Under Armour Aims to Get Closer to Consumers to Magnify Brand Loyalty

Under Armour CEO Kevin Plank knows what it takes to create true brand loyalty and he has done an amazing job at the Baltimore-based athletic apparel retailer.

Despite less than stellar fiscal results from the company’s recent fourth-quarter earnings call−although up 12 percent for the period, it fell short of the usual quarterly lift of at least 20 percent−Plank noted that he believed that Sports Authority’s bankruptcy would significantly assist Under Armour.

“Following the liquidation of a major partner, we believe that lost market share would be absorbed by other parts of our business and saw signs to that effect throughout the year,” Plank explained. “And as we looked out to the fourth quarter, we were bullish in our assumptions, based on a long-standing history of auto replenishments, and at higher full-priced cold weather product and DTC traffic built-in.”

During the fourth quarter, slower traffic caused significant promotional activities earlier, deeper, and broader than expected, Plank noted.

“This commoditized some of our more basic core product that had previously sold through for us in years past,” he said. “This, in addition to a higher demand for more lifestyle silhouettes caused us to be out of balance with our assortment. We lost top line volume as we work to adapt through our mix and pricing.”

Lessons learned?

“We learned there’s a greater opportunity for better differentiation among our basic core product to better cut through the noise,” Plank added. “We learned that our segmentation strategy could be sharper, that being a premium at every price point and having the right product for the right consumer at the right time is the price of admission. And we learned that when we play in a discounted environment, we can drive volume and win, but the role both we and our retailers expect us to play is a premium full price brand. We were also validated by the fact that as our strong portfolio of footwear, international and DTC growth engines scale, we will be better positioned to deal with imbalances like this going forward. We know that we own this. So, what are we going to do about it?”

Plank added: “We’re working to evolve our selling strategy to better align with what consumers want, with what consumers need. Tracking our 2017 assortments to ensure that our largest volume drivers are in better balance with fresh, new product on the floor at key points in each season. This is our merchandising functions’ key priority for the year. This means amplifying our agenda for newness and innovation at every price point as our partners expect Under Armour to be the premium brand of choice in their stores. We’re also accelerating our lifestyle product offering to capture broader demand, and we’re working within our new category management structure to be better merchants and closer to our consumer.”

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