In a year that has been plenty humbling for much of the retail industry, few companies have gotten quite the comeuppance Under Armour Inc. has.
The athletic apparel giant reported on Tuesday that its revenue in the latest quarter was up 9 percent over the same period a year earlier. That marks the third consecutive quarter in which growth in this measure was lower than 20 percent -- a pullback from a streak of blockbuster growth lasting more than six years.
And there was more grim news. The company cut its revenue forecast for the full year after sales growth in its crucial North America division barely budged.
The change in momentum has weighed heavily on Under Armour shares, which have declined more than all but a few stocks on the S&P 500 Index this year.
Add it all up, and this has got to be the most difficult moment CEO Kevin Plank has faced since taking his company public in 2005.
So what's the key for Under Armour to outrunning its troubles? It starts with the shoes.
The company has said expanding its footwear business is a pillar of its future success. And, in theory, all the puzzle pieces are in place for crackling growth in this division: In particular, it produces the signature shoe line of NBA superstar Steph Curry, who continues to be a dominant force on the court. (Surely you've heard the B-school-textbook-ready story about how Nike Inc. dropped the ball with a careless pitch to the Golden State Warriors star, giving underdog Under Armour an opening.)
But Under Armour's footwear division looks far from MVP-worthy right now. In fact, in the latest quarter, sales in its footwear division declined on a year-over-year basis.
The fizzling shoe sales look especially bad when you check out what's happening over at Nike. Growth in the footwear division there has been consistently strong, and it is growing from a much larger base than Under Armour's.
On a conference call, Plank sought to assure investors the footwear division has some promising items in the pipeline. He said there has been favorable reaction to the recently released C1N Cam Newton shoe. And while the Curry 4 doesn't hit shelves until the fall, Curry wore them on the court in the NBA Finals, and Plank said feedback was "quite positive."
Under Armour has said disappointing Curry 3 sales led it to re-think big sneaker launches, including how scarce to make shoes and what colors to offer. This will be a good opportunity to see if those changes bear fruit.
A successful Curry 4 would likely be Under Armour's quickest path to assuring investors it still has a chance of rocketing out of third place (after Nike and Adidas AG) in the clash of the athletic apparel titans.
That's because its other big initiatives are a long game -- or don't seem as promising.
For one, Under Armour is working on developing a bigger presence in international markets, to rely less on a North America business that is being shaken by sweeping changes in the retail industry. Strengthening its business overseas is a good idea, but it won't happen overnight.
The same goes for its plans to develop its "direct-to-consumer" offerings, which include adding more Under Armour brick-and-mortar stores and pulling in more sales via its e-commerce site. Taking more of its business through these channels will give Under Armour more control of its own destiny; but, again, investors won't see the results right away.
One of its other major initiatives is to bring more fashion and so-called "lifestyle" elements into its business -- and I'm not convinced this will help.
The athleisure market is incredibly saturated, and the leggings-as-pants look has probably hit its peak. And that means there's not much room for Under Armour to wring money out of this category. It would be better off focusing on performance apparel, where it has strong loyalty and brand cachet.
With its other potential lifelines offering only long-term help or little help at all, it is crucial for Under Armour's footwear division to step it up.
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