Under Armour splits with Steph Curry, leaving NBA legend free to find a new business partner

Under Armour and Stephen Curry have mutually terminated their 13-year partnership, with Curry gaining sole ownership of Curry Brand to pursue new retail collaborations. This separation is part of Under Armour's expanded restructuring plan, now costing $255 million, as the company aims to refocus on its core brand amidst eight consecutive quarters of sales decline and intense market competition. While Curry Brand contributed $100-$120 million in revenue, Under Armour asserts the split will not significantly impact its financial results or profitability, underscoring CEO Kevin Plank's strategic pivot to reignite the struggling sportswear giant, whose shares are down 40% this year.

Analysis

Under Armour (UAA) and Stephen Curry have mutually terminated their 13-year partnership, with Curry gaining sole ownership of the Curry Brand. This separation is integrated into an expanded restructuring plan for UAA, now projected to cost $255 million, an increase of $95 million from previous estimates, covering contract terminations and severance. Despite the Curry Brand contributing $100-$120 million in current fiscal year revenue, UAA asserts the split will not significantly impact its overall financial results or profitability.

This strategic move occurs amidst significant challenges for Under Armour, including eight consecutive quarters of sales declines and a 40% drop in its share price this year. CEO Kevin Plank aims to refocus on the core UA brand and reposition it as a premium offering, acknowledging the intense competition from rivals like On (ONON) and Hoka. The departure of Curry, a long-standing focal point, suggests a decisive shift away from past strategies that failed to reverse declining sales.

The increased restructuring cost and the termination of a high-profile endorsement, previously considered central to turnaround efforts, signal deeper operational issues and a pessimistic outlook for UAA. While UAA claims no significant financial impact, the market's strongly negative sentiment (-0.7 overall, UAA -0.8) and the company's persistent sales struggles suggest investors view this as a further setback. The move allows Curry to pursue "aggressive growth" for his brand, indicating potential for new competitive dynamics in the athletic footwear market.

Key Decisions for Investors

• Investors should closely monitor UAA's execution of its expanded $255 million restructuring plan and subsequent financial reporting for evidence of improved core brand performance and profitability, given the claim of no significant financial impact from the split.
• Evaluate the evolving competitive landscape in athletic footwear, particularly how Curry Brand's independence and potential new partnerships might impact market share, and the continued rise of agile competitors like On (ONON) against established players like Nike (NKE) and Under Armour.
• Reassess Under Armour's long-term growth prospects and its ability to reignite sales and achieve sustainable premium brand positioning, considering eight consecutive quarters of sales decline and the departure of a key brand ambassador.