Under Armourâs terrible year just got worse
Armour
A woman runs past an Under Armour store in downtown Chicago on Oct. 16. (Christopher Dilts/Bloomberg)
Americans  it seems  are over Under Armour.
âThis is an abrupt about-turn for a company that  until recently  was on a mission to challenge the might of Nike â Neil Saunders  managing director of the analytical firm GlobalData Retail  said in an email. âUnder  Armour  has become just another brand in a sea of brands.â
The problems are multiple  he said. Although Under  Armour  racks up billions of dollars in sales each year  analysts say it has failed to drum up much loyalty among its customers. It has also been slow to resonate with women and has struggled to compete with larger rivals such as Nike and Adidas  which often offer lower-priced goods. Another factor: bankruptcy filings by key retail distributors such as Sports Authority and Sports Chalet.
âWe are incredibly disappointed with our 2017 performance â Kevin Plank  Under Armourâs founder and chief executive  said during the call with analysts. âWe have not performed to the level we had originally aspired to.â
Under Armour tried to keep up  he said  by discounting prices and offering more promotions than usual  which further cut into the companyâs profit margins. But  Plank added  those were just temporary efforts to shore up sales and not a long-term strategy for the company  which once could command higher prices than its competitors. (Menâs running shoes  for example  start at $74.99 at  Under Armour   $65 at Adidas and $60 at Nike  according to the companiesâ websites.)
âIn no way  shape or form do we anticipate changing the pricing model that makes Under Armour special and unique â Plank said. âWe invented the $25 T-shirt. Weâve pressed the bounds as to what consumers will pay for apparel. Thatâll continue. No one is looking for  Under Armour  to have the $25 hooded fleece. They want Under  Armour  at the $75 and $100 price points.â
But analysts say that might be a tough sell  particularly as customers grow accustomed to deep discounts. Saunders added that a âmarked slowdownâ in demand for athletic apparel is likely to further complicate Under  Armour âs turnaround efforts.
âWhile customer numbers have risen  loyalty to the brand is not deep-rooted in the same way that it is at Lululemon and Nike â he wrote. âWhat this means is that as demand moderated  Under  Armour  has been quick to drop off the radar of many consumers.â
The latest round of disappointing earnings comes on the heels of a tough year. The company posted its first-ever loss in April and in August announced it would lay off 2 percent of its workers. Thereâs also been changes to the leadership team. Still   shares of Under Armour stock  which are currently trading at about $13   have lost more than half  their  value this year.
A woman runs past an Under Armour store in downtown Chicago on Oct. 16. (Christopher Dilts/Bloomberg)
Americans  it seems  are over Under Armour.
âThis is an abrupt about-turn for a company that  until recently  was on a mission to challenge the might of Nike â Neil Saunders  managing director of the analytical firm GlobalData Retail  said in an email. âUnder  Armour  has become just another brand in a sea of brands.â
The problems are multiple  he said. Although Under  Armour  racks up billions of dollars in sales each year  analysts say it has failed to drum up much loyalty among its customers. It has also been slow to resonate with women and has struggled to compete with larger rivals such as Nike and Adidas  which often offer lower-priced goods. Another factor: bankruptcy filings by key retail distributors such as Sports Authority and Sports Chalet.
âWe are incredibly disappointed with our 2017 performance â Kevin Plank  Under Armourâs founder and chief executive  said during the call with analysts. âWe have not performed to the level we had originally aspired to.â
Under Armour tried to keep up  he said  by discounting prices and offering more promotions than usual  which further cut into the companyâs profit margins. But  Plank added  those were just temporary efforts to shore up sales and not a long-term strategy for the company  which once could command higher prices than its competitors. (Menâs running shoes  for example  start at $74.99 at  Under Armour   $65 at Adidas and $60 at Nike  according to the companiesâ websites.)
âIn no way  shape or form do we anticipate changing the pricing model that makes Under Armour special and unique â Plank said. âWe invented the $25 T-shirt. Weâve pressed the bounds as to what consumers will pay for apparel. Thatâll continue. No one is looking for  Under  [TGT] .  [TGT]  want Under  [TGT] at the $75 and $100 price points.â
But analysts say that might be a tough sell  particularly as customers grow accustomed to deep discounts. Saunders added that a âmarked slowdownâ in demand for athletic apparel is likely to further complicate Under  Armour âs turnaround efforts.
âWhile customer numbers have risen  loyalty to the brand is not deep-rooted in the same way that it is at Lululemon and Nike â he wrote. âWhat this means is that as demand moderated  Under   [TGT] has been quick to drop off the radar of many consumers.â
The latest round of disappointing earnings comes on the heels of a tough year.  [TGT]  posted  [TGT]  first-ever loss in April and in August announced  [TGT]  would lay off 2 percent of  [TGT]  workers. Thereâs also been changes to the leadership team.  [TGT] have lost more than half   [TGT]   value this year.