Overview – Under Armour’s Turnaround Strategy in 2018: Efforts to Revive North American Sales and…

Overview – Under Armour's Turnaround Strategy in 2018: Efforts to Revive North American Sales and Profitability Founded in1996 by former University of Maryland football player Kevin Plank, Under Armour was the originator of sports apparel made with performance enhancing fabrics—gear engineered to wick moisture from the body, regulate body temperature, and enhance comfort regardless of weather conditions and activity levels. It started with a simple plan to make a T-shirt that provided compression and wicked perspiration off the wearer's skin, thereby avoiding the
Overview – Under Armour's Turnaround Strategy in 2018: Efforts to Revive North American Sales and Profitability Founded in1996 by former University of Maryland football player Kevin Plank, Under Armour was the originator of sports apparel made with performance enhancing fabrics—gear engineered to wick moisture from the body, regulate body temperature, and enhance comfort regardless of weather conditions and activity levels. It started with a simple plan to make a T-shirt that provided compression and wicked perspiration off the wearer's skin, thereby avoiding the discomfort of
sweat-absorbed apparel. Under Armour quickly earned a reputation as an up-and-coming company in the sports apparel business, achieving sales of $1 billion in 2010 and $3 billion in 201 4. Starting in the second-quarter of 2010 and continuing through the third-quarter of 2016, Under Armour cemented its status as a growth company by achieving revenue growth of 20+ percent for 26 consecutive quarters.
However, Under Armour's report of its 2016 fourth quarter and full-year results in January 2017 rang alarm bells. Total fourth-quarter revenues rose 11.7 percent; revenues in North America were up only 5.9 percent; income from operations dropped 6.1 percent companywide and 15 .0 percent in North America. To make matters worse, the company's outlook for full-year2017 was gloomy- expected
revenue growth of 11 to 12 percent and a decline in operating income to approximately S320 million. Under Armour's performance in 2017 turned out to be worse than management's earlier expectations. In its core North American market, Under Armour found itself on the defensive throughout 2017. Sales in North America dropped $200 million (5.1 percent) to $3.8 billion. Total revenues worldwide were up a meagre 3.1 percent- from $4.83 billion to $4.98 billion, after growing at a compound rate of 27.3percent during the 2012-2016 period. Operating income dropped from $417.5 million in 2016 to $27.8 million in 2017. Net income fell from a record high of $257 .0 million to a net loss of $48.3 million. The prices of the company's Class A shares and Class C shares which began 2017 trading at $29 .34 AndS25.49, respectively, closed at $14.43 and $13.32 on the last trading day of December 2017. Top management immediately announced a restructuring and set of turnaround initiatives to get the company back on track. A good first case to assign after covering tile concepts and tools of industry and competitive analysis (Chapter3), company situation analysis(Chapter 4), and the five fundamental competitive strategies(Chapter5). Has two accompanying videos. AFTER READING/REVIEWING/ CHAPTERS, AND LISTENING TO CASE INSTRUCTIONS, PREPARE TO PRESENT ANSWERS TO THE FOLLOWING DISCUSSION QUESTIONS BY THE DUE DATE. SEE CASE DOCUMENT AND ASSIGNED QUESTION SUGGESTIONS ATTACHED. SUBMIT ANSWERS TO QUESTIONS IN SUBMISSION FOLDER. Assignment Questions what is your assessment of the Under Armours performance downturn in North America that first appeared in the fourth quarter of 2016? Causes? Reasons? What financial performance issues do you see at Under Armour based on the data in case Exhibits 1, 2, and 3? What is your assessment of the strength of the competitive rivalry among the leading participants in the North American market for performance sports apparel headed into 2018? How strong are the other four competitive forces confronting Under Armour, Nike, and The adidas Group as of 2018? Do a five-forces analysis to support your answer. Does Under Armour have any core competencies and, if so, what are they? Does Under Armour have any resource strengths or competitive capabilities that qualify as a distinctive competence? What does a SWOT analysis reveal about the overall attractiveness of Under Armours situation headed into 2018? What are the key elements of Under Armours strategy? Which one of the five generic competitive strategies discussed in Chapter 5 most closely approximates the competitive approach that Under Armour is employing? As of 2018, how does Under Armours competitive strength in the global market for sports apparel and athletic footwear compare against that of Nike and The adidas Group? Do a weighted competitive strength assessment using the methodology presented in Table 4.4 in Chapter 4 to support your answer. Based on your assessment and calculations, does Under Armour have a net competitive advantage or disadvantage in competing globally against Nike and The adidas Group? What are the key issues confronting Under Armours top management team as of mid- 2018? What recommendations and suggestions for improvement would you make to Kevin Plank regarding the turnaround strategy put in place at Under Armour?