- Letter from the CEO
- Key Financials
- Board of Directors
June 27, 2024
Dear Shareholders,
Since Under Armour’s founding nearly 30 years ago, our goal has been to deliver industry-leading, innovative products that empower athletes to perform at the highest levels of competition. With a heritage centered on athletic performance, Under Armour is one of only a few podium brands with the credibility of being recognized worldwide as an authentic, on-field, court, and pitch performance brand. It is a privilege we do not take for granted and represents an immense responsibility. While our strengths are undeniable, we have been inconsistent in recent years in how we show up in the market, articulate stories to consumers, and deliver industry-leading products every day.
At our best, we can deliver incredible innovations and storytelling. In our fourth quarter, we delivered six new footwear drops – Infinite Pro, Infinite Elite, SlipSpeed Mega, and Apparition in running, new Curry colorways at the NBA All-Star game, and Drive Pro in golf, yet we showed up quietly. However, at this year’s Boston Marathon, UA athlete Sharon Lokedi took her third podium wearing the Velociti Elite 2 running shoes – and ahead of the race, our team did a fantastic job flooding social media channels with our messaging. These examples, our SlipSpeed footwear franchise, Unstoppable collection, and women’s Meridian products, demonstrate the power of fully aligning our product and marketing engines.
Moreover, Under Armour delivers some of our industry’s highest-performing innovations and materials sciences, including moisture-wicking, body temperature management, cushioning, compression, and sustainable fabrics. Still, we’ve not consistently communicated our product advantages to athletes – what it is, what it does, and how it will make them better.
This will change. If a product is important enough for us to develop and release, it’s important enough to celebrate with storytelling – if not, we won’t make it. That is a crucial focus of our work as we reconstitute our brand, particularly in North America, moving forward with clarity around our purpose of empowering those who strive for more.
In fiscal 2024, we faced a challenging macroeconomic environment and increasingly competitive industry dynamics, which included historically elevated inventories and a constant drumbeat of promotions. Amid these conditions, our revenue declined 3% to $5.7 billion, primarily due to challenges in our North American business. Even so, our gross margin improved 130 basis points to 46.1%, driven mainly by supply chain benefits, and our adjusted operating income and adjusted diluted earnings per share were in line with the outlook we gave at the beginning of the year.
Due to a confluence of factors, including lower wholesale channel demand and inconsistent execution across our business, we are seizing this critical moment to make proactive decisions to build a premium positioning for our brand, which will pressure our top line in the mid-term. Under Armour embraces its underdog spirit, and we have the grit and determination to tackle this next chapter. The output of this work will take time, but we are moving with urgency to deliver consistently across our business. We have refined and simplified our Protect This House strategy to concentrate on three main priorities to reposition our business: achieving more, doing less, and focusing on our core fundamentals. This is what you can expect from us:
- Delivering Products and Storytelling. We will prioritize our core performance and technical innovation competency to avoid competing on price, particularly in North America. To do this, we are editing our product offerings and working to better communicate our product advantages to athletes in the near term – doing more with less and being more intentional with our future offerings by focusing on “better” and “best” level products and driving greater operational efficiency. While a critical mass of elevated offerings won’t fully come to market until the fall/ winter 2025 season, in the next 18 months, we plan to reduce our SKU/style count by 25% and add greater flexibility and speed to our go-to-market capabilities. We are also prioritizing our core men’s apparel business, reorganizing our product and marketing teams around our largest revenue sports categories, and ensuring that our authenticator of Team Sports, like basketball, football, and American football, is front and center to maintain a relationship with our targeted 16-24-year-old athletes. Brands are built with consistency, and we will strengthen our brand in this chapter.
- Running Smarter Plays. We allowed ourselves to become overly complex in the last few years. We will be more intentional, simplifying our design language and how we operate. We will streamline our operating model, modernize our supply chain and planning processes, and optimize our cost base to drive greater efficiencies and, ultimately, better profitability. This includes assigning single points of accountable leadership within our product, marketing, and sales organizations to stay fully aligned as we deliver go-to-market strategies focused on our athletes’ needs, giving us greater visibility into the category and product performance critical to creating greater agility and adaptation.
- Elevating Consumer Experiences. Our work to elevate the Under Armour brand experience, become more premium, and build better connections with athletes is of particular focus as we look to address our North American business. We will make our eCommerce business a premium platform by deliberately reducing promotions, discounting, and harnessing the growing power of our UA Rewards loyalty program. As a companion piece to this, we plan to increase the awareness and velocity when we release new products – becoming a brand of launches with performance solutions athletes never knew they needed and once they’ve tried them, cannot imagine living without them. We also have a meaningful opportunity to elevate our retail consumer experience at our Brand Houses, which must become a premium showcase for UA, and at our Factory Houses, where we see additional opportunities for margin expansion and a better, more curated expression for our consumers. This North American focus does not mean we’re taking our foot off the gas in international markets, which remain an essential part of our business. We will maintain high-quality sales across all channels and protect our premium brand positioning in every region worldwide.
With these priorities, we are leaning into the things that work well and reducing the complexity that has distracted us from our core mission – to make athletes better. We have a strengthened and experienced management team, the talent and determination to deliver on these objectives, and a strong balance sheet, as evidenced by our Board’s recent approval of a three-year, $500 million Class C share buyback program.
Our strategy will take time to come to fruition. As we execute against our goals – we will remain disciplined in our efforts to strengthen Under Armour, provide stability, and focus on consistent execution to deliver better results for all stakeholders. I am honored to be back leading this iconic brand, and I am excited to bring a clear sense of purpose and 100% commitment to unlocking our full potential and generating more consistent value creation in the future. While on this journey, we will continue to care for the Under Armour brand, our teammates, and our communities, including our home in Baltimore, as we move into our new headquarters later this year.
Thank you for your continued support.
Kevin A. Plank
President and Chief Executive Officer
Under Armour, Inc.
