Under Armour is not out of the woods yet.
The company, whose stock has tumbled 30% so far this year, reported its first-ever operating loss in the first quarter of 2017.
Analysts following the company have been a bit harsh on the company, mostly criticising the company for missing athletic apparel’s shift to more fashionable clothing.
Giving Under Armour a “neutral” rating, analyst Christopher Svezia wrote that the company’s more technical clothing offerings were out of step with the lifestyle products desired by consumers and that as a result its “ability to return to its former glory is unknown.”
Apparel and footwear created with a lifestyle focus make up less than 5% of Under Armour’s total sales, according to Svezia, though the company has been taking steps to offer more options in that category. Svezia says missing the trend has Under Armour playing a high-stakes game of catch-up.
“It will take years for the category to have a measurable impact to the company with potential starts and stops along the way as lifestyle requires more trial and error and sample testing than core basic technical gear,” he said.
The company has previously acknowledged that it misread the upmarket trend of athleisure, instead relying on copious logos and basic styles of sportswear.
“We need to become more fashion,” CEO Kevin Plank said during a call with analysts after the company’s latest quarterly earnings report. “The consumer wants it all. They want product that looks great, that wears great, that you can wear at night with a pair of jeans, but that also does perform for them.”
Under Armour launched Under Armour Sportswear in 2016 as its effort in the athleisure space, in partnership with designer Tim Coppens. With its $US1,500 trench coats, it has failed to make the splash the company was hoping for, and it’s likely the company is still missing the medium between mass market and high end that competitors like Nike and Lululemon inhabit. The company is looking to fix that when it launches its first style-oriented mainline in the fall in earnest.
Under Armour has also relied on basketball sneakers to lift its nascent shoe offerings, which has collapsed underneath them as the basketball shoe trend died. It’s now started releasing more fashion-forward shoe offerings like the Threadborne Shift, a sneaker that takes significantly greater cues from current trends.
Nailing athleisure is critical for Under Armour because it is the chief trend in North America, which accounts for 80% of the company’s online sales. The athleisure trend isn’t going anywhere, industry experts have told Business Insider.
Under Armour’s brand is still strong among competitive athletes and the youth, so it’s conceivable they can create a cult around their products the way Nike and Adidas have done. But it all comes down to producing product customers want to buy.
“I think we’re going to see them do a lot more product that doesn’t look like it’s meant for the gym, but does have performance characteristics,” NPD Group industry analyst Matt Powell told Yahoo Finance. “And that’s a hard shift to make, but it’s not impossible. Every brand has had to do this.”
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