Photo by Abhay siby Mathew on Unsplash
On August 8, 2024, Under Armour Inc. reported financial results that not only exceeded analysts’ expectations but also indicated a positive shift for the brand under the renewed leadership of its founder, Kevin Plank. The athletic-wear company, in the midst of a significant restructuring effort, raised its guidance for the year, projecting adjusted earnings per share of up to $0.22, surpassing analysts’ expectations of $0.20 per share. Additionally, Under Armour reported $1.18 billion in sales for the first quarter of 2024, outpacing the $1.14 billion forecasted by analysts.
These results highlight Under Armour’s progress and offer valuable insights for Central and Eastern European (CEE) brands facing similar market pressures. The transformation strategies employed by Under Armour provide a potential roadmap for brands in the region, showing that with the right approach, a business can not only survive but thrive amidst industry challenges.
Key Strategies Behind Under Armour’s Turnaround
Simplifying the Product Portfolio One of the most notable steps in Under Armour’s restructuring plan is its decision to reduce its stock-keeping unit (SKU) count by 25% over the next 18 months. This streamlining effort focuses on prioritising "better and best offerings", while decreasing reliance on mid-tier products that are more likely to be heavily discounted.
For brands in the CEE region, a similar approach to simplifying product portfolios could lead to greater focus on quality and innovation, rather than competing on price alone. Reducing product complexity can also improve supply chain efficiency, helping brands allocate resources more effectively while driving consumer interest in standout products.
Refining Marketing and Brand Messaging Kevin Plank has acknowledged that Under Armour’s marketing had become fragmented, with internal silos creating inefficiencies. By consolidating its global and North American marketing teams and bringing a clearer, more integrated approach, the company aims to communicate its product advantages more effectively to its core audience—athletes.
CEE brands can benefit from reviewing their own marketing strategies to ensure consistency in messaging and alignment across channels. Clear and cohesive communication of product benefits is crucial for standing out in competitive markets. Simplifying marketing efforts while enhancing creativity can lead to more impactful campaigns that resonate with consumers on a deeper level.
Focusing on Core Categories Under Armour has made the strategic decision to refocus on its core categories, particularly men’s apparel. Plank admitted that the company had spread itself too thin by prioritising too many product areas. This renewed focus on a key segment is intended to sharpen the brand’s competitive edge.
For CEE brands, identifying and doubling down on core categories can be a powerful growth strategy. By honing in on the product segments where they excel, brands can build stronger consumer loyalty and improve market positioning. However, this does not mean neglecting other categories; instead, it requires a clear understanding of which areas drive the most value and how to balance priorities across the portfolio.
Rationalizing Corporate Operations Under Armour has also recognized the need to streamline operations at the corporate level. The company is reducing the amount of external consultants and cutting unnecessary meetings and distractions. This operational discipline aims to foster a more agile and efficient organisation.
CEE brands can similarly benefit from reassessing their corporate structures to eliminate inefficiencies and focus on what truly drives business success. Streamlining operations, reducing unnecessary costs, and empowering teams with clear objectives can help brands become more responsive to market changes and customer needs.
Reinventing Retail Concepts Under Armour is piloting new retail concepts that emphasise storytelling over product abundance. These new stores will feature fewer products, allowing the brand to tell more compelling stories about key launches. This shift reflects a broader trend in retail, where experiential shopping is becoming increasingly important.
For CEE brands with physical retail presences, rethinking the in-store experience could be a valuable strategy. Moving away from cluttered, product-heavy environments and towards more curated, experience-driven spaces can help differentiate brands and enhance customer engagement.
The Road Ahead: Challenges and Opportunities for CEE Brands
While these strategies hold significant potential, implementing them is far from straightforward. Under Armour’s turnaround has required difficult decisions and careful execution, and similar challenges will face CEE brands attempting to navigate their own transformations.
As GlobalData Managing Director Neil Saunders, an analyst, pointed out regarding Under Armour’s journey, “It will take time to reposition the brand, and successful execution will require some painful decisions that will negatively impact the numbers.” This observation holds true for any brand embarking on a restructuring effort. The benefits of these strategies may not be immediate, and short-term setbacks are likely. However, with a long-term vision and commitment to execution, the rewards can be substantial.
CEE brands have the opportunity to draw on Under Armour’s experience to build stronger, more resilient businesses. By focusing on product excellence, refining marketing efforts, and optimising operations, these brands can position themselves for sustainable growth in an increasingly competitive global market.
Conclusion: Turning Insight into Action
The strategies employed by Under Armour in its ongoing transformation offer a roadmap for CEE brands seeking to navigate similar challenges. However, these strategies require more than just intent—they demand careful planning, execution, and the willingness to make tough decisions.
Kondo & Partners are committed to helping brands in the CEE region implement actionable strategies that drive growth. By combining industry insights with tailored solutions, we support our clients in turning challenges into opportunities for lasting success.
The journey may be difficult, but with the right approach, CEE brands can emerge stronger and more competitive in the global market.