Skip to Content

Kevin Plank is returning as Under Armour's CEO. He faces an uphill climb, an analyst says.

By Bill Peters

'We believe this transition suggests there is still a fair amount of moving pieces and uncertainty related to strategic direction,' Jefferies analyst says

Kevin Plank, who founded Under Armour in 1996 and served as chief executive until 2019, will return to that role next month, the athleisure gear maker said on Wednesday.

Plank, who returns on April 1, succeeds Stephanie Linnartz, who is stepping down from that role and as a member of the board, after a little more than a year on the job. She will stay on as an adviser to Under Armour until April 30.

The change follows a years-long slide for Under Armour's (UA) stock. The company, known for its workout clothing that can also be worn for comfort, has faced steep competition from the likes of Nike Inc. (NKE) and Adidas (ADDYY), and, more recently, has suffered amid a two-year jump in prices for essentials that has hit clothing demand.

Initially after the announcement, which Under Armour made after the close of trading Wednesday, shares jumped about 6%, but those gains soon vanished and the stock ended the after-hours session down 0.7%.

After the announcement, Jefferies analysts said the move reflected continued uncertainty at the company.

"We believe this transition suggests there is still a fair amount of moving pieces and uncertainty related to strategic direction around product, people and processes," they said.

"Therefore, while we still believe the brand has ample value, we think uncertainty will continue to hinder share performance until investors see a turn in top line and margin trends," they said.

The lead board director at Under Armour, Mohamed A. El-Erian, who is also chief economic adviser at Allianz, will become Under Armour's non-executive board chair, the company said Wednesday.

"As the company continues to navigate several post-pandemic consumer, industry and brand-specific factors, we are working hard to reconstitute our strengths and make thoughtful, balanced business decisions to drive enduring success for athletes, customers, and shareholders," Plank said in a statement.

While shares of Under Armour are up 5.8% over the past 12 months, they are down nearly 60% since 2021, when the company's share price benefited from the reopening of the economy and schools, as well as efforts to cut costs and boost profits.

Retailers have been cautious on loading up on new shoes and clothes, after cutting prices to clear their existing stockpiles in 2022, when surging food prices steered people away from leisure buying.

In February, Under Armour reported falling sales and a "mixed retail environment during the holiday season." It said it expected revenue to be down 3% to 4% this year.

-Bill Peters

This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.


(END) Dow Jones Newswires

03-13-24 2022ET

Copyright (c) 2024 Dow Jones & Company, Inc.

Market Updates

Sponsor Center