Under Armour overhauls marketing strategy amid declining prospects
Under Armour's new marketing strategy aims to boost its outlook by intensifying product marketing efforts and leveraging brand ambassadors such as basketball superstar Steph Curry
Article Brief:
Under Armour's revenue remained relatively unchanged at $1.6 billion, according to their recent report. Nevertheless, the company downgraded its fiscal 2024 forecast due to the escalating pressures in its wholesale sector since the previous quarter. In the second quarter, wholesale experienced a decline of 1%, while Under Armour's primary market, North America, saw a decrease of 2% in revenue.
The DTC segment, on the contrary, experienced a 3% increase attributed to growth in e-commerce and owned stores, as indicated in a press release by the company. Profitability also saw improvement, with a 26% increase in net income. CEO Stephanie Linnartz informed analysts of the company's immediate objectives, which are enhancing operational efficiency and managing costs effectively.
In an effort to reverse its fortunes, Under Armour is undergoing a shift in its marketing strategy, as stated by Linnartz. The retailer's recently introduced loyalty program, UA Rewards, has surpassed expectations by already reaching over 1 million members. Linnartz also highlighted that members are twice as likely to make repeat purchases.
Article Insight:
With a decline in sales in North America and a revised forecast for the year, Under Armour's management is actively addressing both immediate and future goals. The immediate focus is on enhancing profitability and boosting sales, while simultaneously prioritizing long-term objectives such as brand development.
Linnartz stressed the importance of enhancing Under Armour's digital capabilities, such as redesigning the website to incorporate sections for shopping the look and reducing online discounts. The company is revamping its marketing strategy to focus more on product marketing and leveraging brand ambassadors like Steph Curry.
"In addition, we're experiencing positive growth in social media marketing. We aim to be present where the 16-to-24-year-old varsity athletes involved in team sports are located," Linnartz mentioned. "We're making significant advancements in terms of likes, shares, and user engagement."
Under Armour is enhancing its focus on footwear by developing a signature shoe for NBA player De’Aaron Fox, who recently signed with the Curry Brand. Additionally, the company is working on a collaboration with Bruce Lee. This effort is part of a larger strategy shift aiming to expand Under Armour's presence in the footwear market. According to Linnartz, the company's chief marketing officer, they plan to capitalize on this opportunity to drive significant growth. This increased investment in footwear is just one aspect of a broader overhaul of merchandising and design. Linnartz acknowledged the positive impact of John Varvatos, the chief design officer who joined the company in September, in fostering a culture centered around design. However, it is anticipated that the first collections led by Varvatos will not be available until the second half of 2024.
"He has swiftly bolstered our design organization with leadership maturity, direction, and strength, bringing a fresh perspective and helping us enhance our approach to our athletes' lives beyond the gym," stated Linnartz. "As we actively seek a new product head and a new design leader, and enlist the expertise of sneaker and branding professionals to augment our team, our focus is on securing the right talent for the right positions."
The executive emphasized that the enhancement of product quality would also result in advancements in the wholesale channel, as Under Armour provides retailers with compelling reasons to stock more of its offerings. GlobalData Managing Director Neil Saunders concurs, stating that a comprehensive product overhaul is imperative.
According to Saunders, the brand's approach of fluctuating between highlighting technical advantages and attempting to prioritize fashion is not beneficial for a clear message. Currently, it seems that the brand is leaning more towards fashion, but some of the recent additions to their collection are lacking in both quality and design. Saunders believes that this lack of discipline has been a persistent issue for Under Armour, and addressing it is crucial for the brand to rebuild its image and establish a more reliable source of revenue.
