I've long had a "worst CEO of all time" list.
I actually keep it on a piece of paper in the kitchen drawer. I haven't made any additions in some time, as there's a high bar to get on the list, and I am 99.99% of the time a happy person — who wants to spend their time labelling people the worst?
There is no set formula to landing on my list. But if there is any tie that binds the 10 people who are on it, it's consistently being inconsistent in delivering financial numbers, brutal underperformance versus competitors, and just incompetence in the role.
Some don't strike me as nice people, either. I like nice.
No. 1 on my list — will never change for as long as I am on this planet — is former Sears CEO Eddie Lampert.
A trip down memory lane for you. One of the worst to do the job in history — ran Sears into the ground from his posh mansion. Most investors never even knew what he looked like!
I'm not going to tell you the other nine names.
But I'm going to reluctantly add an 11th name to the list.
Under Armour's (
UAA) founder and boomerang CEO Kevin Plank.
I say reluctantly because I have a lot of respect for Plank as a founder. To go from selling T-shirts out of your trunk to building a global retail brand is commendable.
Hell, while I got to
interview President Joe Biden this week — which has basically taken me 21 years of hustle — I haven't built a company from scratch.
But what's going on at Under Armour is a full-on disaster, and Plank has to bear the brunt of it all.
Although he only recently returned as CEO — after
booting his hand-picked successor a year into the job — he's been on the board since day one. He's been a constant presence at Under Armour, meddling where meddling wasn't needed. Putting the company in news cycles it shouldn't be in.
All in all, just not getting it done as a leader, from execution to innovation to company culture.
And this week it once again blew up in his face in the form of a shocking earnings release and outlook.
Fourth fiscal quarter sales tanked 5% from the prior year. Sales in North America plunged 10%. International sales were down 7%. Wholesale sales (aka sales to department stores and other partners) fell 7%. E-commerce dropped 8%. Apparel sales down 1%. Footwear sales down 11%. Accessories sales down 7%.
A little bit of perspective:
- Walmart US e-commerce sales rose 22% in the most recent quarter. Sure, Under Armour doesn't sell ground beef and bikes, but e-commerce continues to be a major growth driver for most retailers. Provided your name isn't Under Armour.
- Lululemon's sales in the most recent quarter rose 16%. Sales in its Americas division advanced 9%.
"With several CEOs and heads of product marketing in North America over the past half a decade, ongoing turnover of critical leadership has been central to our inability to stay agile and decisive," Plank told analysts on his first earnings call since returning as CEO.
Reminder: Plank has been the constant in the past half-decade during this internal turmoil. The buck has always stopped with him, who is still the controlling shareholder.
The company guided to a low-double-digit-percentage sales drop in its new fiscal year, including a startling 15% to 17% decline in North America.
Plank says he is resetting the business.
That includes slashing 25% of the company's stock keeping units (SKU), cutting more costs (the other constant in recent years), and rededicating himself to innovation. Under Armour is promising brighter days 18 months from now.
But Wall Street is rightly skeptical.
"Several of the initial inputs to the turnaround strategy add some comfort (new $500 million buyback, 25% SKU reduction, new cost cut initiatives). However, many elements of the plan seem dependent on UAA achieving a degree of success in product innovation we haven’t seen in years," wrote Evercore ISI analyst Michael Binetti in a client note.
And this brings me back to Plank.
Under Armour's share price has plunged 87% since its 2015 record. This is a $6.71 stock now! The company's market cap stands at a paltry $2.90 billion, versus $42.3 billion for Lululemon and $138 billion for Nike.
Deckers Outdoor — once only known for Uggs boots — has seen its market cap swell to $22.7 billion on the back of feverish demand for Hoka running shoes.
Once a consistent 20% plus annual revenue grower, Under Armour's sales are outright declining — with the decline poised to accelerate over the next 12 months.
A few odds and ends to this analysis:
- The company is in such sorry shape you have to wonder how much longer key brand sponsors such as Steph Curry, The Rock, and Jordan Spieth stick around.
- The company totally missed the super-shoe movement.
- The company totally let Hoka and On run all over a sneaker business that has never truly gained traction — because of a lack of design and technical factors.
- Adidas is becoming popular again and could have a big autumn while Under Armour sags.
- Quality has fallen way off. Go touch a pair of Lululemon leggings, then a pair of Under Armour leggings.
- The company isn't even in the conversation in terms of offerings for the coming summer Olympics.
- Malls are filling up with new Under Armour competitors such as TYR.
I want to remove Plank from my list. He has earned his place, however.
The next 18 months are likely to be some of the most trying in his career. At some point, he has to consider his legacy, which could mean stabilizing the business by year-end and selling it to private equity.
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