Shares of Under Armour Inc. fell 4.3 percent Monday as investors were apparently rattled over a report that the company’s cofounder Kip Fulks was taking a further step back at the company and the activewear giant is considering exiting some smaller-volume businesses, such as the tennis and outdoor categories.
The company’s stock closed down 68 cents to $15.23.
An Under Armour spokeswoman said the company is in a quiet period and had no comment on the report from the Wall Street Journal. The company will report its latest quarterly results on Oct. 31.
Fulks, a college classmate of chief executive officer Kevin Plank, has slowly become less and less active in the day-to-day operations of the Baltimore-based company. Since May, he has been a strategic adviser working on improving the brand’s efficiency, but since Under Armour was founded in 1996, he has also served as chief operating officer, chief marketing officer, president of footwear and innovation, and president of product. He has also held roles in sourcing and quality assurance.
Sources said Fulks is on a sabbatical, a benefit offered to all employees with over 10 years of service. When and if he will return is unknown at this point.
After years of growth, Under Armour in April posted its first-ever loss of $2.3 million in the first quarter, on revenues of $1.12 billion, down from a profit of $19.2 million on sales of $1.05 billion, a year earlier.
In July, the company brought former VF Corp. executive Patrik Frisk on board as president and chief operating officer and also rejiggered its executive ranks as a way to “better leverage its digital business, support its move toward category management, and drive greater operational efficiency across the organization.”
Since then, Under Armour has opened a design center in Portland, Ore., revealed plans to collaborate with A$AP Rocky on a collection, launched the UA Unstoppable Collection, a fashion-skewed sports-inspired line, and is jumping into the subscription box game.
But the popularity of athletic-inspired product may be coming to an end after several years of growth, hurting the growth of companies such as Under Armour, Nike and Lululemon.
In August, while reporting net losses of $12.3 million for the second quarter, Under Armour revealed plans to restructure. The move will cost the company $110 million to $130 million in pretax restructuring charges this year, including $15 million for employee severance and $30 million to terminate contracts.