Under Armour has launched a comprehensive initiative to revamp its supply chain operations. The move, announced by President and CEO Kevin Plank during a recent earnings call, is part of a multi-year distribution logistics strategy. The primary objective is to enhance cross-channel capabilities, ensuring inventory availability, improving service levels, and driving cost efficiency across the company’s direct-to-consumer and wholesale businesses.
The Dual Objectives
The sportswear giant is not only looking to streamline operations but also to modernize its supply chain. The two main goals, as outlined by the CEO, are to improve end-to-end planning and cross-channel capabilities. This strategic move comes at a time when Under Armour is grappling with declining revenues, with sales dropping by 10% for the quarter ending June 30.
Navigating Challenges
The company is also facing the challenge of higher-than-expected ocean freight costs, which CFO Dave Bergman referred to as a “newer developing headwind.” Despite these hurdles, Under Armour is confident that its initiatives to enhance supply chain and end-to-end planning capabilities will bolster its gross margins. The company is also proactively working to reduce excess inventory, cut down on discounting, and streamline SKUs.
Industry-wide Trend
Under Armour is not alone in its quest to optimize supply chain operations. Other retailers, such as Macy’s and Dollar General, are also investing in similar initiatives. Macy’s is planning to trim its distribution network and increase automation across its operations, projecting $100 million in cost savings in the current fiscal year. Meanwhile, Dollar General is focusing on optimizing inventory levels to simplify its upstream and downstream supply chain operations.
Under Armour is embarking on a supply chain overhaul to enhance efficiency and achieve cost savings, aligning with industry trends towards streamlined operations and improved planning capabilities.
