Transcript

Rapid Response: Under Armour’s pivot to growth, w/CEO Stephanie Linnartz

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The competitive landscape in sports apparel and footwear is Quite complex. It's not just Nike and Adidas, there's lots of other smaller players that are growing rapidly. You know, there's the Lulus and the Hokas, etc. You're gonna see Underarm are leaning more into sports style and shoes. You think about what gives a brand cultural currency, you very rarely see a line around the block for the latest drop of a hoodie.

I have two teenagers, one of whom is a teenage daughter, and I've taken her to a couple Taylor Swift concerts. So yeah, I can say I've seen the Taylor Swift effect. It's pretty incredible. You think about that social influencer or actress who's sitting courtside every game, how can we leverage opportunities like that to tell our brand story? That's Stephanie Lenartz, CEO of Under Armour. The first woman CEO of a major sportswear company, Stephanie took the reins earlier this year, coming over from Marriott International. I'm Bob Safian.

Former editor of Fast Company, founder of the Flux Group, and host of Masters of Scale Rapid Response. I wanted to talk with Stephanie because Under Armour is an iconic entrepreneurial success story, yet lately has struggled. Her task is to implement a pivot back to growth, as she puts it. Tapping into her experience as president at Marriott, she's applying lessons about product segmentation and brand strategy that can be instructive for any scale effort.

She also shares stories about dinner with Steph Curry, trying on every piece of women's clothing that Underarmor makes, and Taylor Swift's impact on sports marketing. Plus Working alongside a founder and keys for building customer loyalty. It's jam packed. Let's get to it.

F I'm Bob Safian and I'm here with Stephanie Lennartz, the CEO of Under Armour. Stephanie, thanks for joining us. Great to be with you, Bob, and wonderful to see you again. You and I first met when you were an executive at Marriott. You were a guest on the show during the pandemic.

Talking about impact on the hospitality business. And then earlier this year You made A shift signing on to become the CEO of Under Armour in fact the first woman CEO of a major sportswear company.

What made you make this change. I spent the majority of my career at Mariette International 25 years, which was absolutely wonderful. But earlier this year, I decided to take my own advice about the benefits of taking risk.

And I went for it. And I have just absolutely loved my first almost seven months at the company. I heard you had dinner with Steph Curry in San Francisco last week. I did. I had almost a three hour dinner with Steph. We have a fabulous line with Steph Curry, basketball shoes, but also apparel. And accessories.

We re signed our deal with him earlier this year. a long term deal. He's actually the president of the Curry brand and he's a very big shareholder as part of this deal. We had a nice dinner talking about the great future ahead for both of us. And I have so much admiration for him as a human being as well as an athlete. Hanging out with star athletes and coaches

It was that part of the appeal, although I guess for you it would need to be an LSU person to really get the most excited. I'm a diehard LSU fan. My husband's from Baton Rouge, so I've really learned to love the Tigers. But no, I mean, if sure that's the fun aspect of the job. And you know, there were many fun aspects of working at Marriott International. Was able to travel to something like seventy-five countries and see the world. But that's not really what drew me to Under Armour. What drew me to Under Armour was the incredible Growth opportunity. I think about Under Armour in three chapters. There was chapter one, get big fast, you know, grow, grow, grow, 20% growth year on year. Chapter two, which was a time to stabilize, you know, a little bit of a rougher time, but where we got some good systems and processes in place and some good work was done. And I'm blessed to lead chapter three. which is the pivot back to growth and a new error for the company.

You've taken on this role at a time when The giants in the industry are struggling a little bit. You know, Nike's in a little bit of a lull and Adidas is trying to Bounce back from the Kanye West. Yeezy troubles.

Does that mean It's a Difficult environment. For any sports branding including Under Armour or Does their trouble present like an opportunity?

For you The competitive landscape in sports apparel and footwear is You know. Quite complex.

It's not just Nike and Adidas. There's lots of other smaller players that are growing rapidly, the Lulus and the Hokas, et cetera. But I think Under Armour is uniquely positioned to win. The brand has grown to be in over a hundred countries. We have close to eighteen hundred stores. We have thousands of schools and many athletes beyond Steph Curry. You know, you talk to Jordan Speith, you know, he is drier, he is cooler, he is Playing better golf because he's an underarmor athlete and wears our gear. There's very few brands that have real authenticity on the court, the pitch, the field. Athletes, atletic directors, coaches. They love Underarmor because of the performance aspect of our brand. At the same time, there's a big untapped opportunity as we lean more into sports style and grow into new spaces. It's growing more into footwear, more into women.

You recently announced that Fashigner John Barbez was joining Under Armour as the chief design officer. Where we're trying to lean into more While staying dedicated to the performance nature of our brand is sports style. And I think John is gonna help stretch us and grow us. He's such a not only talented designer.

but really loves the brand, you're gonna see underarm or leaning more into shoes that you can wear with a pair of jeans when you go out you know after you practice. You think about what gives a brand cultural currency, you very rarely see a line around the block for the latest drop of a hoodie or a piece of apparel. You think about what's sold on the aftermarket, it's really sneakers, handbags, and watches. We're still gonna make amazing apparel and we're gonna make more sports style apparel, but we think there's an inextricable link. to building brand heat for underarmor, particularly here in the United States. Around

really unlocking our potential with footwear and particularly quote unquote sneakers. I heard that Early on in your time there. You tried on every item of women's clothing that underarmour makes. Yeah, I did. You know, we're doing less than twenty five percent of our sales to women and I wanted to say get some firsthand experience. Why? What's going on? And it was actually during my first month on the job, Kevin Plank, our founder and executive chairman, came into my office and he's I said, Kevin, I've done something and know something in underarm or you you don't know. And he said, What could that possibly be, Stephanie? He's got a great sense of humor. And I said, Well, I just spent the past couple of hours

trying on all our women's clothing and I wanna give you some feedback on where we're doing some things quite well, but where we have a lot of opportunity to improve. And so, you know, there's nothing like trying the clothes, the fit, the finish, the feel. And so I thought it was really important if I was gonna talk about growing the brand for female consumers. If I put the shoes, the clothing on my own body, Kevin had a good laugh'cause he had not ever tried on all of our women's clothing. And you are particularly focused on opportunity for serving Women athletes. I I think it's an untapped opportunity for on Durham Earth. It's pretty amazing when you think about the viewership that female athletics is starting to get. The largest crowd for a female sporting event happened earlier this year with 92,000

people for a volleyball tournament. You think about that at the NCAA finals this year, I think it was close to ten million people watch the finals. There's a the opportunity for us to market to women differently. Of course, leaning into female athletes to be ambassadors for us. But to also leaning into social influencers as we start making more sports style apparel and footwear. Think about that social influencer or actress who's sitting courtside every game. They may not be an athlete, but they love athletics. And how can we leverage opportunities like that to tell our brand story? I have to ask you about This

Taylor Swift. Travis Kelsey phenomenon going on in the NFL and like its impact on On marketing and on brand. Yeah, the whole Taylor Swift thing is just incredible. I have two teenagers, one of whom is a teenage daughter, and I've taken her to a couple Taylor Swift concerts. So yeah, I can say I've seen the Taylor Swift effect. It's pretty incredible. About the the jerseys that are being sold and tickets that are being sold because, you know, because of the Taylor Swift phenomenon, it's the way the world works these days, right? I mean, the way That you can market through

Instagram, TikTok, et cetera, through social influencers is incredible, including celebrities. I mean, it's hard to argue there's a bigger celebrity these days than Taylor Swift. So I think that's just an example on steroids, right? Well, before that happened, we were thinking about of course we use our athletes as a way to tell our brand story and and drive sales and love for the brand, but you know, it's amazing how many social influencers are out there with millions of followers and can help tell our brand story. I think you have to have a multi-tiered approach, you know, with the big names and at the very same time, a network approach that is people who maybe aren't as Like famous, but who can help you build your business. Half of your leadership team are women, which

Doesn't happen in all companies. Some Women executives. Wanna talk about gender? Some Don't I'm not a woman leader, I'm just a leader.

Period. How do you think about it? Well, I think about the fact that I'm a woman. I can't I mean that is a reality, right? And as a woman and as a woman who had a very busy career raising children. I have a set of life experiences that I think other people can relate to, particularly women. So I don't shy away from the fact that I'm a woman You know, at the same time. there's aspects of my life and leadership style that have nothing to do with my gender. They know I lean into all aspects of my life and my leader and some of them

are uniquely one way because I'm a woman and and some are not. So I think about it that way. Under Armour has had an incredibly successful entrepreneurial run, but as Stephanie points out, new opportunities are waiting, as they are for so many businesses, whatever their stage of scale. After the break Well here how she's applying lessons she learned at Marriott in unexpected ways.

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Every week I sit down with the pioneers shaping our future. and we take you behind the scenes of the AI that's transforming our lives. Find pioneers of AI wherever you tune in. Before the break, we heard Under Armour CEO Stephanie Lenart talk about the need to pivot for growth, even once you've scaled. Now she digs into the details from product segmentation to client engagement, applying lessons she learned as the president at Marriott International.

Plus What it takes to work alongside a founder and more. It is such an interesting landscape that you're playing in'cause you've got These giants like Nike and I did. And then you've got Lululemon that's coming at you from another side. And as you mentioned, you've got these fighter brands like Hoka and Bandit and Track Smith and whatever coming from the bottom.

Marriott, you had multiple brands that you used in different categories. That hasn't necessarily happened in the sportswear business. How do you think about it being Similar or different than the way that was approached in in the hospitality business. Marriott International, we had thirty-one different brands, right? Everything from Ritz Carlton and St. Regis and W. down from a lower price point, courtyards and fairfields, right? So at Under Armour, the primary brand is Under Armour. Of course, we do have some

lines like the curry brand and the rock line, but you know, that are connected to Under Armour one of the things we need to focus on is better segmentation in terms of the product pyramid. So the brand can all be Under Armour. We have a lot of good level product. We need to make more better and best product. And then where we sell it needs to be not different than some of the big players you talked about. There's full price stores at Maine and Maine, and then there's outlet stores, right? And and retailers that you work with. So we need to be more disciplined around our product segmentation, even if it's under one brand. So that we're selling only our best stuff in our brand houses and on our website and and then it there's a different part of the product pyramid that's sold in other channels. Yeah, are there things? About

Marriott that you're trying to bring to underarm or Underarmer. It's not just about the product. Of course you have to have products at the center, but I think about what is it like when you go into an underarmor store. You have to have hospitality, you have to have great service, you have to have knowledgeable salespeople, just like you do. In a hotel. And so the warmth and the

The hospitality and retail to me. is the same as the warmth and the hospitality in the hotel business. We had to have a world class website at Marriott. We have to w have a world class website and and app. And under armor. In all of these consumer facing brands, it's about the product, but it's also about the service.

and the emotional connection to the brand. You're working alongside Underarmor founder Kevin Plank. And and a founder's influence can be so strong for good, but sometimes it can also be hard for them to let go or for them to accept change. How's that relationship so far met your expectations and what's been unexpected? Kevin Flink and I are off to a a great start. The first twelve and a half years of

My time at Mariette, Bill Mariette was the CEO. Many Mariette family members work in the business. So while it's not exactly the same as underarmor, there are parallels on that front. I think the pros way outweigh the complications. And it's not easy every day. It does make it challenging sometimes. It is different to be in this situation than maybe running another type of company where there's not a founder involved. That's absolutely true. But I think that there's nothing that matches the passion of a founder. A true entrepreneur who started from very humble beginnings and built a multi billion dollar company. Kevin is a great asset that I have as a CEO to help inspire the team, inspire our athletes. And so

He and I are finding our way together. I mean he's our executive chairman and he's our brand chief, but we're finding our lanes and our way, you know, as we work together. There is nothing I've wanted to try or do or experiment with that he has said no to. And at the same time, he is helping me lean in in places where he has strengths. He has some really good thoughts on product as an example. You know, I give Kevin Plank a tremendous amount of credit for his commitment to Baltimore. We're building a spectacular new headquarters here that is going to be the most sustainable corporate headquarters in America. you know, mass timber, geothermal heating, three thousand eight hundred solar panels, we're reclaiming rainwater. It is spectacularly beautiful and also deeply committed to one of our core values, which is to act sustainably. You run marathons, I understand? Well, I think I've done more half marathons of late. But I do like to run. I am a big runner.

Building a A brand and a business is more like a marathon a long race than a sprint, but investors often want near term results, which I think is one of the Most difficult challenges of being a public company CEO. H how do you think about Pacing yourself. in this new role as a CEO. Sometimes I think it's more like interval training.

I'm running under armor for the long term. I realize the pressures of quarterly earnings and all that, but Every day the long term success of this company. So that's always at the top of my mind. But it's important to have wins along the way, not just for Wall Street, but for the team, right? People need to see some wins on the board to get people psyched up. For myself personally, you mentioned exercise. I think one of the great things about exercise is it helps you through stressful times. So I do like to run and I like my Peloton. I I'm very into meditation. Um I will always love to travel. It's one of my great loves and spend time with my family. So those are the things I lean into. To keep myself as balanced and fresh and energized for what's going to be a very, very tough job. Exciting job, great job, but I recognize also tough job.

What's at stake right now? For under armor. I think about the teammates, the employees that work for Under Armour, their future, their opportunities, and might want to be able to leave a company that's stronger and healthier with more opportunities. If I focus on that, the rest will happen.

You oversaw the creation of the Marriott Bonvoy program. largest loyalty programs anywhere. How are you thinking about approaching loyalty and customer engagement when it comes to to under armor.

So Marion Bonvoy was the backbone of our consumer strategy. It started many decades ago, right? And we grew it into this 180 million member program. was about the emotional connection to the company and to the brands. We would bring people to the Super Bowl. You could exchange your Mary up envoy points for Uber, and much of it was experiential. And it wasn't just about points for hotel rooms. And a lot of people would stay at courtyard hotels to then get those points to take a Ritz Carlton vacation. So fast forward to Under Armour. We just launched Under Armo rewards. So I'm back in the beginning of this journey. And of course it's gonna be about points for merchandise, but to get people to sign up, we said, oh, we'll have a sweepstake and some winners can come spend half a day with Steph Curry in Baltimore. You'll get early drops to the, you know, newest curry basketball shoe or the newest uh underarm or XYZ. It will be about things we can do with our, you know, thousands of teams and hundreds of athletes. And so there's a lot, again, I can pull forward.

from my experience at Marriott about how you make a loyalty program sticky. and emotional, then that's what we're gonna do with UA rewards. I see it as being the cornerstone of our consumer engagement strategy here. How did you go about Introducing yourself to the Team at Under Armour?

Well, one of the things I did early on before I even started is I uh went undercover and started visiting stores. There's nothing just like I used to tour hotels, there's nothing like getting out into the stores and talking to the teammates at the front line. So I did get on the road once I was announced as the CEO. got out to the stores, started meeting with our athletes. Meeting with athletic directors. So he just recently got back from a

eight day ten city trip to Europe where I was meeting not only with our teammates But visiting with our distribution partners, the big trick coming up to Asia where I'll meet with our factories and our suppliers. So there's nothing more important than asking questions. So I can l learn more. about what people think of the brand being open to listening to that more sometimes tougher feedback. Mm-hmm. Well, Stephanie, this has been great. Thank you so much for doing this.

Thanks, Bob. Stephanie doesn't describe herself as a refounder at Under Armour. She's too gracious for that, especially given founder Kevin Plank's continued influence at the company. But the reality is. Every business has to remake itself over and over to maintain its relevance over time and to reach the next level of scale and impact. I'm Bob Safian.

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