Under Armour president and chief executive officer Stephanie Linnartz said on Tuesday that the brand is looking to enter more wholesale doors in the U.S. as it navigates recovery in the region.
“Despite a tempered U.S. wholesale environment, we are focused on strengthening our retail partner relationships across our sports specialty business and being deliberate in the opportunities we pursue across malls and department stores,” Linnartz said in a call with analysts Tuesday. “As we work into spring and summer 2024, we have plans to open new doors across these channels.”
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In the fiscal first quarter, the sportswear brand reported that revenue was down 2 percent to $1.3 billion. Net income was $9 million, with diluted earnings per share of 2 cents. Analysts surveyed by Yahoo were looking for a 2 cent loss per share and $1.3 billion in revenues.
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By channel for the quarter, wholesale revenue declined 6 percent to $742 million, and direct-to-consumer revenue increased 4 percent to $544 million, driven by a 6 percent bump in e-commerce revenue and a 3 percent increase in owned store revenue. Apparel revenue was down 5 percent to $825 million, footwear revenue was up 5 percent $364 million and accessories increased 1 percent to $98 million.
The increased push into wholesale comes a few years after Under Armour said in 2020 that it would cut ties with certain wholesale retailers, starting in the second half of 2021, to focus on d-to-c growth. At the time, the company said it would begin to exit between 2,000 and 3,000 stores in North America and would be in about 10,000 doors by 2022.
Under Armour declined to clarify to WWD sister publication FN how much this new wholesale push will change that distribution.
The entry into new doors is part of Under Armour’s efforts to lift its sagging U.S. business, which dented its results for the first quarter. Like other footwear brands this quarter, Under Armour’s business in North America was challenged as the region grapples with inventory excesses and conservative orders from wholesale retail partners. Under Armour’s revenue in the region declined 9 percent to $827 million, as part of a broader revenue decline of 2 percent, to $1.3 billion in the first quarter.
“There are still inflated levels of inventory that are leading to more promotional activity,” Linnartz said on the call regarding the North American wholesale market. “But as we see the year going on and as we head into next year, we anticipate that things will get better and there will be less need for so much promotional activity.”
This recovery, Linnartz said, will be accomplished under the brand’s new Protect This House 3 (PTH 3) plan, a strategy meant to revamp its business, which involves focusing on reinvigorating brand DNA, key product areas and growing its business in North America. As this strategy progresses, Linnartz said, Under Armour will expand its distribution into new wholesale partners.
“As we focus on better product, we’re going to be more disciplined about segmentation. We’re going to open new doors, new partners, including in the wholesale arena,” Linnartz said.
Wedbush analyst Tom Nikic said in a Tuesday note that an entry into new wholesale doors could potentially drive “an inflection domestically” for Under Armour. Other analysts were similarly encouraged by the brand’s potential to recover through the remainder of the year.
In the second quarter, Under Armour expects revenue to be between flat and down slightly compared with the prior year, which accounts for a low single-digit decline in North America. The fourth quarter is expected to yield the highest revenue growth rate of the year.