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Under Armour faces coronavirus cash crunch, borrows $700M

On March 10th I wrote a post that derived from an in-store visit here in Memphis. The post was about the Curry Be Amazing basketball shoe released to celebrate International Women’s Day. In this post I gave my thoughts on the sneaker and that evolved into an analysis of UA for 2020.

International Women’s Day 2020 and Curry 7 B-Amazing Colorway | An Under Armour Prediction for 2020

If you don’t want to click through and read that post I wrote this in the last paragraph:

If UA doesn’t look at their real estate and consider a small store strategy I don’t expect anyone outside of California to carry the product in traditional retail outlets in North America. That’s a bold statement. When you factor in the volatility of the stock market and the disruption in the international market, the brand is balancing on the ledge with one leg. They can’t bounce back to off brand retailers. There isn’t anything to inspire connection with teens and adults. There aren’t any casual options for men and they aren’t connecting with women who are buying more workout gear than any other demographic… If UA doesn’t open smaller, smarter stores I’m predicting layoffs and outlet store closures for the brand.

I wrote this on March 10th, prior to the store closures due to social distancing. I got a DM from FDRA’s Andy Polk, who journalists should be reaching out to a lot more than they reach out to other analysts, and he made a bold prediction.

I’m adding this after reading the post in the Baltimore Business Journal, taking on debt to remain liquid, as the article states, is misleading. The company is still in midst of dealing with their SEC investigation for accounting issues. A company that is “liquid” isn’t moving sales from quarters to account for losses.

Full disclosure, I wrote Under Armour’s Global SVP of Communications to offer my services in writing a white paper to discuss strategy. I did not get an answer as of yet.

As Under Armour encounters the exit strategy from the COVID-19 crisis, they won’t be able to move as quickly as Nike has. They are growing digital but they aren’t set up with the merchandising or product to inspire connection with the consumer. I explained in a recent post on Nike’s Air Max Day collection that Nike is the only brand positioned to continue selling.

Air Max Day 2020 and Releases on SNKRS  Keeps Nike at the Forefront In Difficult Times

Under Armour taking on a line of credit is a frayed lifeline. Pull too hard and the line breaks. COVID-19 isn’t the fault of the failure of UA and neither is their decision to focus on performance. Under Armour is a victim of indecision. You can trace UA’s problems back to several decisions around Connected Fitness and a smaller issue in the UAS launch. The company distracted itself from its purpose and what made it. They pursued cool and the bright lights of digital communities via apps and wearables as opposed to the power of a digital e-commerce platform that could have lifted it. Under Armour once had a story. They abandoned the story and that was the crack in the dam.

Under Armour Roland Luxe Backpack.