Under Armour faces turmoil as CEO steps down: a retailer’s struggle

Wall Street is not happy that Under Armour founder Kevin Plank is back as its CEO. 

CEO Departure Sparks Investor Concerns

Shares of athletic apparel company Under Armour plummeted approximately 12% following the announcement of CEO Stephanie Linnartz’s resignation after just a year in the role. 

Founder Kevin Plank is set to replace her on April 1, leading to investor uncertainty and analyst downgrades.

Analyst Downgrades and Revised Targets

In response to the CEO transition, both Williams Trading and Evercore ISI downgraded Under Armour and adjusted their price targets downward. 

Williams Trading shifted its rating to hold from buy and lowered its price target from $11 to $8, while Evercore downgraded the company to underperform from in line and slashed its price target from $8 to $7.

Leadership Instability

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Linnartz’s departure marks the second CEO change in less than two years for Under Armour. She succeeded former CEO Patrik Frisk, who took over from founder Kevin Plank in January 2020 but resigned abruptly in May 2022. Plank’s return as CEO further underscores the company’s leadership instability.

Shift in Strategy

Under Linnartz’s leadership, Under Armour focused on overhauling its C-suite, enhancing its loyalty program (UA Rewards), and pivoting its product assortment toward athleisure, particularly targeting female consumers with more stylish options. 

However, Evercore ISI’s downgrade suggests that Plank’s return signals a shift away from this strategy, indicating potential risks for the brand’s long-term prospects.

Challenges in the Retail Industry

Under Armour’s struggles during the holiday quarter reflect broader challenges facing the retail sector, including soft demand in North America and sluggish wholesale orders. 

These challenges, exacerbated by persistent inflation, high interest rates, and shifting consumer preferences, have led to increased caution among consumers and a reluctance to spend on discretionary items like apparel and footwear.

Conclusion: Uncertain Road Ahead

With Plank’s return and ongoing industry headwinds, Under Armour faces a challenging road ahead. 

The company must navigate leadership transitions, address declining performance indicators, and adapt to shifting consumer trends to regain its competitive edge in the retail market.