Once a Strong Nike Competitor, Under Armour Now Struggles to Stay Relevant

Under Armour, once touted as a formidable rival to Nike, is now grappling to maintain its relevance in an increasingly competitive sportswear market. Founded by 23-year-old former college athlete Kevin Plank, the brand gained prominence with endorsements from basketball star Stephen Curry and golfer Jordan Spieth. However, it now faces significant challenges as younger consumers gravitate towards newer brands like Hoka and On.

The company’s financial performance has been lacklustre in recent years, with annual sales stagnating and its stock plummeting 88% from its peak in 2015. Experts attribute Under Armour’s struggles to an identity crisis, management controversies, and a failure to adapt to market trends.

Kevin Plank, the founder, has returned as CEO in a bid to stabilize the company after a series of leadership changes. Plank’s return mirrors those of other high-profile founders like Howard Schultz of Starbucks and Bob Iger of Disney, who returned to their companies to guide them through turbulent times.

David Swartz, a senior equity analyst at Morningstar, highlighted Under Armour’s previous success, noting, “When Under Armour was growing at 20% plus numbers, people saw it as a legitimate competitor to Nike. It was the upstart athletic brand that was making real inroads against Nike, the dominant name in the industry.” However, this momentum did not last, and the brand struggled to maintain its market share.

Under Armour’s decline began around 2016, compounded by the bankruptcy of Sports Authority, a major retail partner. The company also faced legal battles, including a lawsuit from UCLA over a $280 million sponsorship deal and a $9 million settlement with the U.S. Securities and Exchange Commission over past accounting practices.

Plank has acknowledged the company’s management issues, noting the frequent turnover of CEOs and key executives. “With several CEOs and heads of product, and marketing in North America over the past half-decade, ongoing turnover of critical leadership has been central to our inability to stay agile and decisive,” he said.

In a recent earnings call, Plank announced a restructuring plan aimed at streamlining operations and focusing on innovative products tailored to athletes’ needs. Despite these efforts, the company faces a challenging market, with younger consumers favouring athleisure trends dominated by brands like Lululemon.

Retail and e-commerce analyst Zak Stambor emphasized the need for Under Armour to adapt, saying, “Under Armour has failed to latch upon streetwear, or sports style that catapulted On or Hoka. It needs to figure out what is next.”

Despite its struggles, Under Armour’s partnerships with celebrities like Dwayne “The Rock” Johnson and Stephen Curry have kept the brand visible. However, the departure of NBA star Joel Embiid to Skechers and the loss of a potential deal with WNBA phenom Caitlin Clark to Nike underscore the brand’s challenges.

Eric Smallwood, president of Apex Marketing Group, noted the importance of Under Armour defining its identity, stating, “The bottom line for Under Armour is for the brand to be clear about its identity. Are they a shoe company? Are they an apparel company? It’s going to come down to deciding if they want to evolve into a lifestyle brand or stay in performance-based products.”

Under Armour’s path forward involves not only addressing internal issues but also effectively responding to evolving consumer preferences in a dynamic and crowded market.