As the pandemic continues to reshape retail in dramatic ways, Under Armour joins a growing list of major players who are making big changes to their wholesale strategies.
The athletic brand, which saw some progress in its turnaround during the third quarter, said it will begin to exit 2,000 to 3,000 stores in North America, its largest market. By the end of 2022, it expects to be in about 10,000 doors, executives said in a conference call today.
But CEO Patrik Frisk wants to send a strong message about what exactly that means.
“I just want to make it very clear, we’re going to grow in North America. I think that’s incredibly important to state,” Frisk emphasized. “I think the composition of that growth is going to change over time.”
Sam Poser, an analyst with Susquehanna Financial Group, said that while revenues could be pressured in the near-term, cleaning up distribution is always a positive. He questioned how far Under Armour would go to “achieve premium brand positioning” and which retailers might be on the block.
As it overhauls wholesale, the brand is also upping its focus on direct-to-consumer channels, where it plans to offer fewer promotions and discounts to fuel healthier margins.
The move follows larger rival Nike’s recent decision to cut ties with Zappos, Belk, Dillards and forge ahead with its Consumer Direct Offense plan. In the fashion space, notable names like Tapestry have also signaled they will push DTC.
Under Armour reported today adjusted third-quarter earnings of 26 cents per share and an adjusted income of $118 million. Analysts had anticipated earnings of 5 cents per share. Revenues, on the other hand, remained flat at $1.4 billion but still beat Wall Street’s expectations of $1.13 billion.
Shares of company were up about 1.5% to finish the week at 12.23.