Home Business US company hopes to restore brand name following Justice Department’s investigation

US company hopes to restore brand name following Justice Department’s investigation

After facing many setbacks in 2019, Under Armour, an American-based manufacturing company is looking for a come back. It is heavily investing in the quality as well as digital technology to make its products more competitive.

Under Armour

Huge Under Armour billboards dot the streets of Baltimore, with photos of famous athletes sponsored by the sports equipment supplier, like heavyweight boxer Anthony Joshua or quarterback Tom Brady.

And the signs feature the company’s new slogan: “The Only Way is Through.”

That catchphrase could well apply to the company itself as it tries to move forward after a tumultuous 2019, marked by a drop in sales in North America, news of investigations into accounting fraud and a leadership shake up.

In early January, Patrik Frisk took the reins of Under Armour, succeeding company founder Kevin Plank, who retained his post as executive chairman of the board and pledged to remain actively involved in the management of the business.

The announcement in late October of Plank’s exit and Frisk’s promotion from his post as chief operating officer raised some eyebrows.

It doesn’t mean that our products don’t have great design. They have to. But at the end of the day, if it is design for design sake, we shouldn’t be doing it

But a few days later the company confirmed a report by The Wall Street Journal that US authorities — the Justice Department and the Securities and Exchange Commission — were investigating its accounting practices.

The probe began in the summer of 2017 but the company had not revealed it to the investing public.

Frisk stepped in at this delicate time with the mission to restore the brand’s tarnished image, which was also damaged by revelations of employees visiting strip clubs at company expense, a practice halted in early 2018.

At an event at the group’s headquarters in Baltimore last week, 56-year-old Frisk said preparing the new advertising campaign had been “a long journey for the team.”

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“You want to get this out quickly. But you’re holding it back and you want to get it perfect,” the Swedish-born executive said.

Launching the campaign with great fanfare, Under Armour called on a number of its superstars: former swimming champion Michael Phelps, skier Lindsey Vonn, who recently retired from the slopes, French judoka Teddy Riner, and NBA star Joel Embiid of the Philadelphia 76ers, who took advantage of the occasion to launch his own brand of sneakers.

Focus on performance

To distinguish itself from rivals who have invested massively in the “athleisure” sector — fashion inspired by sports but where actually playing is not a requirement — Under Armour emphasizes the quality of its products.

“We’re not fashion, we’re performance,” says Jim Mollica, head of digital strategy and marketing for Under Armour.

“It doesn’t mean that our products don’t have great design. They have to. But at the end of the day, if it is design for design sake, we shouldn’t be doing it.”

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Among the innovations presented at the Baltimore headquarters, Under Armour unveiled a T-shirt with fibers that absorb sweat at record speed, a bra that offers better support during exercise, and a space suit developed for Virgin Galactic, the company of British billionaire adventurer Richard Branson who promises to make space a tourist destination.

Under Armour is also betting on digital technology, in particular with its connected sneakers. The shoes are equipped with a chip capable of tracking the slightest movement, offering athletes a wealth of data on their training and progress using mobile apps.

“We have the largest health and fitness community in the world with 285 million registered users on our digital platform,” Mollica said.

Uncertain future

Some industry experts, however, predict difficult months ahead for the manufacturer, which on February 11 will announce results for the final quarter of 2019 and present its annual forecasts.

“I think Under Armour kind of lost it many years ago,” Chip Wilson, founder of competitor Lululemon, said in early January on CNBC.

He said the 2017 bankruptcy of sporting goods retail chain Sports Authority, one of Under Armour’s key partners, was a blow to the brand, which still has not found a way to adapt its sales model.

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Noting the continued slowdown in sales in the North American market, JP Morgan analysts have cut their target for Under Armour’s share price for the 2020 fiscal year.

Created by Plank in 1996, Under Armour experienced a meteoric rise, putting it in competition with long-dominant brands Nike and Adidas. In 2018, the company’s turnover was $5 billion, compared to revenue of $36 billion for Nike and nearly $22 billion for Adidas.

But the group has struggled to keep up since then and this year will be a pivotal one: Will it recover or see its decline accelerate?

AFP with Additional input by GVS news-desk.

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