Under Armour CEO Patrik Frisk To Step Down in Surprise Announcement

Equities Staff  |

Image: Patrik Frisk (left), Colin Browne. Source: Under Armour

In an announcement that few investors were expecting, Under Armour ( UAA,  UA

) said after the close Wednesday that CEO Patrik Frisk would step down as of June 1, 2022.

Colin Browne, the company's current chief operating officer, will take over as interim CEO until a permanent successor is found.

Frisk has been CEO since January 2020, when he succeeded Under Armour's founder, Kevin Plank. Frisk is credited with turning the company around in his first year and a half on job, but the company has faced significant headwinds over the past six months.

Investment thesis

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  • Under Armour stock is down a further 4.4% in premarket trading Thursday after shedding 6.9% on Wednesday. The last price we saw was $9.29 at 7:18 am ET Thursday.
  • The stock has been cut in half since the beginning of the year, and we think investors should be avoiding it for the time being, at least until the company has more clarity on the impact of Covid lockdowns in China, which severely affected the March quarter.
  • Under Armour missed its numbers two weeks ago for its "transition quarter" as it moves to a March fiscal year.
  • For the quarter ended March 31, 2022, the company reported an unexpected loss of $0.01 per share, compared to the street's expectations of a $0.06 per share profit.
  • Revenues were slightly below expectations at $1.30 billion, vs the $1.32 billion the street was forecasting.
    • On the earnings conference call, CFO David Bergman said, "Revenue in Asia Pacific was down 14% due to Covid-related inbound shipping delays and challenging market conditions amplified by retail store closures and restrictions in China."
    • Further, Bergman cited "elevated freight costs, particularly for ocean freight which came in considerably higher than we had expected along with increased airfreight utilization."
  • We note the company provided zero explanation for the departure of Frisk.
  • Finally, we have a pet peeve about the company's investor relations website, which serves as more of an extension of its marketing section for its products. IR sites should be clean and easy to navigate, presenting all essential financial information and press releases in an obvious manner. Someone needs to fix the current layout.

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Source: Equities News

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