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Under Armor is falling apart – and Kevin Plank has to take the blame

Published

11 months ago

21 May, 2024

Under Armor is falling apart – and Kevin Plank has to take the blame

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I’ve had a list of “worst CEOs of all time” for a long time.

In fact, I keep it on a piece of paper in my kitchen drawer. I haven’t made any additions in a while, as there is a high bar to get on the list, and 99.99% of the time I’m a happy person – who wants to spend their time labeling people the worst?

There is no set formula for getting on my list. But if there is any bond that unites the 10 people who are in it, it is the consistent inconsistency in the delivery of financial numbers, the brutal underperformance in relation to competitors and just incompetence in the role.

Some don’t seem like nice people to me either. I like cool.

No. 1 on my list — it will never change as long as I’m on this planet — is former Sears CEO Eddie Lampert. A trip to the past for you. One of the worst jobs in history – brought down Sears in his luxurious mansion. Most investors didn’t even know what he looked like!

I won’t count the other nine names.

But I will reluctantly add an 11th name to the list.

Under Armor (UAA) boomerang founder and CEO, Kevin Plank.

I say reluctantly because I have a lot of respect for Plank as a founder. Going from selling t-shirts straight out of your trunk to building a global retail brand is commendable.

Hell, while I have to interview President Joe Biden this week – which basically took me 21 years of work – I didn’t build a company from scratch.

But what’s happening at Under Armor is a total disaster, and Plank has to bear the brunt of it all.

Although he only recently returned as CEO – after booting your hand-picked successor one year in office – he has been on the board since day one. He has been a constant presence at Under Armour, interjecting where he was not necessary. Putting the company in news cycles it shouldn’t be in.

In short, simply not being able to do it as a leader, from execution to innovation and company culture.

And this week it once again blew up in your face in the form of a shocking earnings and outlook release.

Fiscal fourth-quarter sales fell 5% from a year earlier. Sales in North America fell 10%. International sales fell 7%. Wholesale sales (also known as sales to department stores and other partners) fell 7%. E-commerce fell 8%. Apparel sales fell 1%. Footwear sales fell 11%. Accessory sales fell 7%.

The story continues

A little perspective:

Wal-Mart (WMT) US eCommerce sales increased by 22% in the most recent quarter. Sure, Under Armor doesn’t sell ground beef and bicycles, but e-commerce continues to be an important growth driver for most retailers. As long as your name isn’t Under Armour.
Lululemon (LULU) sales in the most recent quarter increased 16%. Sales in the Americas division increased 9%.

“With multiple CEOs and heads of product marketing in North America over the past half-decade, the continued turnover of critical leadership has been fundamental to our inability to remain nimble and decisive,” Plank told analysts on his first annual conference call. results since returning as CEO.

Apparently you can roll this hat into a ball to put in your backpack. How many people roll up their baseball caps? Another example of a strange Under Armor product that misses the mark.

Apparently you can roll this hat into a ball to put in your backpack. How many people roll up their baseball caps? Another example of a strange Under Armor product that misses the mark. (Screenshot: Under Armour/Yahoo Finance) (Under Armour)

Reminder: The plank has been a constant for the past half decade during this internal turmoil. The responsibility has always stopped with him, as he is still the controlling shareholder.

The company guided for a double-digit percentage sales decline in its new fiscal year, including a surprising 15% to 17% decline in North America.

Plank says he is restarting the business.

This includes cutting 25% of the company’s stock-keeping units (SKU), cutting more costs (the other constant of recent years), and rededicating itself to innovation. Under Armor promises better days in 18 months.

But Wall Street is rightly skeptical.

“Several of the initial contributions to the turnaround strategy add some comfort (new $500 million buyback, 25% SKU reduction, new cost-cutting initiatives). However, many elements of the plan appear to depend on the UAA achieve a degree of success in product innovation that we haven’t seen in years,” Evercore ISI analyst Michael Binetti wrote in a client note.

And that brings me back to Plank.

Under Armor’s stock price has plummeted 87% since its 2015 high. This is a $6.71 stock right now! The company’s market value is a paltry $2.90 billion, compared to $42.3 billion for Lululemon and $138 billion for Nike.NKE).

Outdoor Deckers (COVERED AREA) – once known only for Uggs boots – has seen its market value rise to $22.7 billion due to feverish demand for Hoka running shoes.

Once consistently growing 20% plus annual revenue, Under Armor’s sales are in complete decline – with the decline poised to accelerate over the next 12 months.

Some odds and ends for this analysis:

The company is in such a sorry state that you have to wonder how long the brand’s major endorsers like Steph Curry, The Rock, and Jordan Spieth will stick around.
The company completely missed the supershoe movement.
The company let Hoka and On fully manage a sneaker business that never really gained traction – due to a lack of design and technical factors.
Adidas is becoming popular again and could have a big fall while Under Armor declines.
The quality has dropped a lot. Go touch a pair of Lululemon leggings and then a pair of Under Armor leggings.
The company isn’t even in the conversation in terms of offerings for the upcoming Summer Olympics.
Malls are filling up with new Under Armor competitors like TYR.

I want to remove Plank from my list. He earned his place, however.

The next 18 months will likely be the most difficult of your career. At some point, you will have to consider your legacy, which could mean stabilizing the business by the end of the year and selling it to private equity.

Looking for an example of a good CEO? Check out the latest Opening bid podcast with ex-Cisco (CSCO) CEO John Chambers below.

This embedded content is not available in your region.

Brian Sozzi is the executive editor of Yahoo Finance. He is also the host of “Opening bid“podcast. Follow Sozzi on Twitter/X @BrianSozzi and so on LinkedIn. Tips on business, mergers, activist situations or anything else? Email brian.sozzi@yahoofinance.com. Are you a CEO and want to participate in Yahoo Finance Live? Email Brian Sozzi.

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Related Topics:Kevin Prancha Stephen Curry Under armor

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News

Breakfast on Wall Street: The Week Ahead

Published

9 months ago

14 July, 2024

FinCrypto Staff

The spotlight next week will shift somewhat to the Federal Reserve’s second-quarter earnings season and monetary policy. Market watchers will be treated to results from several major names, including Dow 30 components Goldman Sachs (GS), UnitedHealth (UNH), Johnson & Johnson (JNJ) and American Express (AXP), along with streaming giant Netflix (NFLX).

The Fed will still attract some attention as investors will be eager to hear from a packed lineup of central bank speakers just before the policy meeting lockout period.

In terms of the economic calendar, after fifteen days of labor market and inflation indicators, activity data will gain momentum in the form of the latest retail sales and industrial production reports.

Earnings Highlight: Monday, July 15 – Goldman Sachs (GS) and BlackRock (Black). See the full earnings calendar.

Earnings Highlight: Tuesday, July 16 – UnitedHealth (UNH), Bank of America (BAC), Progressive (PGR), Morgan Stanley (IN), PNC Financial (PNC) and JB Hunt Transport (JBHT). See the full earnings calendar.

Earnings Highlight: Wednesday, July 17 – Johnson & Johnson (JNJ), US Bancorp (USB), Morgan Children (KMI), United Airlines (UAL) and Ally Financial (ALLY). See the full earnings calendar.

Earnings Highlight: Thursday, July 18 – Netflix (NFLX), Abbott Laboratories (ABT), Black stone (BX), Domino’s pizza (ZDP) and Taiwan Semiconductor Manufacturing (TSM). See the full earnings calendar.

Earnings Highlight: Friday, July 19 – American Express (AXP), Halliburton (THANKS) and Travelers (VRT (return to recoverable value)) See the full earnings calendar.

IPO Observation: Hospital and healthcare clinic operator Ardent Health Partners (TARDT), insurance service provider Twfg (TWFG) and the biotechnology company Lirum Therapeutics (LRTX) are expected to price their IPOs and begin trading next week. The analyst quiet period ends at Rectitude (RECT) to free up analysts to publish ratings.

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News

Trump shooting: Gold could hit record high, dollar and cryptocurrencies set to jump

Published

9 months ago

14 July, 2024

FinCrypto Staff

Police cars outside the residence of Thomas Matthew Crooks, the alleged shooter at a Trump rally on Saturday, investigate the area in Pennsylvania. In the aftermath of the incident, one rally attendee was killed, two rally attendees are in critical condition and Donald Trump suffered a non-fatal gunshot wound. The shooter is dead after being killed by the United States Secret Service. (Photo by Kyle Mazza/Anadolu via Getty Images)

Police cars outside the residence of Thomas Matthew Crooks, the suspected shooter at a Trump rally on Saturday, investigate the area in Pennsylvania. Following the incident, one rally attendee was killed, two rally attendees are in critical condition and Donald Trump suffered a non-fatal gunshot wound. The shooter is dead after being shot dead by the United States Secret Service. (Photo by Kyle Mazza/Anadolu via Getty Images)

Investors will initially favor traditional safe-haven assets and may lean toward trades more closely tied to former President Donald Trump’s chances of winning the White House after he survived an assassination attempt, according to market watchers.

“There will undoubtedly be some protectionist or safe-haven flows into Asia early this morning,” said Nick Twidale, chief market analyst at ATFX Global Markets. “I suspect gold could test all-time highs, we’ll see the yen being bought and the dollar, and flows into Treasuries as well.”

Early market commentary suggested Trump’s shooting at a rally in Pennsylvania on Saturday could also prompt traders to increase his likelihood of success in the November election. His support for looser fiscal policy and higher tariffs is generally seen as likely to benefit the dollar and weaken Treasuries.

An indicator of market sentiment heading into the weekend: Bitcoin surged above $60,000, likely reflecting Trump’s pro-crypto stance.

Other assets positively linked to the so-called Trump trade include stocks of energy companies, private prisons, credit card companies and health insurers.

Traders will also be closely watching market measures of expected volatility on Monday, such as those in the tariff-sensitive Chinese yuan and Mexican peso, which have begun to price in the U.S. vote.

Trump said he was shot in the right ear after a shooting at his rally. His campaign said in a statement that he was “fine” after the incident, which prompted him to rush off the stage.

“Currencies will be the first major market on Monday in Asia to react to the weekend’s shots. There’s potential for extra volatility, and getting a clear reading could be especially difficult because liquidity will be hurt by Japan’s national holiday,” said Garfield Reynolds, Asia team leader for Bloomberg Markets Live.

Strategists had already expected a volatile run-up to the election, particularly as Democrats are still agonizing over President Joe Biden’s candidacy after his poor performance in last month’s debate raised questions about his age. Investors were also grappling with the possibility that the election could end in a drawn-out dispute or political violence.

But there is little precedent for events like those in Pennsylvania. When President Ronald Reagan was shot four decades ago, the stock market plunged before closing early. The next day, March 31, 1981, the S&P 500 rose more than 1% and benchmark 10-year Treasury yields fell 9 basis points to 13.13%, according to data compiled by Bloomberg.

Bond investors should pay particular attention as the attack is likely to boost Trump’s election chances and ultimately lead to concerns about the fiscal outlook, according to Marko Papic, chief strategist at California-based BCA Research Inc.

“The bond market must at some point become aware of President Trump’s greater chances of winning the White House than any of his rivals,” Papic wrote. “And I continue to believe that as his chances increase, so too must the likelihood of a bond market revolt.”

Kyle Rodda, senior financial markets analyst at Capital.com, said he was seeing client flows into Bitcoin and gold following the shooting.

“This news marks a turning point in American policy norms,” he said. “For markets, it means safe-haven trades, but more tilted toward non-traditional safe-havens.”

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News

Latest Business News Live Updates Today, July 11, 2024

Published

9 months ago

14 July, 2024

FinCrypto Staff

Latest Business News Live Updates Today, July 11, 2024

Follow us for stories on Bill Gates, Elon Musk, Mukesh Ambani, Gautam Adani as we bring you everything that’s happening in the business world. Follow the latest gold and silver prices here too. Stay in the know on all things business with us.

Latest news on July 11, 2024: Airtel says its new Xstream Fiber plans bundle over 350 live TV channels (Official Photo) (Reuters) Disclaimer: This is an AI-generated live blog and has not been edited by Hindustan Times staff.

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News / Business / Latest Business News Live Updates Today, July 11, 2024

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News

Jio Financial share price: Should you buy this Reliance group stock on Monday ahead of Q1 FY2024 results?

Published

9 months ago

14 July, 2024

FinCrypto Staff

Jio Financial share price: Should you buy this Reliance group stock on Monday ahead of Q1 FY2024 results?

Q1 2024 Results: Jio Financial Share Price will be in focus on Monday as the Reliance Group company has a fixed board meeting on July 15, 2024 to consider and approve the company’s unaudited standalone and consolidated financial results. Trust Group company informed about the Q1 2024 Results date on Wednesday last week via an exchange filing. According to stock market experts, Jio Financial Services Limited is poised to deliver impressive Q1 results for FY25 on solid operating income. They have forecast a healthy QoQ PAT for the company in Q1 FY25.

Jio Financial Services News

Speaking on the Jio Financial Services Q1 2024 results, Manish Chowdhury, Head of Research, StoxBox, said, “We believe Jio Financial Services is poised to deliver impressive results in Q1FY25 aided by its operating income, which is likely to show robust growth driven by strong investment income, which in turn should lead to healthy PAT growth on a sequential basis. Jio Financial Services continues to make strategic moves such as launching digital products and expanding its ecosystem, with a clear focus on future growth. The company has announced plans to introduce products for lending against stocks and mutual funds, leveraging Jio’s large user base, which could be a significant growth driver in the coming quarters.”

“Furthermore, with the NBFC receiving RBI approval to become a primary investment company, Jio Financial Services is well-positioned to unlock value from its investments. Overall, we expect the company to report robust numbers in the upcoming quarter,” the StoxBox expert added.

Jio Financial Stock Target Price

Speaking about the technical outlook of Jio Financial share price, Ganesh Dongre, Senior Manager, Technical Research at Anand Rathi, said, “Jio Financial Services share price is poised to make a fresh high at the ₹260 apiece level. If the stock breaks above this mark, the Reliance Group stock could make a fresh high by touching the ₹290-₹295 zone. Hence, those with Jio Finance stock in their portfolio are advised to stick to the script by keeping a stop loss at ₹205. If the stock breaks above ₹260 decisively, then one can upgrade the stop loss at ₹240 for the near-term target of ₹295.”

On the advice to new buyers regarding Jio Financial stock, Ganesh Dongre said, “New buyers are advised to wait for the breakout. Once the stock breaks above ₹260, one can buy this Reliance Group stock at the short term target of ₹295, keeping a stop loss of ₹240 apiece.”

Disclaimer: The views and recommendations made above are those of individual analysts or brokerage firms, and not of Mint. Investors are advised to consult with certified experts before making any investment decisions.

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