Wall Street isn’t happy Kevin Plank is returning as Under Armour CEO

The interior of an Under Armour store is seen on November 03, 2021 in Houston, Texas.

Brandon Bell | Getty Images

Wall Street is not pleased that Under Armour founder Kevin Plank is returning as its CEO. 

Shares of the athletic apparel company plunged about 12% on Thursday after the retailer announced late Wednesday that CEO Stephanie Linnartz would be stepping down after barely a year on the job and Plank would replace her on April 1. 

Following the announcement, both Williams Trading and Evercore ISI downgraded Under Armour and lowered their price targets. Williams Trading rated it a hold from buy and lowered its price target from $11 to $8, while Evercore downgraded the company to underperform from in line and lowered its price target from $8 to $7. 

Linnartz, a former Marriott International executive who took the helm last February, is the second CEO the company has cycled through in less than two years. 

Former Aldo Group CEO Patrik Frisk replaced Plank as Under Armour’s chief executive in January 2020 only to suddenly announce plans to resign a little over two years later, in May 2022. 

That December, Under Armour announced plans to hire Linnartz on a bet that her experience building out Marriott’s renowned Bonvoy loyalty program and driving digital revenue for the hotel giant would offset her lack of experience in the retail industry. 

Since she started at Under Armour, Linnartz had been focused on rehauling the company’s C-suite, building out its loyalty program, UA Rewards, and pivoting the brand’s assortment to a more athleisure-focused offering that had more stylish options for women. 

In its downgrade, Evercore ISI said Plank’s return to the company was a “clear signal” that the strategy wasn’t working and its key performance indicators were continuing to deteriorate in the current quarter. 

“We think the most likely scenario Mr. Plank will pursue will include efforts to accelerate a return to N. America revenue growth … which we think will add significant risk to the brand longer-term,” analyst Michael Binetti wrote. 

Sales at Under Armour slowed during the holiday quarter as the company grappled with soft demand in North America and sluggish wholesale orders. However, these dynamics also have affected rivals and are emblematic of larger forces that are pressuring the retail industry. 

In the face of persistent inflation, high interest rates and dwindling savings accounts, consumers in North America have been more choosy with their discretionary dollars and have been pulling back on buying new clothes and shoes in favor of spending on dining out and traveling.

On the other hand, wholesalers have kept tight order books as of late after they were crushed with high inventories that they accumulated during pandemic-era supply chain snarls. Now that inventory levels have largely normalized throughout the industry, wholesalers have been careful with their orders as they look to maintain those levels while contending with an uncertain…

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