The brand catapulted to prominence in the mid-2000s with sleek, tightfitting “performance” apparel that was a hit with young and professional athletes alike, despite its higher price tags. The company’s testosterone-heavy marketing campaigns carried it to a successful initial public offering in 2005, and it spent the intervening years building out a diversified product line.
The firm dared to challenge Nike in the market for high-end basketball shoes, netting an endorsement from Stephen Curry at the height of his popularity.
Rivals, though, fought back with their own compression wear and kicked off a price war. At the time, the company’s main source of distribution, through big box chains and athletic stores such as Foot Locker, came under its own pressure as shopping moved online. Fewer and fewer people frequented shopping malls, leaving many to close, and the industry was jolted when Sports Authority filed for bankruptcy last year.
“Really every vendor that sells into that [distribution] channel is seeing the repercussions of that bankruptcy,” said Camilo Lyon, managing director at Canaccord Genuity investment bank.
Indeed, Under Armour is hardly the only casualty of the shake-up in retail. Nike has suffered. It announced a round of layoffs earlier this summer.
But unlike Nike and Adidas, which sell globally, Under Armour is still largely a domestic player. For Under Armour, “there was way too much reliance on the U.S. wholesale channel,” said John Kernan, an analyst with Cowen investment bank. “When that music stopped, the company’s growth profile dramatically slowed.”
Under Armour is working to play catch-up. Analysts say the company is making impressive strides in China, where it expects to reach $1 billion in sales by 2020. But about 80 percent of the company’s sales are still constrained to the North American market.