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Despite the drastic implementation of the three-month restructuring plan, Under Armour still failed to stop the decline in performance. In the first quarter of fiscal year 2025, Under Armour's revenue fell by 10% and its net loss was US$305 million. Under Armour's management considered this financial report better than expected and believed that it would develop better in the future. Reducing discounts, laying off employees, betting on the Asia-Pacific market... Under Armour's 18-month self-rescue restructuring plan is still continuing. However, whether the restructuring plan can enable Under Armour to achieve growth still needs to be questioned.

Revenue fell 10%

According to financial report data, in the first quarter of fiscal year 2025 ending June 30, Under Armour's revenue was US$1.2 billion, a year-on-year decrease of 10% (down 10% on a fixed exchange rate basis); operating loss was US$300 million, translating to an adjusted profit of US$8 million; net loss was US$305 million, translating to an adjusted profit of US$4 million.

In terms of regions, Under Armour's revenue in North America fell 14% to $709 million, and international revenue fell 2% to $473 million (a currency-neutral decline of 2%) in this fiscal quarter. In the international business, revenue in Europe, the Middle East and Africa was flat (currency-neutral), Asia Pacific fell 10% (currency-neutral decline of 7%), and Latin America revenue increased 16% (currency-neutral growth of 12%).

In the past fiscal year 2024, Under Armour's performance was also in a state of decline. In fiscal year 2024, Under Armour's revenue fell 3% year-on-year to US$5.7 billion (approximately RMB 41.246 billion); net income was US$232 million, a decrease of US$142 million from the previous year.

Although entering the new fiscal year did not change the downward trend in performance, Under Armour management expressed satisfaction with the results of this fiscal quarter. Kevin Plank, President and CEO of Under Armour, said: "We are encouraged by the early progress in rebuilding the premium positioning of the Under Armour brand and are satisfied with our first quarter results for fiscal 2025, which exceeded expectations. It turns out that our renewed vitality and consistency are key factors as we strive to deliver excellent products and stories while improving efficiency, reducing promotional activities, etc."

As a sports brand that once attracted much attention in the US market and briefly surpassed Adidas to become the second largest in the US market, Under Armour had a glorious period. However, in the past two years, Under Armour's influence has been greatly reduced, and the turmoil in Under Armour's management seems to have become an unstable factor in its development.

In 2019, Under Armour founder Kevin Plank stepped down as CEO; then Under Armour experienced two short CEO terms. First, the company's COO Patrik Frisk was promoted and resigned after serving as CEO for two and a half years. Stephanie Linnartz from Marriott took over as the third CEO; and in May of this year, founder Kevin Plank returned to take power again; not long ago, Under Armour announced the appointment of former Adidas executive Eric Liedtke as executive vice president of brand strategy. The relevant person in charge of Under Armour told the Beijing Business Daily reporter that the appointment of the executive vice president of brand strategy is mainly responsible for enhancing Under Armour's brand image and brand narrative globally, coordinating strategic planning, promoting transformation initiatives, and accelerating Under Armour's growth.

Cheng Weixiong, an independent analyst in the fashion industry and founder of Shanghai Liangqi Brand Management Co., Ltd., said that from the current positioning, Under Armour is not a professional sports brand, but is more involved in the field of sports fashion, and has certain deficiencies in sports professionalism and functionality. In addition, Under Armour mainly operates a distribution system in China, and its offline channels have been greatly impacted, leading to poor development.

Accelerate self-help

It is not difficult to see Under Armour's anxiety from the frequent changes in management personnel, and the return of the founder is also seen as the key to Under Armour's breakthrough. After Kevin Plank returned, he led Under Armour to launch an 18-month restructuring plan and carry out drastic reforms. In this restructuring plan, the first knife was pointed at Under Armour's discount strategy. It is understood that in the new fiscal year, Under Armour canceled its excessive discount strategy, planned to halve the number of promotional days, and turned to providing members with exclusive high-quality products to increase customer unit price and profitability. At the same time, Under Armour also plans to reduce the number of SKUs by about 25% to focus on providing more high-quality products. In this quarterly performance report, Under Armour mentioned: "Gross profit margin is expected to increase by 75-100 basis points compared with the previous year due to a significant reduction in promotions and discounts for the company's direct-to-consumer business and product cost benefits."

In addition to reducing discounts, Under Armour has also refocused on its core menswear business, considering it as the top priority for brand development. In terms of market layout, Under Armour has focused more on the Asia-Pacific region, mainly in China. Under Armour said it plans to expand the number of stores in the Asia-Pacific region and provide new overseas market growth.

It has only been three months since the restructuring plan was proposed, so it is too early to talk about the effect. However, judging from the current fiercely competitive sports market, especially the Chinese sports market, it is not easy for Under Armour to achieve higher growth through reform and seek more growth in the Chinese market.

In the current Chinese sports market, in addition to the key layout of international sports giants such as Nike and Adidas, local brands such as Anta, Li Ning, and Xtep are also competing for the market in various segments. For example, Adidas has delegated power to the Chinese market team to ensure that 70% of its products are produced and sold in China; Anta continues to exert its influence in the field of basketball, Li Ning in the field of badminton, and Xtep in the field of running. In addition, in the past two years, sports giants such as Nike and Adidas have increased their layout in the field of women's sports; not to mention Lululemon, which originally started by laying out the women's sports market. These will be competitive factors faced by Under Armour. In addition, Under Armour has been frequently complained about not having a hit product and not being innovative in design in the past two years.

In the view of Jiang Han, a senior researcher at Pangu Think Tank Research Institute, Under Armour failed to continuously attract and maintain sufficient consumer interest in terms of brand positioning and marketing strategy, resulting in the erosion of its market share. In addition, its lack of product innovation is also one of the key factors. If it cannot continue to launch new products that meet market demand, it will gradually lose the favor of consumers.

Beijing Business Daily reporter Zhang Junhua