Kevin Plank, founder and CEO of Under Armour sportswear, in his office in Baltimore, Maryland on October 1, 2009.
Bill O’Leary | The Washington Post | Getty Images
Under Armour said Tuesday, in an unexpected announcement, that its CEO and founder Kevin Plank will step down from the role on Jan. 1 2020, to be succeeded by COO Patrik Frisk.
The transition comes as the Baltimore-based retailer has been caught up in a sales slump in North America, combating the likes of Nike, Adidas and Lululemon in a cut-throat sports apparel and sneaker market. The company also came face to face with its own #MeToo moment in 2018, when the public learned employees had charged visits to strip clubs on their corporate credit cards. Women at the company said it was a symptom of poor culture.
Now Plank and Frisk will continue to work closely together, with Plank being named executive chairman and brand chief. And Frisk will still report into him.
Having been the face of the brand for so long, and holding such a loud voice about his vision for Under Armour’s future, some people are happy to see Plank sticking around. Plank told CNBC the move was ultimately his decision and that him and Frisk will “divide and conquer” duties, moving forward. He added, he will be able to better focus on the longer term.
Plank built Under Armour from scratch in his grandmother’s basement in Washington, D.C. In its first full year in business, in 1996, Under Armour did $17,000 in sales. Last year, it did $5.2 billion.
Growing up in Kensington, Maryland, Plank, now 47 years old, was the youngest of five boys, and was always into sports. He loved football — so much so he earned a walk-on spot at the University of Maryland, later becoming a special teams captain. While he was playing at the collegiate level, he – and his teammates – grew frustrated with always sweating through their cotton T-shirts. Plank, who’s described himself as a big entrepreneur growing up, wanted to create a better, sweat-wicking top.
He started by designing a synthetic base layer that was meant to wick away sweat. And he grew Under Armour’s product assortment from there, into long-sleeve shirts, cold-weather gear and later shoes for football, cross training and running.
In 1998, Under Armour’s headquarters moved from Plank’s grandmother’s basement in Georgetown to Baltimore, where the company has been based since. A huge moment for the brand would come a year later, when Under Armour landed a deal in 1999 to have its products featured in the Oliver Stone film “Any Given Sunday,” starring Al Pacino and Jamie Foxx.
Kevin Plank, chairman and chief executive officer of Under Armour Inc., speaks during the Women’s Wear Daily Apparel/Retail CEO Summit in New York, U.S., on Tuesday, Nov. 10, 2009.
Daniel Acker | Bloomberg | Getty Images
Following a welcome surge in awareness thanks to its Hollywood moment, Plank kept his brand focused on sports. And in 2001, Under Armour became the official supplier of the National Hockey League, and had licensing deals with both Major League Baseball and USA Baseball. That gave its name even greater appeal and the validation it needed to secure key sponsorships. It would also lead to even bigger business opportunities.
On Nov. 18, 2005, Plank took Under Armour public, raising $157 million in the company’s IPO. Plank has about a 15% stake in the company today, but he controls it through a special voting class of stock.
Under Armour surpassed $1 billion in annual sales five years later, in 2010.
Meantime, the company’s “Protect this House” marketing campaigns were working to solidify Under Armour as a very male-centric, high performance-focused brand. Under Plank’s tenure, it has signed deals with athletes ranging from golfer Jordan Spieth to NBA star Stephen Curry to professional boxer Muhammad Ali.
But some analysts have said this laser focus on “performance,” hyped by Plank, is what has led to some of Under Armour’s more recent struggles. So-called athleisure wear — more comfortable items like joggers, women’s legging and yoga pants — have exploded in popularity in the U.S., boosting Lululemon and pushing Nike and Adidas to invest more in fashion-forward apparel. But Under Armour has largely been sitting on the sidelines of the trend. It also is still working to grow its women’s business, something that hasn’t been as much of a priority in the past.
2017 was a tough year for Plank. Under Armour shares cratered more than 40%. The company reported its first quarterly loss. Momentum clearly started to slow.
Under Armour then announced in September 2018 it was cutting 3% of its workforce globally, in a bid to slash costs. Three months later, in a pivotal December meeting with investors, Plank laid out a turnaround plan with fresh five-year goals.
In his presentation, he said 2017 had been a year to “get organized,” 2018 was to “get to work,” and 2019 was meant for Under Armour to “execute.” Results wouldn’t come overnight.
“So now in our 23rd year in business, our 14th as a public company our ability to innovate, adapt and improve is stronger and holistically more capable than it’s ever been,” Plank told the audience. “It’s an unbreakable part of our DNA.”
If Plank wasn’t busy enough trying to get his business back on its feet in 2018, this was also the year a Wall Street Journal report revealed Under Armour had been allowing employees to expense visits to strip clubs. The practice has seen been revoked. But it sparked more questions externally about Plank as a leader. Some women also spoke out about feeling like they didn’t have a chance at securing key roles.
At the time, Plank responded saying, “Our teammates deserve to work in a respectful and empowering environment. … We can and will do better.”
Under Armour founder and CEO Kevin Plank
J. Meric | Getty Images
Then, earlier this year, the Journal also reported that Plank flew journalist Stephanie Ruhle on his private jet, taking her advice on business issues. When the relationship was made public, an Under Armour spokeswoman said: “Mr. Plank and Ms. Ruhle are friends. … The idea that Mr. Plank uniquely listens to any one individual is absurd.”
Under Armour’s sales in North America dropped 2% in 2018, to $3.7 billion. It September, it named Stephanie Pugliese as its new president of that division, offering Wall Street a glimmer of hope that Under Armour’s struggles on its home turf might subside under new management. Pugliese had previously been president and CEO at Duluth Trading Company. But Under Armour is still calling for sales to decline slightly in North America in 2019.
Under Armour shares are up more than 18% this year. But those gains lag rivals. Nike’s stock is up about 30% over the same time, while Lululemon shares have rallied more than 68%.
On Tuesday, Under Armour’s announcement sent shares up more than 4%.
Under Armour’s Patrik Frisk, left, and Kevin Plank
“We view the CEO transition as positive and believe Mr. Frisk is the right person to lead the company forward,” Telsey Advisory Group analyst Cristina Fernandez said. “The two leaders seem to have a good working relationship and appear aligned in their goals for the company, which should help ensure a smooth transition.”
“We expect Under Armour to continue to execute against the plan and long-term targets the company laid out at its December 2018 investor day and don’t see a change in strategy,” she added in a note to clients.
Plank just last week sat side by side with Richard Branson to unveil the new spacesuits that Under Armour has designed for Virgin Galactic, which the first space tourists are soon set to wear to space. In an interview with CNBC, Plank said: “It’s a bit of a coming-out party for what we’ve been talking about for three years, that people have a hard time getting their arms around where Under Armour truly wants to be. … The human performance company. … We want to stand for all things innovation.”
As the company’s new brand chief, one would expect Plank will continue to make appearances like his one with Branson, touting the company he founded as one sweat-wicking shirt.