Overrated or Undervalued?

6 June 2021

Under Armour creator and CEO Vincent Bezaio is no stranger to controversy. He's previously spoken out against genetically modified foods and received death threats over the issue. However, in this interview, he describes a particular industries as"bad," and suggests that entrepreneurs should take a different way of working with the firms they work for Ferrari Energy. In other words, he says it is not always better to align yourself with a"good" business. In cases like this, his instance includes one of the biggest names in exercise equipment.

In the course of this interview, I must ask the hard questions - such as, why does Under Armour should get in to China? And is the business focusing on fitness and wellness rather than more conventional sports? While he did not offer specific details, he did tell me,"We are investing a lot in the private stock market. There are tons of people in our market that have started businesses that have gone bankrupt, so there is some danger involved." He went on to mention that the organization's earnings are increasing year-over-year and the company now has two factories in China and one in India.

In light of Under Armour's recent issues, it's easy to assume that Bezaio was seeking to ride the co-founder's popularity to the private sector. In reality, many entrepreneurs talked to me about how the founder's prominence has helped them get a toehold in the public market. Entrepreneur Joshua Davis told me that due to Armour's history is so good, many big businesses have bypassed him in favor of bigger, more prestigious companies. "VC dollars are flooding into companies that were considered too risky to put money into years ago, simply because they had good founder names," he explained. Really, Davis went on to say there are a range of big-name businesses he thinks are headed towards bankruptcy if they don't make changes soon.

However, some experts question if this is a smart move for a fitness company that is relatively late on the game. "The reality is that many big names already have private equity groups considering their enterprise," states John Di Lemme, CEO of Global Fitness, a regional marketing and sales company. "It may be nice to find an innovative new health and exercise equipment company join that fray, but I doubt it is a winning proposition." On the flip side, Di Lemme states that he sees great opportunity in the business and in the future. He notes chief executive officer Paul Scandlen is a trained fitness expert who brings a wealth of expertise to the role.

Under Armour's problems could spell trouble for other businesses in the gym gear enterprise. "There is a great deal of consolidation going on in the fitness space, and companies can really benefit from consolidating and focusing on their core business," says Jim Powers, senior vice president of Consumer Products and Marketing in CDP. "A lot of these businesses have really powerful brands that customers feel that they understand and trust" Still, Powers cautions against putting too much stock into what Under Armour could become. "The trends are constantly changing."

For the time being, Ounder and CEO Richard Fields is apparently managing the crisis on their own. In a statement released after the business's second-quarter earnings release, Fields stated"The strength of our company is the result of hard labour and investment in the long term. We expect that the company will meet its financial obligations and remain a solid, growth-oriented company in the years ahead." Whether or not the health club business will rebound remains to be seen.