Under Armour Loses Consumer Interests

Source: Under Armour

Ranked number seven in Forbes Fab 40: The World’s Most Valuable Sports Brands, Under Armour has faced a dramatic drop in sales for the first time since 2005. As stated by CNN, compared to a year ago, quarterly sales have fallen about 5 percent and on October 31st, 2017, the company’s stock value went down by roughly 19 percent. The revenue from the companies in North America cover more than 75 percent of overall sales, and the sales there dropped 12 percent in the last quarter. Additionally, Under Armour’s profit has fallen from $128 million to $54 million since just last year. These statistics have proven to be very detrimental to the company as a whole, and they may have to shut down completely.

One of the biggest problems the company faces is a lack of loyalty from its consumers. Although they have been trying to expand into major chains such as Famous Footwear, Kohl’s, and Designer Shoe Warehouse, their biggest competitors, Nike and Adidas, offer similar goods at lower prices. The demand for academic apparel is already decreasing, and without loyalty from its customers, Under Armour is suffering the most. Consumers are already investing less in sports attire, and the company’s products are not keeping them interested enough to spend that extra $10 or $20 for Under Armour attire. Furthermore, according to the Washington Post, Sports Authority and Sports Chalet, who are Under Armour’s main distributors, filed for bankruptcy, which took a large hit on the company’s overall success.

The company’s debt to equity ratio continues to stand high at 0.5%. The earnings for the next quarter are 19 cents a share, which is low compared to last year’s 25 cents a share. Under Armour’s stock price has fallen about 80%, in that in 2015 it was a high 50% and now they are at roughly 11%. Bloomberg, a well-known financial software, data, and media company, stated that the company’s Founder and Chief Executive, Kevin Plank, has seen his net worth decrease by more than $25 billion.

Despite the higher pricing of their products, Under Armour does not plan to drastically change their sales method. “In no way, shape or form do we anticipate changing the pricing model that makes Under Armour special and unique. We invented the $25 T-shirt. We’ve pressed the bounds as to what consumers will pay for apparel. That’ll continue,” said Plank, quoted by the Washington Post. Keeping prices high will not immediately help the current plummet in sales, but global expansion seems to be the best option. Looking into the future, the company expects its rocky financial struggles to continue before they can hopefully break through with a new way to expand its market and stable its sales again.