Editor’s note: This article has been edited to reflect clarifications and new information about the nature of Under Armour’s comments.
Under Armour reportedly announced this week that it will end more than 2,000 existing wholesale partnerships, focusing instead on its direct-to-consumer business.
The apparel company reported more than 50 percent growth in e-commerce business during its third fiscal quarter, with a 17 percent increase in direct-to-consumer business. Conversely, wholesale revenue decreased 7 percent over last year.
The decision, however, will not impact the promotional products industry, as the Under Armour brand is carried by several suppliers in the industry. Those partnerships will remain intact, as Under Armour’s decision more directly impacts the retail market.
During the call, which was posted as a transcription on The Motley Fool, Lance Allega, senior vice president of investor relations for Under Armour, said that the company will focus on “prudent marketplace management” for 2021 to keep the company, which has had a turbulent few years, profitable:
Accordingly, we have begun identifying certain undifferentiated retail partners, primarily in North America, to more meaningfully reduce our wholesale footprint starting next year and into 2022 and beyond. To be clear, wholesale remains a crucial part of Under Armour’s future, but as the broader retail landscape continues to evolve, so must we. Switching gears to our third area, which is prioritizing a direct consumer-focused approach. Our efforts remain centered around becoming a best-in-class retailer capable of providing a premium Under Armour experience whenever and wherever consumers directly engage our brand.
Allega also called e-commerce a “bright spot this year,” as it has been for so many other brands across other industries.
On the call, Under Armour chief financial officer Dave Bergman added that Under Armour’s licensing business dropped 15 percent. Specifically, licensed apparel dropped 6 percent, “driven primarily by declines in [Under Armour’s] team sports and training categories”:
Accordingly, we have begun identifying certain undifferentiated retail partners, primarily in North America, to more meaningfully reduce our wholesale footprint starting next year and into 2022 and beyond. To be clear, wholesale remains a crucial part of Under Armour’s future, but as the broader retail landscape continues to evolve, so must we. Switching gears to our third area, which is prioritizing a direct consumer-focused approach. Our efforts remain centered around becoming a best-in-class retailer capable of providing a premium Under Armour experience whenever and wherever consumers directly engage our brand.
The company launched its own corporate sales division in 2017, which appears to include in-house decoration services—“the works,” it says on the site. But, as Bergman said, the wholesale market, including the promotional products industry, is still a vital part of its business.
