Under Armour founder Kevin Plank made a rare public appearance for the company Wednesday to say the search for a new CEO is progressing, with a decision expected before the end of the year.
Former CEO Patrik Frisk left the Baltimore-based athletic apparel maker June 1 after just more than two years at the helm and after engineering a recently completed multiyear turnaround.
“The board and I are focused on our search for a permanent CEO, a proven leader capable of amplifying our existing strategy in a now large and mature public company, a professional who can technically do the job while simplifying the definition of success in that job,” said Plank, the company’s executive chairman and brand chief.
Long the face of the company until recent years, Plank made the comments while addressing analysts Wednesday during a quarterly earnings conference call. He said the next CEO will be tasked with taking care of the brand while making the most of Under Amour’s numerous athlete relationships and partnerships.
In his first 60 days as interim CEO and president, Colin Browne, the company’s chief operating officer, has “done an outstanding job stepping in to manage our business,” Plank said during the call.
That’s earned him a place in the pool of CEO candidates pulled from proven leaders across various industries being reviewed by Under Armour director Karen W. Katz, Plank said.
Plank also announced plans to reallocate and reposition Under Armour’s marketing budget of $600 million, which he said the company has failed to optimize, as a way to drive brand growth.
And he said the company is doubling down on its mission of offering innovative sports apparel. The brand plans to launch a new footwear platform this fall, starting with a training shoe, he said, that can “change the athletic footwear landscape” and can “become a signature item for our current $1.5 billion footwear business.”
Plank addressed analysts after the company reported financial results for the first quarter of the company’s new fiscal year that ended June 30. Under Armour earned $8 million, meeting earnings forecasts for its first fiscal quarter and saying its brand remains strong in a difficult environment.
Under Armour began a new fiscal year 2023 on April 1.
“We ... remain bullish on our brand strength while we navigate the current environment,” Browne said in the earnings announcement.
Revenue for the three-month period was flat compared with the year-ago period at $1.3 billion, the company reported. But it maintained its outlook for full-year revenue growth of 5% to 7%.
The brand’s reported income of $8 million worked out to earnings of 2 cents per share. The company reported adjusted earnings of 3 cents per share, meeting analysts’ expectations.
Shares of Under Armour closed at $9.33 each, up 13 cents, on Wednesday.
In growing the brand, Under Armour plans to beyond its roots in performance uniforms and workout gear to fill demand for sportswear and for occasions outside gyms and fields, Plank said.
Browne also said the brand is looking for ways to broaden its appeal beyond performance clothing.
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“Based on countless conversations with athletes and our customers, there is also demand for Under Armour across the less sweaty, non-elevated heart rate part of their day,” Browne said during the call. “They want more style, more options and more usage cases.”
Analysts at Stifel, who maintained a hold rating on the company’s stock, warned that moving toward more lifestyle-oriented offerings could be risky.
“Opening the brand focus aperture to include sportswear expands the addressable market, but the brand has struggled to gain traction in these areas with prior efforts,” said Jim Duffy, a Stifel analyst, in a report. “With the industry currently over-inventoried and promotional, execution risk to category extension is high.”
During the call, Browne said inflationary pressures will mean a more cautious consumer outlook for the rest of the year.
“We’ve assumed the market will be very promotional and we will need to participate in many of these promotions,” he said, adding the brand is looking at options that won’t hurt sales growth.
He said he is confident the brand can deliver “more pronounced” growth and profitability over the long term.
“Our relentless approach of delivering groundbreaking innovation will continue to manifest through 2022 and beyond as we work to unleash the full potential of the Under Armour brand,” he said in an announcement.