After experiencing possibly the worst 3rd and 4th Quarter in the history of the company in 2016, can it get worse?
I don’t think so. I think Under Armour is at the bottom of where they can go. Do I realize that they are now selling everything on their website at a reduced price? Do I realize that they are even marking down apparel in their new relationship with Kohl’s?
Yes and yes. These aren’t good signs. I also recognize that they have done an extremely bad job of dealing with the issues in basketball footwear. They have however introduced a few models in footwear that are performing very well. The Slingflex could be a life preserver for footwear.
What are my predictions?
The current stock price for Class C $UA is 19.10. The brand saw a drop to 17 when Foot Locker failed to mention the brand during their recent conference call. Class A $UAA is at 20.93 which is trending up after hitting a low of 18.98. Class A is a bit more important. This is the stock that dropped dramatically since October 2016. Class C was a smart move to launch because in that stock Under Armour could bolster investment.
This doesn’t give you my predictions however. Here we go.
- UA will discuss digital and their performance technology and running shoes designed to interact with their suite of digital acquisitions. I have long thought that these acquisitions did little to inspire interest in the brand and actually pulled resources away from the athletes. Digital will not inspire confidence and will not move the needle in regard to the stock.
- Plank will discuss the “Trump” situation and continue to distance the brand. He should not gloss over it, but he should take it head on explain the diversity of the company, and he should show a strong support of the athletes and stand lockstep with the athletes in refuting the negative aspects of this administration. If he does this and then establishes that the brand is leaning heavy into it’s athletic roster for inspiration this will make the market respond better.
- He should discuss The Rock and Threadborne as two positives that show the direction the company is headed. Threadborne has been a revelation. While the rollout of apparel just happened, it should be performing well and the Slingflex is a great product at the right price.
- Kohl’s will feature prominently. The question should be why is Kohl’s doing all of the heavy lifting. There have been some excellent short campaigns from Kohl’s supporting the launch. Under Armour however hasn’t done anything. This relationship is too early to gauge, but the discussion on the relationship can inspire confidence.
- E-commerce, DTC and poor sales at chains will be a topic that will be downplayed, but should be addressed. The company will have lower margins because they have been pushing sales all quarter. The retail numbers will hurt and cause a lack of confidence.
- Curry 3.5 should be a focus and the brand should stress that Steph Curry remains a priority. What would truly help with confidence is a rollout of a multifaceted campaign on the superstar player. Since Curry 3’s release in September of 2016 Under Armour has only produced 1 campaign for Curry. If Plank doesn’t show that he is completely invested in Curry shares will not shift.
- The MLB rollout will be addressed, but only in regard to Fanatics and Majestic and if the confusion there will create issues as the brand moves toward the 2020 takeover.
7 points that will be discussed, or should be presented. What will be the outcome? I think Class A and C will remain steady. There will not be an increase and the market won’t panic anymore. Class A $UAA will uptick to 21/share. Class C will stay at 19. The job at this point is to establish that the slide is over and things are rebounding for the brand.
Let’s see if I’m right. use the source link for more info.