Stephen Curry's model may usher in a brand new period at Beneath Armor
Look out for Air Jordan.
This week, Stephen Curry, the Golden State Warrior athlete, was the youngest athlete to debut his own brand in partnership with a major sports label – Under Armor. The deal is similar to Nike's with Michael Jordan and Lebron James, widely recognized as the two greatest basketball players of all time. Curry is a fitting addition to their ranks: while there is often discussion about who will round off the top three, curry is predominantly viewed as a contender for the first electoral hall.
The Curry brand may be even more important to Under Armor than to the athlete himself. Curry has been with the sports label since 2013. Given Under Armor's problems in recent years, introducing a full-fledged curry brand can go a long way in restoring the brand image. Thanks to the NBA star's squeaky clean reputation, Curry's union could ultimately give a shot in the arm to Under Armour's growth.
The announcement comes a little over a year ago since Under Armor founder Kevin Plank stepped down as CEO and Patrick Frisk transferred control of the company's day-to-day operations. Plank said he made this decision in part to focus on branding and develop a long-term vision for the company as brand chief and executive chairman. He claimed the move was part of a plan he started when he hired Frisk as president and COO in 2017.
While this may be the case, it's also true that Under Armor has had uneven results since 2017.
For the first quarter ended March 31, the company reported a net loss of more than $ 2 million, compared to net income of approximately $ 19 million for the same period last year. Meanwhile, Under Armor's sales rose 7% to $ 1.1 billion over the same period. To put this slower growth into context, revenue rose 30% to $ 1.05 billion over the same period last year. This marks the point where the company moved from double-digit growth to single-digit growth, posting losses that ultimately led to restructuring and layoffs. (These difficulties probably drove Frisk's hiring as well, as he worked as CEO of the Aldo Group and an executive at VF Corp.
The brand has also been criticized for creating a “toxic” corporate culture, according to a 2019 lawsuit against the company alleging racial discrimination and sexual misconduct allegations in 2018.
Covid-19 only made the brand's comeback difficult. Under Armor has managed to maintain sales, which were unchanged at $ 1.4 billion for the third quarter ended September 30, at last year's level. However, due to a drop in sales in the depths of the pandemic, the brand's sales are expected to decline by a high percentage of teenagers compared to 2019 results.
While this is an achievement in the midst of a pandemic, it is still threatened by rivals like Lululemon, emerging DTC brands like Vuori, Cuts Clthing and Mack Weldon, and sporting giants like Nike, all of whom are threatening to steal market share due to their pandemic investments in technology and aggressive marketing.
A vaccine in sight shifts the brand's priorities away from the pandemic and towards the future. This gives the Curry brand room to address the problems of long-term growth and the need to improve the company's image.
For one, shoes are currently the largest contributor to Under Armor's absolute dollar growth. Sales in this division rose 19% in the third quarter alone, accounting for approximately $ 300 million of Under Armor's total sales, although apparel sales declined 6% to $ 927 million. (Under Armor accessories sales increased 23% to $ 145 million from the same period last year.)