Under Armour: Company Issues Analysis in 2016-2020

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Economic issues

Among the many manufacturers of sportswear, there are clear leaders. They have been setting the trends for other companies for decades with their innovative technologies and the highest quality sports equipment. Under Armor loses to its main competitors: brand sales are declining, including in the North American market. For the 3rd quarter of 2019, the company’s net loss amounted to $17.3 million against a loss of $95.5 million a year earlier. Under Armor, revenue grew by only 1.5% on an annualized basis, while sales in the U.S. and Canada decreased by 3.2%, and store traffic decreased as well.

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In 2019, the company’s share in the sports shoe market decreased from 3.2% to 2.7%, and in the clothing market – from 6.4% to 5.6%. Nike and Adidas remain the main competitors of the brand in 2020, as well as Fila and Puma gradually increasing their market share. Under Armor expects to open more stores outside malls and develop online sales attracting more customers through targeted advertising. Thus, Under Armor has not the best position in the market and is not a strong enough competitor for other brands. Thus, one of the ways to develop a brand is a promotion by developing a compelling brand policy.

In 2019, Under Armor came under investigation by the U.S. Department of Justice. Officials suspect management of the company fabricated reports and overstated sales, trying to hide specific problems. During the investigation, officials of the Department of Justice visited the Under Armor headquarters in Baltimore, hoping to get answers to their questions. This investigation did not significantly affect the brand’s reputation but did not go unnoticed.

Under Armor admitted that since 2017, they have been cooperating with investigators and providing documents regarding financial statements. The company’s management at the same time claimed that there were no violations. In 2016–2017, the finance department at Under Armor was led by Chip Molloy, who was unexpectedly dismissed. The company explained this with personal reasons but did not specify what exactly happened. After Molloy’s departure, the company recognized a decline in sales and made changes.

Technological issues

Under Armor clothing, footwear and accessories are “armed” with unique technologies that provide athletes with first-class comfort, safety and thus help them achieve maximum athletic performance. In the manufacture of sneakers, UA uses many unique technologies. These are, for instance, high-quality breathable and high-strength materials and a special technique for cutting patterns. Moreover, shoes are made on high-tech equipment under strict quality control. Various technologies allow the company to make shoes as good and comfortable as possible. For example, Under Armor Spine technology allows creating the maximum lightness of the sole, providing excellent foot support. Material Charged Cotton, combining the properties of cotton and polyester, is highly washable and provides long-term operation.

New technologies and materials have also been developed in the field of clothing. For example, ColdGear Infrared is a heat-conducting layer that helps condensate excess heat. Another technology named ArmourBlock ensures the dryness and freshness of clothes during a long workout. One more invention is UA Scent Control, which includes zeolite and silver in synthetic fabric. It allows manufacturers to reduce hygroscopicity and prevent odors. Thus, the company aims to ensure that its products are relevant for athletes who care about not only appearance but also many other characteristics.

Social issues

Now many predict the imminent decline of UA, but there are no objective reasons for this. They have many opportunities to grow, even despite a high level of competence. This company remains a brand for professional athletes primarily, however, the shoe market and women’s sportswear can bring in many times more revenue than all that is now. It means that UA can make new products and keep developing according to the needs of customers. In addition, the company can very quickly integrate into new trends and keep up with the market. For instance, UA bought Endomondo, MapMy Fitness, and with them nearly 150 million users for $6 each. Thanks to this, the company was able to approach the performance of larger competitors and declare itself. This causes recognition in the sports environment and confidence in brand products.

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Moreover, Under Armor are open to the new and technological, for example, they have an Innovation Challenge. This is an open competition where everyone can come up with their idea. There are two main criteria of these ideas: technological effectiveness and the possibility of using them in the company’s products. The winners receive $50,000 and the opportunity to work on their project in Under Armor. The last two winners are a night jogging shirt with integrated LEDs and a one-handed magnetic zipper. The judges are the top management of the company, led by Kevin Planck. Talking about this contest, he stated an idea that supports potential participants. If people can think up and implement something, it is excellent, but if not, they can come to UA and do it together. This approach makes consumers believe in the company and want to grow with them.

References

Subramanian, Ram and Pradeep Gopalakrishna. “Under Armour.” Strategic Management and Business Policy Globalization, Innovation and Sustainability. 14th ed. Ed. Thomas L.

Wheelen, J. David Hunger, Alan N. Hoffman, and Charles E. Bamford. Upper Saddle River, NJ: Pearson Education, 2014. 20-1 – 20-12. Print.

Momin, A. (2021). Under Armour SWOT Analysis 2020: Case Study in 4 Steps. PESTLE Analysis. Web.

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