Under Armour Layoffs and Why Connected Fitness Was a Mistake | 2nd Quarter 2017

Source: http://investor.underarmour.com/releasedetail.cfm?ReleaseID=1035246

Under Armour Conference Call this Morning: http://investor.underarmour.com/eventdetail.cfm?eventid=183715

With over 200 Layoffs on the horizon, similar to Nike in the recent months, Under Armour can’t carry the weight of this setback. The company has been the orchestrator of its own problems.

I wrote these articles in the past year:

Why “Under Armour Sprinting Past Its Footwear Sales Goals” Is Dead Wrong

How Under Armour Has Failed Steph Curry

The first post explains why the acquisition of digital companies was not the path to pursue. In the follow up article I discuss how Under Armour failed Curry and by definition the rest of its company by spending so much time promoting and trying to figure out the acquisitions as opposed to creating great product and developing stronger marketing campaigns.

In the last two weeks Under Armour finally nailed marketing, but this success is a little too late and like last year at this time they have failed to correct the ship in the US and continue to try and build everywhere. Curry is touring Asia when at this moment UA hasn’t figured out home.

I get that sales are down in the US, but why is adidas performing so well if that’s the case. Of the big three adidas is the only company hiring instead of laying off percentages of their workforce. There is a reason for this. adidas focused on brand, marketing, and product. It seems simple enough, but when you click the source link at the top scroll down to the Connected Fitness section on the spreadsheet and you will notice that the revenue generated from Connected Fitness is around 20K for the quarter. The interesting thing in the spreadsheet however is that Connected Fitness and Footwear, an area that obviously has the most room for growth are the only segments down for the brand.

In the Curry article I explained that Connected Fitness replaced the marketing that was done from Curry 1 to Curry 3 and that this focus on digital, which was represented on the brands webpage heavily in the past year in lieu of developing marketing ideas around the athletes and brand, was a mistake.

I also think that the alignment with Kohls has helped to contribute to the discount attitude associated with the brand. That’s a different story that is more nuanced and moves me towards why I think Under Armour should regain control of their market while they are in this tailspin. They should continue the relationship with Kohls, but look at Birkenstock and what they did with Amazon. Another story, for another day.

Digital tech in footwear is a red herring. It’s not the last connective tissue to the retail market. You know what is?

Misty Copeland | Under Armour | Unlike Any is Brilliant

Ehtos, Pathos and Logos… Beautifully crafted products that show the customer that you understand their dreams and goals, delivering product that makes sense to the market with an emotional connection. The Unlike Any campaign is the best marketing that the company has done, but instead of developing products and campaigns that connect to the emotion of the people, Under Armour built tech at the expense of the rest of the company. Connected Fitness was a mistake. Is it needed? Information is power, but sometimes product and emotion is more important. It’s right there in the numbers.

 

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Chris Burns
Chris Burns
Founder, Writer and Webmaster at ARCH & CBP
Chris B. is the founder of ARCH.

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