• by Sarah Mahoney  @mahoney_sarah, March 14, 2024

Image above from an Under Armour ad.

It’s been a rough week to run a sneaker company. In an abrupt move, Under Armour’s CEO, Stephanie Linnartz, is out. Kevin Plank, who founded the company in 1996 and first ceded the CEO spot in 2019, is back in that role. And Allbirds replaced its CEO and co-founder with industry insider Joe Vernachio.

Industry observers say the Under Armour move is both sudden and unsurprising. Linnartz joined the company in February 2023, following a 26-year career at Marriott. Her appointment surprised many, both because she had no relevant apparel or footwear experience and because the industry is notoriously rough on women executives.

Her departure follows the failed realm of Patrik Frisk, who held the post for just two years.

The company also named Mohamed A. El-Erian, Under Armour’s lead director, as chair of the board.

The transition comes as Under Armour struggles to regain the sales momentum it’s been looking for since 2017.

“As the company continues to navigate several post-pandemic consumer, industry, and brand-specific factors,” writes Plank in the announcement, “we are working hard to reconstitute our strengths and make thoughtful, balanced business decisions to drive enduring success for athletes, customers, and shareholders.”

In quarterly results released last month, revenue fell 6% to $1.49 billion from $1.58 billion in the third quarter last year. Wholesales revenue decreased plummeted 13%. The company’s problems are worse in North America, where sales fell 12% to $915 million.

Apparel sales slid 6%, and footwear declined 7%.

Net income dropped to $114 million from $121.6 million in the comparable period of the prior year.

Under Armour also forecast that more bad news was on its way, lowering its outlook to a 3% to 4% decline for the full year.

Linnartz had been clear that revamped marketing was high on her to-do list. A shake-up back in June saw the hire of Jim Dausch as executive vice president and chief consumer officer, also from Marriott. And both chief operating officer Colin Browne and chief product officer Lisa Collier stepped down.

“We recently consolidated our global and North American teams who will report to a new chief marketing officer, a search that's currently underway,” Linnartz said in a webcast for investors last month. 

Observers aren’t so sure Plank is the answer. “Plank hopes for a return to a glorious past after years of failure,” writes David Swartz, an analyst who follows Under Armour for Morningstar. Ousting Linnartz “always seemed like a strong possibility. Under Armour has been in restructuring mode since about 2017, and the performance of its stock has been woeful.”

Swartz points out that when the company’s results began deteriorating, Plank was fully in charge. “He also must take some blame for the failure of his chosen successors.”

Notably, the company paid $9 million in a fine to the Securities & Exchange Commission, settling charges that Plank had misled investors by inflating the company’s value.

Still, Swartz says there’s plenty to be hopeful about. “Under Armour has a strong balance sheet despite its struggles, and the sportswear market is attractive.”

While Under Armour and Allbirds are vastly different -- Under Armour’s latest annual sales topped $5.9 billion in many categories, compared to Allbirds’ annual sales of $254.1 million -- both are examples of how hard it is to maintain customer love in athletic wear.

Allbirds’ leadership announcement came at the same time as fourth-quarter results, marking another sharp decline in sales. The company is promoting Joe Vernachio to CEO from COO.

He succeeds co-founder Joey Zwillinger, who will remain on the board of directors and act as a special advisor.

Zwillinger founded the company with Tim Brown in 2016, and the two ran the business as co-CEOs. For a time, people couldn’t get enough of the eco-conscious, all-wool shoes, and the company rapidly expanded beyond its D2C roots into physical retail.

While Allbirds’ valuation rose as high as $4 billion following the 2021 public offering, its stock languishes at less than $1 a share.

“Allbirds has all the makings of an enduring, iconic brand -- lifestyle positioning, meaningful purpose and sustainability, and great value,” Vernachio says in the release. “I look forward to delivering on the full potential of our strategy, creating incredible products and building long-term value for our shareholders.”