Under Armour 4Q16 Earnings Call Notes

Under Armour (UA) Q4 2016 Results

Kevin Plank

CFO leaving

“In addition to our earnings results this morning, we also announced that Chip Molloy has decided to leave Under Armour for personal reasons. With this marking Chip’s last call, I’d like to say thank you and wish him well in his future endeavors. Chip will continue to serve in an advisory role for a period of time.”

Traffic decline caused more promotions

“So first, I’d like to explain a few things. What happened, what we learned, and what we’re doing about it? So let’s start with what happened. In the fourth quarter, slower traffic caused significant promotional activities earlier, deeper and broader than expected. This commoditized some of our more basic core product that had previously sold through for us in years past. This, in addition to higher demand for more lifestyle silhouettes caused us to be out of balance with our assortment. So we lost top line volume as we work to adapt through our mix and pricing.”

We’re in a constant state of evolution

“Being a growth company means that we’re in a constant state of evolution. In 2017, we will remain on offense by continuing to invest in our fastest-growing businesses and leveraging our unique strengths and competitive advantages, and we have a lot of advantages: innovative product, brand strength, a broad base of premium sports marketing assets, unparalleled consumer connections and a strong, strong management team. Staying on offense, however, does not mean growth at any cost. It means striking an appropriate and responsible balance for the health of the brand in the near and long term.”

Need to make UA simple

” In my office here in Baltimore, I keep white boards. I use them as a way of organizing my thoughts, ideas, business plans and strategies. And recently with all the things written on them, I cleaned them all off, and I wrote just one phrase: make UA simple. And that’s just it. As we pass through $5 billion on our way to $10 billion, we must get better, faster and smarter at what we do, why we do it and how we do it. And in a way, that is simple and humble.”

The fact is that the consumer expects more today

“The fact of the matter though is that the consumer, they expect more today. They expect speed and convenience and best price and value, and they expect it the next day. So that choice of newness and customization is something that we need to react to and do a better job of. This idea though is we think that the cycle that we’re living in from retail and inventing the next big thing, it’s going to come from much closer to the concentric circle versus something built frankly off of a product that has to be hot, or an athlete or a celebrity, or a product that just happens to be about innovation.”

We’ll always have a wholesale aspect to our business

“So, I don’t think any of these things – I think the way that we’re viewing it is, of course, we like controlling our destiny, but we began as a wholesaler, and we’ll always have a wholesale aspect to our business with the best partners out there that continue to prioritize us and put us and present us in a way which we think tells and helps explain the great products that we have and doesn’t just differentiate us by price.”