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Under Armour: Journey of a Successful Sportswear Brand to Uncertain Future

Abdul Kadir Khan by Abdul Kadir Khan
March 1, 2021
in Case Study
5 min read
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Under Armour: Journey of a Successful Sportswear Brand to Uncertain Future

Under Armour:NBB

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University of Maryland Football Team captain was not comfortable with his sportswear. The clothes were providing an uneasy experience to the captain during the match especially after sweating. T-shirts were not comfortable with the rigorous training of the game. The captain decided to manufacture athlete-friendly sportswear. His name is Kevin Plank. That is how the journey of the Under Armour company started.

Beginning of Under Armour

Plank started the Under Armour journey in 1996. “The Shorty” was the first product of the company. The product helped the players to wick away sweat to have a dry body.

The company’s main goal was to design sportswear that will enhance the performance of a player. It used special fabric to achieve this goal.

Plank started the company from his grandmother basement in Washington, DC. The company got recognised early when it had a partnership with the Georgia Institute of Technology and North Carolina State University.

Slowly, Plank started to get in touch with the National Football League(NFL) players for selling his sportswear. NFL Star Deion Sanders liked Under Armour t-shirts and bought a few of them. The company that was just popular in the colleges, became a known name in a professional circle as well.

Growth of Under Armour

At the beginning of the 2000s, the company saw exponential growth. It started expanding its merchandise. The company did advertising through television. In 2004, the company touched the $200 million sale mark. It became public in 2005. During its Initial Public Offering, the company raised $157 million.

The company focussed more on the different marketing strategies to make the brand popular. Plenty of endorsements and strategic media coverage helped the company to become a strong brand. In 2010, it had a popular tie-up with England Football player Tom Brady.

The company signed one of the costliest endorsement deal with quarterback Cam Newton in 2011.

Under Armour also started focussing on Women Sportswear. For that, it signed contracts with few women players. In one of the viral advertisement, Tom Brady’s wife joined the Under Armour team.

Currently, the company is known for a large collection of women sportswear. It has a Sports bras, leggings, and sports tops.

The company acquired MapMyFitness for strengthening its brand. It paid $150 million for this deal in 2013. In 2015, it also acquired Endomomdo and MyFitnessPal for $85 million and $475 million respectively. With the help of these acquisitions, the company made its digital presence strong.

As per the Wall Street Journal Report of 2014, the company’s designed suits for the US speed skating team were criticised by few for manufacturing an outfit that affected the skaters’ performance in the 2014 Winter Olympics.

The controversy did not affect the company. In the same year, it became the second best selling sportswear brand in the US. Nike ranked first in that year, whereas Under Armour dethroned Adidas to achieve the second position.

2015 brought another good news for the firm when it signed a deal with boxing giant Muhammad Ali. The company built its first smart shoe in 2016. It had a built-in sensor to store and track data. The same year, it became the official uniform supplier for Major League Baseball.

For providing comfort sleep environment, the company manufactured sleepwear in 2017. This product helped players to recover fast through sound sleep.

Downfall of Under Armour

2017 was not a good year for the company. It’s share value went down 40%. The company also recorded the first quarterly loss ever. Some of the top officials left the firm. These events affected the Under Armour image a lot.

The company also lost track when it focussed more on fashion than athlete-friendly products.

The company lost public trust when its CEO Plank praised the controversial US President Donald Trump. In an interview with CNBC, he called him a valuable asset for the US. Later, the firm tried a lot to clear the doubts related to the CEO statement but they failed badly.

Kevin Plank: Founder of Under Armour, Source: Twitter

In 2018, some athletes boycotted Under Armour shoes at UCLA. They said that the shoes have very low quality and their base is peeling off.

These series of events made the company less popular in the sports fraternity. The company was surprised to know that teens are not liking its products at all. They called it an old brand that is not fit in the current environment.

2018 brought a ray of hope for Under Armour when its sale in North America jumped first time in a year. Overall, it failed to compete with Adidas and Nike. It lost its identity.

In 2018, the company had a huge inventory of $1.3 billion that could not find customers. On top of that, the company’s top management was found enjoying strip clubs on official expenses. It became the Under Armour image worst. Finally, the company announced the first round of layoffs for removing low performing staffs.

In December 2018, it increased women offerings and saw a jump in the growth. Bad news again started for Under Armour. It missed the sales deadline and target in 2019. It’s share also went down.

Under Armour CEO Change

On October 22, Plank resigned from the CEO position after 23 years. He joined the Executive Chairman position in Under Armour. COO Patrik Frisk became the new CEO of Under Armour.

Plank praised Patrik a lot, he said:

“Patrik is the right person to serve as Under Armour’s next CEO. As my partner during the most transformative chapter in our history, he has been exceptional in his ability to translate our brand’s vision into world-class execution by focusing on our long-term strategy and re-engineering our ecosystem through a strategic, operational and cultural transformation.”

Under Armour announced in November that US Exchange Commission and Justice Department are investigating Under Armour for accounting irregularities since 2017. The company is cooperating with the officials. The company is also claiming that we are following all rules and regulations related to accounting practices.

In May 2020, covid affected the firm business so badly that it is planning to extend payment terms for its contracted athletes like Tom Brady.

In June 2020, it terminated a 15 year long signed contract with UCLA. The deal was signed in 2016 for 15 years with an amount of $280 million. In another announcement in the same month, Under Armour dismissed 600 employees as per the Business Insider report.

Covid-19 has affected Under Armour very badly. A company that once had a market cap of $15 billion, is struggling to survive. It used to compete with Nike and Adidas. Now, it is finding difficulties in achieving the quarterly target.

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Abdul Kadir Khan

Abdul Kadir Khan

Abdul Kadir Khan is a Content Writer at Next Big Brand. Hails from UP. Postgraduate in Computer Science. Content Maniac and Trainer. Love to write about startups, Brands, and Trending Tech.

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