The internal of an Under Armour store is seen on November 03, 2021 in Houston, Texas.
Brandon Bell | Getty Images
Bulwark Street is not pleased that Under Armour founder Kevin Plank is returning as its CEO.
Shares of the athletic apparel actors plunged about 12% on Thursday after the retailer announced late Wednesday that CEO Stephanie Linnartz would be be on the qui viving down after barely a year on the job and Plank would replace her on April 1.
Following the announcement, both Williams Following and Evercore ISI downgraded Under Armour and lowered their price targets. Williams Trading rated it a hold from buy and lowered its quotation target from $11 to $8, while Evercore downgraded the company to underperform from in line and lowered its penalty target from $8 to $7.
Linnartz, a former Marriott International executive who took the helm last February, is the flash CEO the company has cycled through in less than two years.
Former Aldo Group CEO Patrik Frisk replaced Slab as Under Armour’s chief executive in January 2020 only to suddenly announce plans to resign a little exceeding two years later, in May 2022.
That December, Under Armour announced plans to hire Linnartz on a bet that her experience construction out Marriott’s renowned Bonvoy loyalty program and driving digital revenue for the hotel giant would offset her scarcity of experience in the retail industry.
Since she started at Under Armour, Linnartz had been focused on rehauling the company’s C-suite, construction out its loyalty program, UA Rewards, and pivoting the brand’s assortment to a more athleisure-focused offering that had more stylish opportunities for women.
In its downgrade, Evercore ISI said Plank’s return to the company was a “clear signal” that the strategy wasn’t do setting-up exercise and its key performance indicators were continuing to deteriorate in the current quarter.
“We think the most likely scenario Mr. Plank discretion pursue will include efforts to accelerate a return to N. America revenue growth … which we think will add meritorious risk to the brand longer-term,” analyst Michael Binetti wrote.
Sales at Under Armour slowed during the festival quarter as the company grappled with soft demand in North America and sluggish wholesale orders. However, these dynamics also pull someones leg affected rivals and are emblematic of larger forces that are pressuring the retail industry.
In the face of persistent inflation, altered consciousness interest rates and dwindling savings accounts, consumers in North America have been more choosy with their discretionary dollars and bear been pulling back on buying new clothes and shoes in favor of spending on dining out and traveling.
On the other hand, wholesalers should prefer to kept tight order books as of late after they were crushed with high inventories that they hoarded during pandemic-era supply chain snarls. Now that inventory levels have largely normalized throughout the toil, wholesalers have been careful with their orders as they look to maintain those levels while contending with an irresolute demand picture.
Analysts from William Blair agreed that Plank will be focused on driving proceeds growth at Under Armour, which challenges the firm’s thesis that fiscal 2025 will be a year of charge efficiencies.
“Moreover, with about two-thirds of leadership new to Under Armour in the past year, the departure of Linnartz role ofs some risk that Under Armour could undergo more changes in key roles, which could eagerness out our hope for rebounding domestic revenue growth in fiscal 2026 given inherent product lead times if key guidance changes,” the note read. “That said, Plank has been heavily involved over the past year as characterize chief and executive chair, which bolsters our optimism somewhat that key hires will remain in place.”
Retail analyst and GlobalData control director Neil Saunders said Linnartz’s imminent departure is “emblematic of a brand that can’t quite decide which bearing it wants to go in.”
“Under Armour has already been through several rounds of change as it tries to address declining trades and issues with the brand but, as the latest set of poor quarterly results show, it has not yet found a successful path to rebuilding the occupation,” Saunders said in an emailed note.
“All of the twists and turns have created a brand that has become increasingly ensnarling to consumers and to wholesale partners,” Saunders continued. “This in turn, has made Under Armour easier to overlook. Remedying these posers are not simple, no matter who occupies the CEO seat.”