Under Armour (UAA, Financial) founder Kevin Plank, who recently returned as CEO, has launched an extensive restructuring plan aimed at revitalizing the brand. This initiative marks the second major overhaul for UAA within a year, following the brief tenure of former CEO Stephanie Linnartz.
The company's stock has been relatively stagnant, trading between $6.00 and $10.00 over the past year, which is about 60% lower than its 2021 levels. Kevin Plank has warned that the new strategy might lead to a significant revenue decline in FY25 (Mar), including a 15-17% drop in North America.
Despite the focus on the restructuring plan, UAA reported a Q4 (Mar) adjusted EPS of $0.11 on revenues of $1.33 billion, a 4.7% year-over-year decline, aligning with market expectations.
Key aspects of Kevin Plank's strategy include:
- Reducing product SKUs by approximately 25% to streamline offerings.
- Shortening the product-to-market timeline to 12 months.
- Refocusing on the men's apparel segment in North America to enhance brand perception.
- Expanding the direct-to-consumer line with exclusive in-store and online products, while maintaining a strong wholesale presence.
The overhaul also involves simplifying operations by cutting down on consultants and suppliers. This decision follows investor skepticism regarding the abrupt CEO change from Stephanie Linnartz to Kevin Plank. However, the announcement of a $500 million repurchase plan and some positive movement in stock prices post-restructuring news indicate growing investor optimism.
While these changes are ambitious, it may be prudent to wait for tangible improvements in UAA's quarterly performance before drawing conclusions on the success of the new strategies.
