[Baltimore Sun] Under Armour launches charm offensive with new Baltimore HQ, as share price wobbles
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Store mannequins that dot Under Armour’s flagship store at its new corporate campus appear to play soccer, dribble basketballs and turn handstands, part of a long-planned retail venture that opens Thursday and represents both milestone and challenge for the Baltimore brand.
It represents a new chapter for a brand struggling to regain relevance in a crowded sports apparel market as it navigates sales declines and a turnaround plan.
Under Armour’s stock has lost around 20% in the last 12 months, as its share price fell to a 52-week low of $6.17 from $11.89, prompting pressure from investors that has made headlines and changed analyst targets. Shares of Under Armour have fallen around 80% since 2015, a loss of nearly in $18 billion in market value.
Under Armour stock closed down 27 cents Wednesday at $9.12 each.
The Brand House store, the company’s second largest, anchors a five-story headquarters building where employees began moving in last week from Tide Point in nearby Locust Point.
It marks the completion of Under Amour’s piece of the massive Baltimore Peninsula redevelopment after the campus faced years of delays and downsizing.
And it is one of the crown jewels in a restructuring plan announced when founder Kevin Plank stepped back into the CEO role after four and a half years.
Under Armour said it plans to use the 24,000-square-foot Baltimore Peninsula store to test its “Sports House” concept, parts of which would be rolled out eventually at all 1,400 full-price Brand House stores.
It is aiming for “an elevated experience for athletes,” with well-curated product assortments, Plank said earlier this month.
That streamlined approach fits into the turnaround plan, which calls for a shift from a scattergun approach to sales to one that’s simpler, with fewer product variations, less reliance on promotions and discounts and a push toward “premium” brand positioning.
Plank immediately called for a 25% reduction in products, a move the company says will make it more efficient and less confusing for both consumers and retailers who sell the gear.
Besides bringing customers to the doorstep of corporate teams that design and test products, the store is expected to offer insights on traffic patterns, merchandising, product testing and response to color and styles.
“The store will serve as a living laboratory to inform how we think about what perfect looks like for our entire fleet,” of stores,” Plank said in a Nov. 7 call with analysts.
Out of favor with parents and kids
Coming on the heels of previous company chapters, including a period of explosive growth, followed by sharp slides in sales and stock price, changes in top leadership, including CEO, and several restructurings, company leaders now say they’re on track, with a strong balance sheet, positive cash flow and little debt.
Consumers are expected to spend about $5 billion on Under Armour products in the current fiscal year, according to analyst estimates.
Analysts say Under Armour has made progress in its reset, achieving a higher mix of full-price sales, better-than-expected gross margins and better-than-expected operating income during the most recent quarter.
Others say the company is losing market share, especially in the U.S., partially as it pulls back from some categories and channels, and that it needs to project a greater sense of purpose.
Other retailers have tried the same strategy, and investors often welcome it, said Neil Saunders, managing director of GlobalData Retail in New York.
“While general awareness of Under Armour remains strong … it has fallen out of favor with parents and kids alike,” Saunders said in a report earlier this month. “It tends to perform better on basics and essentials, but when it comes to more fashionable and performance-related purchases it is lower down the batting order.”
Sharon Zackfia, an analyst with William Blair, praised efforts to eliminate redundant products and reduce overall promotions and markdowns.
The latest basketball shoe release in the NBA superstar Stephen Curry line performed well, she said. Still, she said, in a report issued after the company’s latest quarterly results earlier this month, a massive brand reset takes time and has risks.
“Under Amour’s ability to maintain and evolve a strong brand image and product portfolio in an industry with intense competition, historically high turnover rates in senior management, and majority voting control held by CEO Kevin Plank,” she said.
The company declined to comment on the record about criticism that Plank has had a hard time stepping away from the company as a founder and allowing new CEOs to do their jobs without his constant presence.
All things Curry and footwear
At the Baltimore Peninsula store, Under Armour’s efforts to make inroads in the sportswear casual category are evident, as are reminders of its performance-based sports apparel roots.
One area is dedicated to all things basketball and to Curry. There’s a youth zone, where shoppers can use interactive stations to test arm strength, jumping ability and mind agility.
A footwear zone is centered at the store’s core, fitting for a brand striving to grow in that category, with athletic shoes displayed not by men’s and women’s but by activity and sport, from cleats to the sneakers designed for young athletes use both on and off the court or field.
The company declined to answer questions on the record about how Under Armour took a hit when it launched the SlipSpeed, a running/slip on hybrid shoes.
The product’s rollout was given a lot of hype, but the shoe gained middling traction with consumers despite a fast-track debut and major marketing, the Wall Street Journal reports. But it never became a must-have, the Journal reports, and it has seen its pricing fall around 50% from its debut, as retailers have adjusted to demand for it from consumers.
The store’s main entrance highlights the invention of the sweat-wicking base layer shirt that launched the company.
“[Stores in the past] were designed to have the footwear in the back, like the milk and bread of the supermarket, but we wanted to make it the heart of the store,” said Taylor Swartz, Under Armour’s lead for visual marketing for full price U.S. stores. “We wanted it to be really open. This is a visual break to make this feel really special.”
On Wednesday, a day before the opening, cleaning crews polished floors, workers put finishing touches on construction and retail team leaders arranged displays.
They were working toward a mid-afternoon deadline and preparing for a late afternoon visit from Plank and other top management.
The store sits at one end of the main building, where all of about 1,500 employees are expected to complete moves by the end of December.
Construction started in December 2022 on the 280,000-square-foot headquarters building and athletic field complex, where the company already had some corporate offices on the 50-acre peninsula jutting into the Middle Branch south of Interstate 95.
Company officials say they expect operating costs to be lower than at Locust Point because seven buildings have been consolidated to one, and more efficiency will be gained from features such as solar-generated energy and a rainwater collection system.
Under Armour anchors the larger redevelopment of Baltimore Peninsula, a former industrial area known as Port Covington with a first $500 million phase of new offices, hotels, apartments and shops.
The company said it continues to evaluate the future of its six owned buildings in Locust Point. So far, two lots on Hull Street are for sale.
Have a news tip? Contact Lorraine Mirabella at lmirabella@baltsun.com, (410) 332-6672 and @lmirabella on X.
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