EARNINGS

Holding Out for a Hero Item

Under Armour’s ongoing turnaround plan needs a turnaround plan. 

Under Armour said Tuesday it’s expecting another sizable sales decline this year after reporting sales decreased 2% in its biggest market, North America, in 2019. The rest of the financial picture isn’t pretty either.

• Revenue inched up almost 4% to $1.4 billion in Q4 2019, missing expectations.
• Under Armour swung to a $15.3 million loss in Q4, a far fall from the $4.2 million profit it tallied a year earlier.

Leadership’s shaking in their sneakers. “I’m not satisfied with where we are today,” Under Armour CEO Patrik Frisk said. Neither are investors. Shares fell nearly 17% Tuesday. 

Cheaper by the dozen

Under Armour's downturn started in 2017. Up to the end of 2016, it had logged 26 consecutive quarters of at least 20% year-over-year revenue growth. 

The turnaround strategies Under Armour pursued only made its problems worse. 

• Too many sales squeezed margins. 90% of Under Armour’s North American stores are outlets, and its wholesale partners frequently mark down its merch. 
• Not enough yoga pants. Under Armour focused on gear more suited for Olympic athletes than everyday shoppers, so it missed out on the athleisure boom. 

Zoom out: Competitors like Nike and Lululemon have focused on direct-to-consumer sales and followed the athleisure trend to enviable results. 

“The only way is through” 

That’s the slogan from last month’s Under Armour campaign—and a summary of its 2020 plans. Everything’s on the table to reverse its sales slump. 

• Under Armour says it’ll enhance its e-comm presence and boost marketing investments to drive direct sales. 
• It’s considering hitting pause on plans to open an NYC flagship.
• All in all, pre-tax charges for the restructuring effort could come in between $325 million and $425 million this year. Still, Under Armour says it could save around $50 million. 

My takeaway: Nike has Air Jordans. Lululemon has ABC pants. Under Armour has a hole where its full-price hero item should be—and Tuesday’s heap of bad news shows it could use one.

D2C

Love That Dirty Lemon Water

D2C beverage brewer Iris Nova is bringing its Dirty Lemon water brand nationwide with a new Walmart partnership, the company shared in a release. I’m aware that sentence was a “retail in 2020” time capsule. 

Quick intro: Since 2015, Iris Nova has become the barre-to-brunch crowd’s favorite bev maker by selling cases of Dirty Lemon and other drinks via text message. Then it inked a few wholesale partnerships and opened a cashierless store. The results:

• Iris Nova’s 1,000+ wholesale retail accounts make up around 50% of annual revenue. 
• Retail is Iris Nova's No. 1 driver of customer acquisition online, a company rep said.

From the window to the Walmart 

Since Iris Nova’s thirsty for profitable growth and nationwide scale, Walmart’s almost 5,000 U.S. stores make it an ideal partner. 

And Iris Nova gives Walmart another internet-favorite for its burgeoning D2C portfolio. It’s competing with Target, which has deals with podcast commercial regulars like Casper, quip, and Harry’s. 

+ ICYMI: Iris Nova CEO Zak Normandin stopped by Business Casual, Morning Brew’s weekly podcast, to talk cashierless checkout and venture capital. Listen here.

SPONSORED BY SAILTHRU

Hit the Email Bullseye

Did you know 77% of email ROI is generated from targeted, triggered messaging? It’s cool, we missed that one at trivia night too.

Campaign-centric messaging has its place and purpose, sure, but when it comes to boosting email revenue, repeat purchases, and virtually all critical retail metrics under the sun, triggered messaging is how the pros do it.

That may sound like a lot to chew on, but Sailthru’s got something to help wash it all down: The Ultimate Playbook to Triggered Messaging.

Advance your trigger game with Sailthru’s guide and discover:

• The must-have trigger messages for retail and e-commerce brands
• A deep dive into the highest impact triggers, complete with use cases
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Download the free playbook and target those inboxes with your newfound skills today.

EXPERIENCE

More Caffeine for the Airport Economy

Starbucks entered two new partnerships to expand its presence in airports, because lattes are the only bright side to a six-hour layover. 

Starbucks will work with retail hospitality groups Paradies Lagardère and OTG Management to…

• Enter new airports where Paradies Lagardère and OTG operate stores.
• Introduce pop-up stores that move throughout the terminal, allowing customers to order at their gates.
• Enable mobile orders at airports so customers can skip the 30-minute waits at its walk-up stores. 

Starbucks’s move comes with baggage

HMSHost, Starbucks’s airport retail partner since 1991, last week opted out of their exclusive partnership. The reason? It wanted to focus its future airport efforts on smaller, local brands. (They'll still operate their current stores together.)

But it’s got a free carry-on: Sales are taking off for airport retailers. Lego, L’Oréal, and Estée Lauder are among the duty-free and travel retail stores that took in a record $76 billion in sales in 2018. 

Those purchases were made by only 15% of total airport travelers—meaning there's room to grow for everyone, including Starbucks.

WHAT ELSE IS BREWING

• Shopify reported global sales between Black Friday and Cyber Monday 2019 surpassed $2.9 billion.
• Brandless, the D2C retailer backed by SoftBank, shuttered operations and laid off 90% of its staff.
• Goop is partnering with Banana Republic for a capsule clothing collection and limited podcast series.
• Safilo Group acquired a majority stake in eyewear brand Privé Revaux.
• Showfields will open its second experiential retail store this spring.
• IKEA named a new CEO: Jon Abrahamsson Ring, who’s currently head of IKEA’s franchising division.

SWAPPING SKUS

One top listen, one top read—both with ties to the restaurant biz. Hope you’re hungry.

• Planet Money debunks the dining theory that more chairs = more money with a feng shui case study of an NYC restaurant. (Full disclosure: This rec comes via my fiancé.)
• The D2C disruption wave finally came for frozen meals.

FRONT ROW

People-watching enthusiasts can get an eyeful from the front rows at fashion week. This year, I can’t unsee Vogue editor-in-chief Anna Wintour’s unexpected seatmate at Tom Ford. Here are some clues: 

• He doesn’t have a fashion background, but his company is making investments in it.
• He’s recently traveled to Delhi and Los Angeles.
• He’s a Retail Brew regular.

Who is he? Scroll down for the answer. 

There are two more days until Valentine’s Day, so don’t forget to send the most special person in your life some flowers. My address is at the bottom of the newsletter—Halie.

FRONT ROW ANSWER

Jeff Bezos