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Under Armour’s Founder Returns To Guide Turnaround
Kevin Plank, who founded Under Armour in his grandmother’s basement in 1996, is returning as CEO to get his brand, once hyped as the next Nike, back on a growth trajectory.
Plank built Under Armour into a $5 billion brand but stepped down four years ago after sales began flattening in part due to a number of bankruptcies in the sporting goods channel, including Sports Authority, but also because of heightened competition from the likes of Nike, Adidas, and Lululemon.
Some analysts have felt Under Armour’s focus on performance led the brand to miss out on the athleisure trend and casual dressing opportunities overall. Opening distribution to department stores, including Kohl’s, may have alienated former fans. Plank’s initial CEO exit also came amid allegations that the firm had a male-dominated culture.
His successor, Patrik Frisk, lasted only two years. Frisk earned credit for executing a multi-year restructuring that streamlined operations and distribution. However, Plank at the time of Frisk’s exit indicated that Under Armour needed to “pivot to offense.”
Plank will replace Frisk’s successor, Stephanie Linnartz, who lasted only 11 months. A former Marriot executive, Linnartz launched the UA Rewards loyalty scheme and a three-year turnaround program focused on building out women’s apparel and “sportstyle” products. However, sales have fallen short of targets this year amid elevated apparel inventories across retail.
In a LinkedIn post, Plank, the company’s controlling shareholder, thanked Linnartz for her contributions, particularly numerous recent product and branding hires, while noting that his time away from his CEO role has taught him “many lessons — professionally and personally.”
Plank added, “The experience of not being a CEO has taught me more about what it truly means to be a CEO. I am deeply humbled to have been entrusted by our Board to lead Under Armour at this pivotal time for the company.”
Shares of Under Armour plunged about 12% last Thursday after the leadership transition was announced, likely due to concerns about the rapid CEO changes and risks of additional management turnover.
On a positive note, Wedbush analyst Tom Nikic wrote that his conversations with the company indicate Plank is “coming back for the long haul,” likely resulting in more consistency in brand approaches. He also said that unlike his prior time as CEO, Plank has “somebody to answer to,” with lead director Mohamed El-Erian, chief economic advisor at Allianz, replacing Plank in the role of chairman.
Plank’s return reignites the debate over the value of “boomerang CEOs,” or CEOs returning to their former roles. Plank’s familiarity with the company could provide him with an advantage in addressing challenges, although he may revisit past antiquated approaches.
Apple’s Steve Jobs is often cited as the big win among returning CEOs, while Myron Ullman’s JCPenney return has been cited among disappointing encores. Other major companies that have seen CEOs return in the retail or consumer space over the years include Starbucks, Dell, Best Buy, Disney, Panera Bread, Google, and Urban Outfitters.
Discussion Questions
How confident are you that founder Kevin Plank is the right CEO now to steer Under Armour’s sales recovery?
How would you assess the advantages and disadvantages of a returning CEO?
Poll
Loading …BrainTrust
Lisa Goller
B2B Content Strategist
Shep Hyken
Chief Amazement Officer, Shepard Presentations, LLC
The problem with Under Armour was not Stephanie Linnartz. The problems are a lack of focus on what the brand wants to be, extremely poor distribution strategies with terrible wholesale accounts, taking its eye off the ball on product innovation, a scattergun and constantly changing approach to merchandise. It’s hardly surprising that Under Armour has been losing market share. And a lot of these problems can be traced back to Kevin Plank; they’re not new. What we need to see now is a very clear and integrated strategy for making Under Armour relevant again.
Having a CEO that has no experience in the industry is a risky play, and it clearly didn’t work out for Under Armour. From the outside, it’s impossible to say if it was due to the ineffectual new CEO or if was a result of other factors inside the business. But it doesn’t matter. Under Amour needs to change again, and having the founder come back may not be a bad idea. Bringing in another industry outsider at this point seems even riskier. As the founder, Kevin Plank will have knowledge of the business and depth of experience that is unmatched by any external candidate. And while founders don’t necessarily make the best CEOs, at this stage I would say it’s the best play for Under Armour. The downside is that Plank may not have the vision or stamina to lead the company, and instead of innovation merely recycles past strategies.
Under Armour had such potential. It’s difficult to say now that their rising moment may have passed.
For a company this size and this mature to have three CEOs in four years is an indication of something fundamentally out of alignment within the organization. If Plank were the answer, I’m not sure the company would be in this position right now.
Plank coming back as CEO, but not as Chairman will either be a catalyst for their fifth CEO or, leadership will realize that success is fleeting and this may be Under Armour’s last chance to grab hold of it.
UA has had some brand successes, but not lately. Frisk did a good job with some operational moves, but in the end couldn’t get out of Plank’s shadow. Will El-Erian truly have the chairman’s role with accountability is the question. Plank as a brand leader may be a good move in returning, but he needs to rely on operational expertise, which he hasn’t seemed to value in the past. He needs a strong team underneath him to support the execution, and that’s been an ongoing challenge for UA.
Kevin Plank left his CEO position amid controversy. He returned because he owns 65% of the voting shares. Under Armour doesn’t need to be the next Nike or Adidas. It needs to be a bigger “Under Armour.” Can they pivot back?
As far as Under Armour, the brand means performance. If there was a mistake in brand strategy, it was moving into other segments rather than doubling down on performance and technology for performance.
It’s hard for company founders to walk away, no matter the industry. (And it’s even harder when they are the majority shareholders.) The history of retail (and business in general) is full of failed succession stories like this one.
The question now facing Under Armour is whether Plank can recover the brand’s growth trajectory — but with a more disciplined operation than before and in a shrinking world of retail accounts. Direct-to-consumer may turn out to be Under Armour’s biggest chance at growth.
Returning CEOs often realign their workforce with the brand’s core values or offer steady leadership in times of massive transition. Their time away has given them a fresh perspective of what needs to change and how to do it because they took time to reflect on lessons learned.
Plank says that he has learned “many lessons”. If that is truly the case, then this could be a great move. The founding of UA was brilliant but this isn’t a founding story any longer. It’s a mature brand in a mature market with brutal competition. And the mission is to demonstrate differentiation and distinction from the key competitors. Nike is one of the great storytellers in retail. UA needs to rise to that level of storytelling. Great product with great marketing. They’ve had both in the past, but allowed themselves to become distracted. So let’s see what Plank has learned.
This brand and its problems have been a mystery to me because I have never bought one of their articles of clothing – I have many – that I didn’t not just like, but admire. The mystery has been why has it not done better. Under Armour knows how how to make good, durable athletic wear.
Okay so we have already seen this movie. If his return is successful, it calls into question why he left in the first place. I remember something about allegations around an inappropriate relationship with a journalist. How involved was the board with his first departure. Now everyone wants the magic back. If he is unsuccessful he can simply state the company was beyond fixing.
No risk move for Mr. Plank. The board, on the other hand, should be looking in the mirror. Just my view.
Will the Steve Jobs/Apple story repeat itself at Under Armour? That would be exciting!
For Under Armour’s sales to move higher, the company will have to understand the industry’s changing expectations and give customers what they want: athleisure offerings. The alternative is to focus on workout apparel and miss the massive opportunity that others like Lululemon, Atheltica, and others have capitalized on.
Lululemon and Athletica are synonymous with athleisure, while Under Armour is synonymous with performance. In the shopper’s mind, the two will never meet.
I think it’s worse than that. Because of all the chopping and changing, I think consumers are very confused about Under Armour.
Under Armour needs a brand refresh, not a brand rewind. They need to own a clear position in the customer’s mind. Define what they stand for. And what they don’t. They need to become more data driven (product attributes, digital demand signals, etc.) so they can improve inventory forecasts and turns, and reduce their inventory carrying costs. Building a company and leading it through growth is not the same as optimizing and rebranding. So we’ll see.