The Clothing Brand Andrea Meets Iceberg, Dare To Ask Where The Road Is.

According to the world clothing and shoe net reporter, recently, the Under Armour performance slowed sharply, the market value evaporated nearly 3 billion US dollars, and was degraded by the S & P. Where is the way out for Under Armour?

In the past six years, the American sportswear giant Andemar (Under Armour) Sales have been growing at an alarming rate, with sales growth of less than 20% per quarter. However, Under Armour's latest earnings report has disappointed Wall Street. Sales growth slowed sharply to 12% in the fourth quarter of 2016, and is expected to decline sharply in 2017. As sales growth slowed down, Under Armour's credit rating was downgraded to junk level by S & P International and its rating was also downgraded from BBB- to BB+. Wednesday's report shows that S&P looks at the prospect of Under Armour's rating. This rating has dealt a severe blow to Under Armour. In the past two months, Under Armour (NYSE:UA) has fallen by more than 30%. Where is the way out for the stock market crash and the downgrade of Under Armour by S & P?

Deviations in sales strategy

Morgan Stanley analyst Jay Sole said in January 31st: "this is the first time since the launch of Under Armour, there has been a significant deviation in sales estimates, which indicates that it is difficult to find enough growth points to offset the weakness of its core business." At the end of 2016, Under Armour's inventory increased by 17% over the previous year, and analysts said that the company's profit margin would fall in 2017, as it needs to digest inventory through discount sales. Analysts claim that the growth rate of less than 15% will be the new normal of Under Armour in the future. The bankruptcy of large footwear retail chains The Sports Authority and Sport Chalet makes the problems faced by Under Armour more complex and has a great negative impact on its distribution channels. Corporate credit rating has been reduced to junk level.

As sales growth slowed down, Under Armour's credit rating was downgraded to junk level by the S & P International and its rating was also downgraded from BBB- to BB+. The report on Wednesday showed that S&P looked at the prospect of Under Armour's rating. This rating caused a serious blow to Under Armour. Last June, Under Armour sold $600 million of bonds. The price of Under Armour's bond fell 4.5 cents, and the current price was 87.75 cents, the biggest drop since its launch, according to the financial regulatory agency bond price reporting system Trace data. S&P pointed out that Under Armour sales will slow down in the next two years. Due to fierce competition in the North American market, growth will mainly depend on low profitability international markets. Gym shoes The profit margin will decline. Brand expansion programs, including marketing abroad, will also increase costs. The S & P downgrade took place on the second day of the latest Under Armour earnings crash.

1, competition in the North American sports retail market is heating up.

Founded in 1996, Under Armour has been relying on continuous product innovation and the courage to break the rules of the market game. In the rapid development of the past six years, the quarterly sales volume has increased by at least 20%. In 2014, it overtook the German sports giant Adidas to become the second largest sports brand in North America. However, over the past two years, Nike and Adidas's two biggest competitors have been making great efforts in new products, high technology and new generation retail stores. Adidas has successfully turned over with a series of explosive shoes. In 2016, the global sales growth rate is expected to exceed 15%. Nike is also unwilling to be lonely. The price of some products has been lowered some time ago, so as to better compete with the new Under Armour Sportswear Under Armour Sportswear. The latest quarterly sales and profits are better than expected, and the basketball category products rebound. In addition, traditional fashion retailers and brands such as Macy, s, Gap and J Crew have launched self-developed sports and leisure product lines to fuel the fiercely competitive sports market. Even the old rival Lululemon, who has been sated by Wall Street, has recently surpassed the expected performance report, and has made progress towards the five year goal of "double sales revenue and more than doubled profits" through measures such as product innovation, international expansion and expansion of men's clothing category. 2, the decline in shopping malls, the frequent discounts and frequent promotions, and the fact that the decline in the number of shopping centres in the US is getting more and more serious. The physical retail industry is constantly being impacted by the electricity supplier and fast fashion. American Apparel, Aeropostale, PacSun, The Limited and a large number of traditional American fashion retailers continue to go bankrupt, although Under Armour is still one of the few brands that still maintain growth in the field of American Apparel Retailing.

3. The negative influence of the founder's right to seize power.

The fall in share prices is closely related to the behavior of the founder, chairman and chief executive officer of Kevin Plank, who issued no voting shares two years ago. Kevin Plank's move is to emulate the Silicon Valley technology company, which aims to tighten control and ensure its absolute leadership. At present, he has the economic interest of Under Armour 15%, but he has 65% of the voting rights.

4, lack of fashion elements at the beginning of this year.

At CES electronics exhibition, Kevin Plank sees apple and Samsung as potential competitors and more benchmarking companies. However, yesterday when he was reflecting on the company's development strategy, he said, "Under Armour" needs to strengthen fashion elements. "The professionalism of sportswear is still important," he said. "This is the basic demand of people in sports, but people are generally not satisfied with the current sportswear and hope they can be more comfortable and better looking." Last year, Under Armour co worked with Tim Tim, a leading fashion designer, to launch capsule series for the fashion crowd. Recently, Under Armour has launched its own design and development of the capsule series - Arris Project bra and tights, while playing the "American made" and "fashion sense" two cards.

The two new products have a simple and stylish appearance. The production process is completed in the United States. The production plant is UA Lighthouse, which is built by Under Armour at the headquarters of Baltimore. It occupies 35 thousand square feet, and 3D printing and design, body scanning, rapid prototyping and other processes can be realized here. Where is the way out?

Market research firm NPD data show that in the past two years, Under Armour is the second largest in the United States. Sportswear The brand has only recently been overtaken by Adidas. Under Armour's product category is also growing, including children's clothing and outdoor sporting goods, and deals with the major league baseball, sports stars and professional teams in the United States. But the biggest problem with Under Armour is that they focus solely on sales of products that improve athletic performance, ignoring fashion products, while Adidas and Nike have a wider range of fashion products. According to NPD data, 3/4 of sports shoes in the United States are not used for sports. For example, Under Armour's Curry basketball shoes are better for basketball court performance, unlike Nike's Air Jordan has become a fashion symbol. Kevin Plank, chief executive of Under Armour, also said that consumers need to become more fashionable when consumers choose more times. Susquehanna Financial analyst Sam Poser said: "Under Armour performs well on the pitch, but it is not cool enough." The company said it would increase investment in advanced sportswear business and sell shirts, jackets and coats in luxury department stores such as Barney s. It is also planning to cooperate with more retailers, and recently signed a new agreement with Kohl s, a department store operator, to sell its products in more than 1100 stores. However, analysts do not think its emerging fashion business will soon take off. NPD analyst Matt Powell said: "they will gradually increase their fashion products. Even if the growth is not obvious, I hope they can step by step. I do not expect them to become a high-end fashion brand overnight."

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