Under Armour, which was once comparable to Adi and Nike, has now become a frequent visitor to the quality black list. On December 20, a reporter from Beijing Business Daily learned that Under Armour was once again punished by relevant departments for quality problems, and just two months ago, Under Armour was fined more than 400,000 yuan for unqualified quality. Opening, pilling, fading ......When these can become the quality problems that Under Armour has complained about, the voice in the industry about Under Armour's "rotten" is getting louder and louder.
Frequently trapped.
According to the information released on the official website of the Shanghai Municipal Administration for Market Regulation, Under Armour's brand affiliate Ander Arong ** (Shanghai) ** was fined more than 300,000 yuan and confiscated more than 70,000 yuan of illegal gains for "producing and selling substandard products as qualified products".
According to the penalty announcement, Andera (Shanghai) was released in three batches from Under Armour Bv.Order 1113 men's down garments. After verification, a total of 305 unqualified products were involved in the batch, and the purchase of unqualified products in the batch involved was 597 per piece76 yuan, the tag price is 1999 yuan per piece, and the total sales amount is about 271.81 million yuan, (including 13% tax, 296 pieces), with a profit of about 771.94 million yuan, so the illegal income is about 771.94 million yuan.
The Shanghai Municipal Supervision Bureau believes that the above-mentioned acts of the parties violated Article 32 of the Product Quality Law of the People's Republic of China, which stipulates that "producers shall not adulterate or adulterate products produced by producers, and shall not pass off fake products as real or shoddy, and shall not pass off substandard products as qualified products", which constitutes an act of producing and selling substandard products and passing off qualified products. Confiscation of illegal gains771.94 million yuan. The fine is about 30480,000 yuan.
Tianyancha information shows that Andera (Shanghai)** was established in 2010 and is a wholly-owned subsidiary of Under Armour Asia Limited.
In response to the fine, a reporter from Beijing Business Daily interviewed Under Armour, but the relevant person in charge did not give more information, only saying that the relevant information would be synchronized after further understanding.
It is worth mentioning that Under Armour was punished for substandard product quality only two months ago. On October 20, the official website of the Shanghai Municipal Bureau of Supervision disclosed information that Under Armour was fined 47 for producing and selling substandard products as qualified productsMore than 90,000 yuan, confiscation of illegal gains 30More than 60,000 yuan.
According to Tianyancha information, Ande Arong ** (Shanghai)** has 7 historical punishment information, many of which have been punished by relevant departments for unqualified product quality.
Regarding the quality of Under Armour's products, many consumers said they had something to say. According to consumer Xiao Wei, he spent nearly 300 yuan to buy a zippered running sports top on the Under Armour Mini Program, and it fell off the line after wearing it three times. Consumer brewing said: "The shoes of more than 1,000 yuan bought in offline stores are basically worn once a week, and the toe cap appears to be open in less than a year, and the quality is too poor." ”
On the Xiaohongshu platform, complaints about Under Armour's clothes are open, fabrics pilling, and the wrong version of clothes abound. "Under Armour's quality is not generally poor, especially the quality of the Chinese mainland version is ridiculously poor, dissuade and buy carefully." This is Xiaoyou's exhortation to consumers who want to buy Under Armour products.
Cheng Weixiong, a senior brand management expert and founder of Shanghai Liangqi Brand Management, said that Under Armour is famous for making tights and has a certain reputation in the field of bodybuilding and fitness.
The performance is hardly optimistic.
For Under Armour's current situation, frequent quality issues are never a good thing.
Recently, due to the lack of optimism about the market, Under Armour lowered its fiscal 2024 performance forecast. According to Under Armour's disclosure, fiscal 2024 revenue is expected to decline by 2% to 4%, compared to the previous guidance of "flat to slight upside." At the same time, Under Armour also disclosed that inflation is hurting demand and higher discounts are eroding profit margins.
Under Armour's lack of confidence in the coming year's performance is evident. According to the financial report data, in the second quarter of fiscal year 2024 as of September 30, 2023, Under Armour's operating profit and net profit were 1., respectively$4.6 billion and 1100 million US dollars, although all appeared, but the North American market, which accounts for more than sixty percent, has declined one after another. Sales in the region were down 2 percent year-over-year in the quarter, compared to a 9 percent decline in the previous quarter. The decline in the first market may make Under Armour difficult to have confidence in the next performance development.
In fact, Under Armour has been in a sluggish phase since the loss in 2017. Under Armour posted its first loss since going public in Q1 2017, and in the following quarters, its revenue in key North American markets continued to decline. Until 2020, Under Armour was mired in losses.
There's no denying that compared to today's once-sluggish situation, Under Armour has had a moment of highlight. In 2013, Under Armour signed NBA star Curry on the eve of the explosion, and with Curry's take-off in 2014 when he won the MVP, Under Armour also entered a high-speed development track.
According to public information, Curry's popularity made Under Armour's "Curry Generation" sneakers a great success, and the company's sneaker revenue growth remained above 40% every quarter. In 2015, Curry's Under Armour basketball shoe sales increased by 350 percent.
According to statistics, in fiscal year 2015, Under Armour's total revenue reached 3963.3 billion US dollars, nearly 30% higher than the previous year**, becoming the second largest sports shoes and apparel company in the U.S. market, surpassing Adidas and second only to Nike. It was Under Armour's highlight reel moment, but it didn't last long.
In Cheng Weixiong's view, from the perspective of Under Armour's current positioning, it is not a professional sports brand, and there are certain deficiencies in sports professionalism and functionality, which are more involved in sports fashion, coupled with Under Armour's distribution system in China, offline channels have been greatly impacted, and it is difficult to achieve the expected development effect, and then there is a poor development.
Bet on the Chinese market.
With the poor development of the main market in North America, Under Armour has its own layout plan for the Asia-Pacific market represented by the Chinese market.
In fact, as early as 2015, Under Armour said that in the next 5-10 years, China will become a key market to enter, and will strive to develop China into the second largest self-operated market of Under Armour.
Since opening its first store in Shanghai in 2011 and officially entering the Chinese market, Under Armour has begun its layout in the Chinese market, with high-end, professional sports brands calling itself a high-end, professional sports brand, and its stores are basically located in the core business districts of first- and second-tier cities, including the two floors of Huaihai Road in Shanghai, which are located in Nike and Adi, and several stores in Guangzhou are located in large shopping malls such as Taikoo Hui and Tianhe CityBeijing Wangfu Zhonghuan opened Under Armour's largest *** in Asia
In 2020, Under Armour stepped up its layout in the Chinese market and signed MMA world champion Zhang Weili;At the same time, he also entered Li Jiaqi's live broadcast room;In addition, it cooperated with actors such as actor Han Dongjun and Zeng Keni, a Xi student of "Youth with You 2". In July 2021, Under Armour's 1,000th store in the Asia-Pacific region opened on the North Bund in Shanghai.
With the intensification of the layout, the Chinese market has indeed provided Under Armour with a lot of confidence. Although Under Armour did not specifically disclose revenue data for the Chinese market, the growth in revenue in the Asia-Pacific region, represented by the Chinese market, was reflected in the latest fiscal 2024 second quarter earnings report.
However, under closer inspection, this confidence is inseparable from Under Armour's aggressive discounts. Under Armour's discounts in the Chinese market are unprecedented. For example, this year's "Double 12", some Under Armour offline stores launched a 20% discount for a single piece, a 7% discount for 2 pieces, and a 6% discount for 3 piecesSome outlets are as low as 4% off. Some consumers ridiculed: "The unattainable Under Armour is too fragrant to fold now." ”
Behind the great efforts, in Cheng Weixiong's view, as domestic brands and foreign giants in the domestic sports field step up their layout, competition intensifies, Under Armour may also face the risk of being replaced by other brands, and can only retain consumers through frequent discounts.
While discounts** can drive sales to a certain extent, they also erode profits to some extent. Under Armour has repeatedly mentioned in its earnings reports that high-frequency discounts erode profits. At the same time, Under Armour's gross profit margin has also declined to varying degrees. In fiscal 2023, Under Armour's gross margin decreased by 470 basis points to 449%, which Under Armour attributed to the impact of discounts, although in the latest quarter, Under Armour's gross margin increased by 260 percentage points year-on-year to 48%, it was mainly due to the decline in chain efficiency and freight expenses, but the impact of clearance sales offset some of the growth.
It is also worth noting that in the Chinese market, Under Armour also closed stores for a time. During 2022, Under Armour closed stores including Shanghai Qibao Dragon City store, Shanghai Hongqiao Nanfeng City store, Shanghai Super Brand Mall, Shanghai K11 Shopping Mall and other stores.
Nowadays, although the Chinese market is regarded as its important market layout, the frequent quality problems may be worse for Under Armour.
Jiang Han, a senior researcher at the Pangu Think Tank Research Institute, said that in the sports and leisure market, competition in the Chinese market is intensifying, such as Nike, Anta, Hongxing Erke and other domestic and foreign brands to step up their layout, as well as competition in emerging fields such as functional sports shoes.
Public data shows that during 2020, Under Armour has been ranked outside the top five in terms of market capitalization. The top five are Nike (US$121.1 billion), lululemon (US$42.7 billion), Adidas (US$27.9 billion), Anta Sports (HK$204 billion, about US$26.3 billion), and VF Group, the parent company of VANS, (US$23.1 billion).
Beijing Business Daily reporter Zhang Junhua.