Under Armour (UA, UAA) has announced a leadership shake-up: founder Kevin Plank has reassumed the position of Chief Executive Officer, replacing Stephanie Linnartz, who occupied the role for only a year.
Yahoo Finance Executive Editor Brian Sozzi breaks down the market reaction and provides insight into Plank's operational mishaps during his tenure as CEO.
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Editor's note: This article was written by Angel Smith
Video Transcript
JARED BLIKRE: Under Armour stock is under pressure this morning after a leadership shakeup at the company late Wednesday. Under Armour founder Kevin Plank retaking the CEO reins from Stephanie Linnartz who has been at the role for just over a year. We just had Linnartz on our new leadership series Lead This Way and here's what she had to say about being CEO with the founder as executive chairman.
[VIDEO PLAYBACK]
STEPHANIE LINNARTZ: Having the opportunity to work with the founder is pretty special. And I think it's fantastic for me as the CEO. I think it's fantastic for the company and the brand that the founder of Under Armour is our executive chairman and brand chief, and is deeply passionate about the company that he founded, and is deeply passionate about supporting me as the CEO and growing the company.
[END PLAYBACK]
JARED BLIKRE: And to break down what this means for investors, we have Yahoo Finance's Brian Sozzi. Brian, timing is interesting here. Any inclination that something might be underfoot, some big leadership changes when you had this interview?
BRIAN SOZZI: Well, no. So if you want to tie this all in a bow, it's essentially this, here's the story, rich, aging quarterback wants to buy back his toy and that is essentially Kevin Plank who owns 65% or 65% voting control of the company. And he wants to take this company back likely before they open up a new headquarters in about a year just down from where he originally started Under Armour.
But nonetheless, people that I've been talking to over the past 12 hours suggest this was a surprise to a lot of analysts on the Street. Also, a surprise to Stephanie Linnartz based on what people have been telling me. But also comes at a time where the business was being rebuilt essentially by hand by Stephanie and her entire new leadership team that he's brought-- that she's brought on over the past six months. So lots of moving parts here.
Generally, the vibe on the Street is, look, the analysts are giving a lot of praise to Kevin Plank. He did found this company. He was selling T-shirts out of his car in the late 1990s, is an American success story. But let's keep in mind, this is a company that has had a lot of cultural issues, a lot of major, major operational missteps when Kevin Plank was, in fact, CEO.
And really one of the things that came up between me and Linnartz was this thought of culture. Linnartz telling me that she is very much focused on servant leadership and rebuilding the company's culture. Here's what she told me on Lead This Way.
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STEPHANIE LINNARTZ: That old expression that culture eats strategy for lunch, but I think you need to have a strategy for culture. I do think you need to have a strategy for culture. And I think that the CEO plays an important role in driving the culture of the company. And the culture that I want to have at Under Armour and that we have at Under Armour is one of winning, of grit, of determination, of belief.
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BRIAN SOZZI: You do this long enough, guys, as I have-- I still look young, but nonetheless I've been doing this for a while. And really some of the biggest success stories or turnaround success stories in corporate America have come because a new CEO has come in and reset the corporate culture. And that helps the way of thinking, it helps thinking right down to even the ground level.
Now, it takes time to rebuild a culture. It takes time for those efforts to pay off. But usually they do start to pay off one, two, three years down the line and it's just something, I think, Kevin Plank didn't want to give Linnartz time to do.
Interesting point on culture here, I'll just continue this thread, timeline of some of the-- I would say some of the biggest flops under Kevin Plank as CEO and there have been many. A couple of things that are worth calling out, bought a series of digital assets in MyFitnessPal nearly at the top of the market, sold it for far less. Came out at the start of the Trump presidency with supportive comments for President Trump that really ruffled the feathers of Steph Curry, of course, a key asset, endorsed athlete for Under Armour with that Steph Curry line. Ironically, one of the first meetings that Linnartz had, she told me, was with Steph Curry just to rebuild that relationship in large part because of those bungled comments in a TV interview by Plank, always known to put his foot in his mouth.
Then you had the "Wall Street Journal" reporting in 2018 that strip club visits were reportedly allowed to be expensed and Under Armour. Under Armour looks like they course corrected on that. And then one of the more bizarre stories, in 2023 there were reports coming from a new lawsuit against the company that Plank shared confidential information with TV anchor Stephanie Ruhle. So there's been a lot of going on.
And against backdrop of really this, you look at the last 10 years of results for Under Armour. With Plank largely at the helm, sales have aggressively slowed down, margins have degraded, the company has lost significant market share to Lululemon, Nike, a lot of upstarts in the space. So this is not going to be an easy ship.
Now, Kevin Plank posted on LinkedIn. I should mention Under Armour, now I want to make Plank available for an interview to me. Also really not being made available to any folks on Wall Street, so tight lipped for him.
They posted on LinkedIn though that he seems to be a changed human being and because of that he might be a changed CEO to be told. But he has a lot-- he has a lot to prove. And really he can't come back in here in Under Armour thinking he's going to run this ship like he did the prior 10 years. That's not going to cut it in this environment.
SEANA SMITH: So real quick, what do you make of the stock reaction to this?
BRIAN SOZZI: It's the correct one.
SEANA SMITH: It's the correct one?
BRIAN SOZZI: It's the correct one. Not only you have the surprise factor of pushing out really a respected leader in Stephanie Linnartz who had a lot of tremendous success at Marriott, some of her efforts, her management team, the management team she hires, that they hired, they were all new. Incredibly respected John Varvatos, the fashion designer, is the chief designer of this company. So she has started to reset the culture and there were signs these things were starting to pay off and may have started to pay off later this year for the holiday shopping season.
And again, I think there's just this lack of trust in Plank. This is a company that grew the company too aggressively, led to a lot of bloat. You have the controversial headlines.
And the strategic direction on what Plank wants to do is wildly unclear. So I wish him good luck, but he has a lot to prove. And all I can say is I hope he runs the company better than he did in the prior 10 years. Because if he doesn't, this could very easily be a $2 stock five years from now.