NEW YORK, United States — In 2010, Under Armour chief executive officer Kevin Plank issued a warning to his athletic wear rivals. Full of the bluster and bravado that defined Plank and his scrappy underdog company from Baltimore, he named names and called them all out. “Our goal for getting into basketball is to be No. 1,” said Plank.
What about Nike? “Those guys are old,” he said.
Seven years later, Nike still rules and Plank has been humbled. Sure, Under Armour found some success breaking into the paint, and Plank revelled in bidding wars over NBA superstars such as Kevin Durant. “Do I take pleasure in that they paid $150 million more than they planned on paying?” Plank said of Nike’s endorsement deal with Durant. “Absolutely.”
These days, Plank is content to tout Under Armour Inc. as the third-largest sports brand in the world, pointing out that Nike and Adidas are a “long ways away.” The 44-year-old, whose biggest claim to fame of late was triggering consumer blowback for supporting Donald Trump, admitted to various missteps and conceded that the company he built remains comparatively small. This act of contrition came as the company posted its first-ever loss as its initial spurt of growth accelerates in the other direction.
“We’re not perfect. We don’t think we’re there yet,” Plank said during a call with analysts on Thursday. “We are using 2017 as a year to get better.”
Growth has slowed for Under Armour in the face of aggressive competition from those two established brands alongside weak demand for its shoes. Under Armour’s footwear business collapsed in the first quarter — growing just 2 percent after surging 64 percent a year earlier — as the third edition of NBA star Steph Curry’s signature basketball shoes disappointed. Revenue declined 1 percent in North America, offsetting gains overseas.
Even the little bit of good news for the company — shares rose as much as 12 percent on Thursday — comes with a caveat: Wall Street was surprised the company didn’t lose even more money.
The best-selling sneaker in the US was the Adidas Superstar. The next nine were sold by Nike. Under Armour had none.
“It’s very clear that they aren’t going to return to the days of 20-plus growth,” said Matt Powell, an analyst for NPD Group. “Their business is tough. They do need to take a step back and do the hard work to correct the missteps they’ve had.”
Even Curry — Under Armour’s most prized pitchman in the battle to win over sneakerheads — has been overshadowed this season by fellow superstars. Shoppers haven’t helped either, as they continued to shift away from performance basketball shoes to casual and retro styles abundant at Adidas AG and Nike Inc.
Sales of performance basketball shoes, which include the Curry line, fell about 20 percent last year and have tumbled by the same amount through March, according to NPD Group Inc. Last year, the best-selling sneaker in the US was the Adidas Superstar. The next nine were sold by Nike. Under Armour had none.
Plank admits that Under Armour hadn’t yet perfected its sneaker launches and is retooling methods for future releases. Just last month, Nike boasted it had its biggest-ever sneaker launch —a throwback version of the shoes Michael Jordan wore in the 1996 comedy film Space Jam, which featured the basketball legend alongside Looney Tunes characters.
Under Armour has struggled to build fashion credibility to push its lifestyle kicks. Plank, however, has a plan. He said he hopes to build coolness through its UAS label, a high-fashion line from former Ralph Lauren Corp. and Adidas fashion designer Tim Coppens, that’s hosted runway shows each of the past two seasons. Plank sees it providing a “halo” effect, bolstering his other categories. A new lifestyle line called Unstoppable is due out this year.
Meanwhile, Under Armour’s cool factor keeps getting hit. In February, Plank’s positive comments about the new US president drew the ire of Curry, as well as of spokes-stars Dwayne Johnson and Misty Copeland. The company took out a full-page ad in its hometown newspaper to try to defuse the situation.
One thing Plank wasn’t willing to concede, however, was the strength of the Under Armour name.
“I truthfully wouldn’t change positions with anyone else in the world — with any other brand,” he said.
By Kim Bhasin and Matthew Townsend; editor: David Rovella.