Τhe Under Armour PESTLE Analysis examines the political, economic, social, technological, legal, and environmental factors affecting the sportswear company.
If you are a sports person, you already know what Under Armour is. Started in 1996, Under Armour is a manufacturer as well as seller of sports equipment including sportswear, casual wear as well as footwear. It is headquartered in Baltimore, Maryland, U.S., and ships globally. Other than the US, Under Armour has offices in Amsterdam, Austin, Guangzhou, Hong Kong, Houston, Jakarta, London, Mexico City, Munich, New York City, Panama City, Paris, Pittsburgh, Portland, San Francisco, São Paulo, Santiago, Seoul, Shanghai, and Toronto.
The company was started by Kevin Plank who used to be a football player in his own university. In fact, it was because of the lack of appropriate sweatproof sportswear he came up with the idea to launch his own business. Who would have known that it was Kevin’s step that would be followed by huge competitors such as Nike and Reebok to include sweat-resistant clothing for their sportswear range. Kevin used to be the CEO however now as of 2020 he acts as the chairman whereas his former COO Patrick Frisk is the current CEO.
Now that we have a better picture of what the brand is, it is important to understand it from a business point of view. Up ahead is the Under Armour PESTLE Analysis for you to read.
Political factors affecting Under Armour
Like any global business, Under Armour is open to the fluctuation of currency and exchange rates around the world. Different laws and policies for taxation, customs, and other duties always make it unpredictable to gauge success.
A company as big and relevant as Under Armour always has to be cautious of its political affiliations as well. In the recent past in 2017, Mr. Plank made the mistake of publicly addressing Donald Trump as “an asset to America” due to which he faced a lot of backlash from the general public and even by Stephen Curry, who was a big ambassador of the brand. This comment also hurt a lot of employees during the time which severely affected the work morale.
In fact, in 2017 Under Armour was under the heat for another rather bland statement made by them in reference to the NFL protest conducted by athletes. Donald Trump once again was very bold in playing down these protests and Under Armour tried to take a diplomatically safe stance by siding with both the “American Flag” and “American Athletes” for their right to free speech which ended up very bad; people thought that the brand had no guts to pick a side.
Economic factors affecting Under Armour
Under Armour whereas started as one of the brands that enjoyed an all-time high and even enjoyed success for quite some years, in 2017 they reported their first loss. In fact, things have gotten so bad that they lost a total of 44% in their share price from 2017 to 2020.
To help matters pick up, the brand has been spending huge sums ($300 million in 2017) to help accelerate growth in other areas by restructuring the company however they only managed a small 4% improvement in their revenue in 2018. Things were not promising in the slightest so they even had to downsize by completely getting rid of around 680 work positions.
Where almost every business has seen adversities because of the covid-19 pandemic, Under Armour got the very brunt end of the unpleasant stick. They have seen remarkable losses during this time period. They had to shut many stores down during the pandemic because of the inability of continuing normal business amidst lockdown situations.
Although the entire apparel industry took some falling because of the virus Under Armour had it the worst out of all of the big companies, particularly because of sportswear as it wasn’t being as promptly sought out from consumers as the gyms were shut down all across many countries because of Covid-19. Thereby not needing any athletic wear for working out.
The company is insistent however that the pandemic can only be partially attributed to this situation. According to their reports from 2020, revenue fell a whopping 23% year over year from $1.2 billion to $930.2 million.
Experts have also noticed that as soon as the leadership got changed i.e. the CEO being changed, Under Armour began to see more losses. Frisk made the decision of increasing expenses on their marketing by 15% to $154 million. They are now undergoing restructuring to decide better ways of expenses by reducing them when needed.
Socio-cultural factors affecting Under Armour
A brand as prominent as Under Armour always has to be in the good books of the people it caters to. While Under Armour has been able to become somewhat of a sensation by being endorsed by the likes of Dwayne Johnson and Stephen Curry, they also have had some weird scandals.
Up till 2018, Under Armour paid exclusively for trips to strip clubs and other adult entertainment to keep their main executives and some major athletes in business with them happy. It used to be a celebration of sorts after some win or deal. Not only did this practice exclude the women working for the brand from being able to form close bonds with their colleagues and subordinates, but it was also extremely demeaning and sexist to celebrate in a way that demeaned and objectified women. They did however announce that the company would no longer pay for such events. A little bit too late according to the times.
The strip club culture seeped into their office as well; Wall Street Journal made notice of the fact that at a particular event, they only invited younger women staff based on their attractiveness level to please some important guests and executives. They had even gone as far as hiring go-go dancers which made a lot of people very uncomfortable. In response to these allegations of sexism and inequality for women in their workforce, Under Armour quickly hired Tchernavia Rocker as their executive for HR; she is the only C-level executive woman at the company.
Overall in all of their divisions, 26% of the executive team consists of women despite there being 49% of total women working here and the brand is apparently very aware of balancing out these numbers. In 2020 they also increased the amount of female athlete brand endorsers by getting rookie WNBA stars Bella Alarie, Kaila Charles, and Tyasha Harris to join the gang. This move puts them at an advantage over competition like Nike because they don’t focus as much on having female brand endorsers.
Experts cite that Under Armour became somewhat bland during the past few years because of misplaced efforts and being late to the digital activities. They recently have started focusing on their digital presence which has proved beneficial. They also were very late to be on the “athleisure” bandwagon where they could have introduced chill sportswear such as yoga pants and joggers which is very popular amongst youngsters.
Another strategy they have to improve their image and quality in a consumer’s mind is by reinventing their placement; stores like Marshalls and TJ Maxx hurt the company’s image because they usually have cheaper priced items. Now they try to be available at sportswear stores which more accurately caters to the brand image anyways.
Technological factors affecting Under Armour
Under Armour has utilized their slumping time in the pandemic to re-strategize which has also included and increased focus on their technology. They have introduced fitness apps and digitally connected footwear which means that the shoes can be monitored in a way via the app to record the amount of workout progress; how many steps taken, distance traveled, and runs taken per day, etc. In fact owing to the success of the tech shoes, compared to 2019 in 2020 customers used 150% percent more of the features during their first workouts.
This app also helps the company in gaining insights into the shifting paradigm of consumer expectations and preferences so that they can invest much more smartly in their research and development to make exactly what is needed.
In 2020 they also launched many innovative products; the “HOVR Machina” is a shoe that aids the runner for sprinting in fast races but also provides the comfort of a nice trainer. It also connects to an app to better mentor the runner so as to avoid any injuries etc. Their “Rush” line of clothing is legit designed to recycle body heat energy to give it back to the body for improved circulation for better strength and endurance. In fact, according to our research conducted in Under Armour SWOT Analysis the brand has remarkable technology for making their clothes; this has always been a huge strength for them.
Legal factors affecting Under Armour
Back in 2017, Under Armour got into a nasty debacle when the Wall Street Journal posted an article on them claiming that they committed accounting fraud. The sales and revenue earned in the year 2016-2017 were falsely stated in order to appear much healthier than what they were so that the brand didn’t pummel under the pressure of under-performing. There isn’t much information available on this matter publicly, but the matter was thoroughly investigated and it more than damaged the brand’s credibility.
In fact, because of this scandal, the Portnoy Law Firm in LA is adamant that the investors in Under Armour should be wary of their money and they should know the legal ways of taking their sum back to avoid any brutal damage. The brand has also received a prompt notice from US Securities and Exchange Commission for their alleged violation of the US law of securities.
Environmental factors affecting Under Armour
Under Armour claims to be very pro-environment by constantly investing in sustainability; their sustainability team is located strategically around their entire supply chain so as to minimize as much impact as possible. They actually have in place a strong responsible sourcing policy so that no illegal supplier is involved. Ever since 2008, the brand has been working with Environmental Defense Fund (EDF) Climate Corps and is a member of Sustainable Apparel Coalition (SAC) which ensures that the apparel industry does not exert any more harm on the surroundings than what is absolutely unavoidable.
They are also known to work with the Fair Labor Association (FLA) to ensure that every employee or any form of labor involved either directly or indirectly gets paid justly and does not face exploitation of any sort.
They have a 59% of overall rating on CSR Hub for their sustainability practices; these rankings are based on 19,001 companies from 148 countries, driven by 734 industry-leading CSR/ESG data sources including ESG analyst, crowd, government, publication, & and not-for-profit data.
Under Armour PESTLE Analysis: Conclusion
Under Armour has a very popular brand name, as can be seen in this analysis however it is more than safe to clearly say that the once luminous start has lost a lot of its original luster. Whereas they have an amazing presence in the world, they are still not able to take over their main competition because of the issues addressed here. The lawsuit against them for accounting fraud will be detrimental if proven and their social issues revolving around gender inequality at the company are very serious problems that have no room anymore.
Nonetheless, brands these big rarely see the face of extinction, so we’re not worried that Under Armour is going away anytime soon. With a little effort and restructuring, they can get back to enjoying the same success as before.
A PEST analysis is essentially a macro-economic analysis where certain dominant factors which influence the present and can predict the future performance of any company or business are studied in thorough detail.
PESTLE is basically an acronym that stands for Political, economic, socio-cultural, technological, legal and environmental analysis thereby encompassing all necessary parameters of assessing a brand’s performance. Performing an analysis of this sort is not difficult at all; if you want to learn how to perform a PEST Analysis of your own, feel free to visit our website where you’ll find all the detail you need. In fact, for those of you who are confident enough to start working on an analysis on some company or brand, we have the perfect PESTLE Analysis template for you on our website which will make your work a whole lot easier.
