Looking for a comeback after slowing growth in the fourth quarter, Under Armour Inc.’s Kevin Plank is turning to fashion.
“We need to become more fashionable with the products that we have out there,” Plank said, speaking to analysts on a conference call after the company reported a sales gain of just 11.7 percent in the fourth quarter. That marked the weakest quarterly increase at Under Armour since the depths of the financial crisis.
Plank, chairman and chief executive officer, said the company had been counting on core basics to do more work for the brand.
“But a consumer today frankly has more options, and most of those options are from good brands that we compete with, that are heavily discounting as well,” he said.
Under Armour will be sticking by its performance offering, but upping its style quotient.
“Performance is certainly not dead,” he said. “Performance is something that is actually a requirement. It’s actually just expected, and it’s almost given information now.…The consumer wants it all. They want product that looks great, the wear’s great, that you can wear at night with a pair of jeans, but that also does perform for them.”
Fashion is not a foreign concept to Under Armour, which teamed with designer Tim Coppens to create a temporary sportswear line, UAS.
More style might well be on the way — and it could come just in time.
Wall Street has been worried that the brand is running out of steam after signs of weakness from the third quarter.
The ceo laid out what happened in the fourth quarter, what Under Armour learned from it and what the company’s doing it.
He said slower foot traffic at stores caused more price promotions and “commoditized some of our more basic core product.” This revealed “a greater opportunity for better differentiation among our basic core products to better cut through the noise.” And now the company is working to better “align with what consumers want.”
Investors are feeling antsy.
Shares of the activewear-maker plummeted 23.4 percent to $19.22 Tuesday.
Sales for the three months ended Dec. 31 rose to $1.31 billion from $1.17 billion. Net income for the quarter dipped 0.7 percent to $104.9 million, or 23 cents a diluted share. For the full year, sales rose 17.7 percent to $2.24 billion, driving profits up 11.6 percent to $248.7 million.
But Under Armour expects 2017 to bring more of the same, with net revenues are expected to grow by 11 to 12 percent, to nearly $5.4 billion.
Plank, a former University of Maryland running back who often takes on the voice of coach pumping up his team, also showed some signs of introspection.
“This year this year is something that I think we can definitely look back on and say we’ve been made much wiser,” he said. “I don’t believe there are surprises in life. I believe that everything is something that we can hopefully forecast or see. But sometimes it’s not so clear to us….Our eyes are wide open, and we are ready to run in 2017 and beyond.”