Kevin A. Plank
President and Chief Executive Officer at Under Armour
Thank you. Lance. And good morning, everyone, for joining us on today's call. With the first quarter of fiscal '25 behind us, I'm pleased that we started the year ahead of expectations, and I'm encouraged by the early progress we're making in executing our Protect This House strategy. At the center of this strategy, we've recently declared to our team and partners that Under Armour is a sports house, a term that we're using to define the landscape in which we compete. The sports industry's version of the only handful of brands from Europe who've earned the right to refer to themselves as fashion houses.
Across the sports brand landscape, we believe there are less than five brands that could be represented on this podium for sports globally and that we are one of them, earned over our 29 year history, the credibility to show up in virtually any athletic endeavor on the field, pitch or court as an outfitter and be seen by athletes in the more than 100 countries where we do business today and are generally famous as an authentic brand, an authentic sports house brand. This rare era [Phonetic] amongst the landscape of the sports industry is an aspect of UA that we feel is incredibly unique. And just one of the attributes of strength we see for ourselves.
We contemplate the opportunity that Under Armour has in front of us. We believe this authenticity gives us an advantage as we reconstitute our brand strength and execute our strategy. To make that happen, this of course, begins and ends with our culture, elevating its importance and visibility, raising the bar of our culture across the enterprise, and like our brand positioning work, we're also reconstituting this. Our culture is unique in how it describes our brand, the athletes we have, and the ones we plan to attract.
In this spirit, we've redefined who and what we stand for within our strategic plan. As discussed on our last call, the who we are being about athletes, sports innovation and passion. And we have a passion for, in its simplest definition, the underdog. The athlete who has not given all of God's gifts of talent and despite what they're missing, is not tall or fast enough or strong or swift or clever enough. For all those who have to stay late after practice to work on a skill or study harder than the rest, this is our underdog.
And because of this, UA's athletes must use every resource and waking hour to make themselves better. Said differently, we don't innovate as a brand for athletes so that they can run up the score, we expect every product we build to provide an edge for our athletes, just to give them a fighting chance to compete. This mentality is what drives our innovation agenda and manifests through grit an oversized chip on the shoulder that is UA's beacon, an underdog spirit that can never be counted out. Each day, this UA team will operate. With responsibility to do everything in our power to push the boundaries of innovation that makes athletes perform better. And above all else, we recognize the privilege and joy it is to work in sports.
Our aspired culture will be the output of bringing this to life. In this effort, we must become more deliberate in everything we do, recognizing the difference between experimentation and intentionality and have the right talent and agile decision making abilities to ensure we can do this consistently at a high level. As such, we've invested meaningfully in experienced leaders to supercharge our ability to execute differently than in years past. We're not just building a company, we're building a brand and the reason is that a brand is so much more valuable than just a company. We're building the UA brand with purpose. One iteration, one success, one day at a time.
Looking back the last four months, since assuming the CEO chair, we still have much work to do, but I'm proud of what's been accomplished to date, including implementing a nine month go-to-market process to complement our 18 month calendar with the StealthForm Uncrushable Hat being our first delivered product and now available and in stock online. We also began the work to reduce our SKU style count by 25% implementing a category management structure and rightsizing our organization with a headcount reduction that while painful, is now complete. However, we're still building too.
This brings me to the announcement we made a couple of days ago. The appointment of 30 year industry veteran Eric Liedtke as Under Armour's EVP of Brand Strategy. Following a 26 year career at Adidas, culminating his roles as Brand President and Executive Board Member, we're thrilled to welcome him. Complimenting one of the strongest product teams we've had in nearly a decade, Eric's proven track record of transformational brand growth and strategy will be an incredible asset to our product and regional leaders and our broader executive leadership team at this crucial time.
As EVP of Brand Strategy, Eric will oversee our brand marketing, corporate strategy, consumer insights, sports marketing, creative and loyalty functions. In addition, Eric will be tasked with building out our marketing organization, including its go forward leadership that will report to him.
On our last call, we outlined what needed to be done immediately, distilled the key points of our strategy into a presentation that's now been delivered to all 16,000 UA teammates and taken on the road to our key retail partners, factories and franchisees globally, across North America, EMEA and APAC. From quick hallway talks to two hour to three hour meetings and presentations, we had transparent two way conversations to gain perspective about how to take better care of our brand.
These interactions have provided well-rounded insights into our strength and areas of opportunity, such as being faster in bringing products to market, more intentional and committed storytelling for our launches, serving as a better business partner and driving deeper connections with athletes to ignite brand love. Constant theme across these exchanges, parallel to the spirit of many of our investor conversations, is the optimism in Under Armour's ability to deliver a premium positioning and unleash our full potential.
In the product construct of good, better and best, we believe that UA can do business in all three, including, as it relates to price, a unique characteristic of being an authentic sports podium brand. This is probably the most significant business advantage of being a sports house and why we believe we can drive a more premium positioning, while not abandoning good level altogether. This range is one of the reasons I know we can attract A Plus talent to join us in this next chapter.
And this potential is evident when we combine innovative products, outstanding design, and thoughtful storytelling, we delight athletes with performance solutions they never knew they needed and now cannot imagine living without. This in conjunction with our strengthened product team and feedback based on early sharing of our evolving product line architecture is encouraging. We aim to scale this more broadly across every product we make, with renewed energy, story, clarity and alignment across the company.
With that, I'll highlight each element of our Protect This House strategy, starting with building better products and storytelling. Central to the evolution of our product organization has been the re-architecture of leadership and structure over the past year, with Yassine Saidi leading a talented and experienced team of apparel, footwear, innovation and design experts. By order of operations, product was the most immediate fix and frankly longest lead time UA needed to address. I'm very confident in the work this team is executing, including a more centralized vision across product merchandise and marketing that will enable us to correct our past inconsistencies, always editing and innovating to drive our brands forward.
With new leadership also came new priorities, and we're progressing well with our category portfolio realignment. This brings greater simplicity to the business and adds focus to our core sports categories, yielding much clearer roles and responsibilities for our product teams to identify and execute go-to-market plans that are ideally optimized for the highest quantitative and qualitative returns.
As mentioned on our last call, our fall-winter '25 season is when this team's efforts will begin to show up more robustly with new design language and improved balance between performance and style, a pivotal season that we will build into subsequent ones. Yet that doesn't mean we're just sitting back, waiting for next year. We're working to elevate our core men's apparel business with a refined assortment, infusing it with industry leading performance technologies in a more deliberate design direction.
At the same time, we're sequencing investments in our footwear and women's businesses to reinvigorate consideration among two of our largest long term growth opportunities. We're also shifting towards a head-to-toe approach across our largest categories by employing key franchises, trend right styles and innovations to underscore an Always On authenticity.
Looking at the season ahead fall-winter '24, we're going to see an uptick in our sportswear offering with more to and from wearing occasions for the 16 year old to 24 year old varsity team sport athletes who we target. This includes the launch of high performance streetwear in Unstoppable, versatile style and athletic performance of Meridian, elevated warmups and sport inspired looks in our Icon Fleece collection, Infinite and Phantom running launches and finally in basketball, the Curry 12, along with the first signature shoe for De'Aaron Fox of the Sacramento Kings.
Our next most significant effort is driving improved demand creation ecosystem through compelling storytelling and aligned merchandising. We've begun to optimize our marketing organization, including efforts to clean up our messaging, particularly in North America. Great example is our use of performance marketing. Last year when we sent an email to consumers, two thirds of these messages were about discounts or promotions and one third, were focused on full price selling and storytelling. This year, that ratio is now inverted, which although early is showing signs of positive traction and perception. So it's encouraging to imagine how a year's impact might improve our brand affinity.
In addition to not simply leading on the retail floor or online with price, we will ensure that we are telling a story about the product advantages, with messaging focused on premium franchises and inspirational connections around key retail and sports moments. In North America upcoming back to school activations highlight key franchises across team sports, apparel, footwear and sportswear styles. The Elite 24 basketball showcase this coming weekend in New York City, in our All-America Volleyball and American Football events in Orlando in January, give us an excellent platform to connect even more deeply with young team sport athletes.
In Asia Pacific, Stephen Curry will be taking his first tour across China since 2019 this September, and we're generating brand heat through social media and activations leading to millions of new followers and thousands of new member enrollments in just the first few days. With four major cities on tap, we look forward to September's tour and the energy it will bring to the Chinese market.
In Europe, across EMEA, football has been a sharp point in driving brand affinity with youth and unlocking our sportswear consideration. Activations during critical sports moments, including the English Premier League, Champions League final and the Euro Championships focused on our iconic HeatGear compression apparel and the Clone Magnetico boot, featuring a young stable of UA athletes, including Tony Rudiger of Real Madrid, Eddie Nketiah of Arsenal, we're very much in this conversation in European football.
We're also increasing our investment in paid social media influencers. Over the next few years, we intend to double the number of influencers in our Creator program to lean into fresh, new content to drive reach and engagement. In line with this, we signed University of Miami women's college basketball players Haley and Hanna Cavinder to a multi-year partnership. This serves as a metaphor for tying together sport authenticity and influencer relevance. With nearly seven million followers across Instagram and TikTok, it's great to welcome them to the brand.
Another first quarter highlight was demonstrating, staying on our front foot with collegiate athletes, including extending our partnership with the University of Maryland to be the exclusive outfitter of athletics program, including 19 varsity sports and universities club in instrumental [Phonetic] sports. With now seven Power 4 teams for UA, 85 Division 1 squads and 350 Division 2 and Division 3 schools, our NCAA presence is a testament to Under Armour being a brand that athletes trust. A true sports house.
We also announced our new partnership with USA Football as the official and exclusive uniform apparel and footwear provider, including the US men's and women's national teams. This is also an excellent opportunity to have a front and center grassroots pathway to defining flag football across more than a million member athletes by integrating it into our existing UA NEXT platform. We're very excited about this, especially as it leads to flag football's debut at the 2028 Summer Olympics in Los Angeles, where UA will be the official outfitter for Team USA competing on the gridiron.
And speaking of the Olympics, with more than 70 athletes from 26 countries across 28 sports representing UA, we've had a fantastic roster on the world's largest, most famous athletic stage. A few callouts, of course, are Stephen Curry and Kelsey plum on the US men's and women's basketball teams, New York City Marathon winner Sharon Lokedi, representing Kenya at our first games and Fermin Lopez, a key Spanish player who's led his team to the final of the Olympics football tournament by scoring four goals and two assists in just five games.
Next up is our second strategic priority, running smart plays and our work to optimize our business to clean up unnecessary complexity, meaning growth by constraint. Our approach here is simple, test all existing rules to determine how to take advantage of all business dimensions more efficiently. Accordingly, no areas left unturned, and all systems, structures and processes must have a clear and well defined purpose and output and definition of success.
Though a difficult decision, our restructuring program has given us a head start in streamlining the organization. During the quarter, we rightsized our workforce and are executing various transformational initiatives and advancing considerations around facilities, software and other areas. As a result of some of this work, we've begun laying out projects to automate task in decision making processes using both traditional and AI solutions to unlock data driven insights and operational improvements. So very promising for long term efficiency gains.
An output of complexity led to the creation of, frankly too many products that without proper segmentation and marketplace differentiation have challenged brand affinity. In this respect, I've tasked our team with achieving a 25% SKU reduction over the next 18 months, and we're making solid progress toward this objective. This is not, however, a blanket strategy across our good, better, best construct, nor does it apply to all categories equally. We're being surgical in this effort, distorting toward areas of opportunity with the highest returns both financially and strategically from a brand building perspective and purposely over indexing towards better and best level products as we elevate our brand positioning.
We're also working to become smarter, more efficient by modernizing our supply chain with two primary objectives, improving our end-to-end planning and cross channel capabilities led by Chief Supply Chain Officer, Shawn Curran. Our end-to-end planning work spans multiple disciplines, aiming to enhance our ability to plan better and protect our consumers' needs to optimize our assortments and manage inventory across regions, channels and retail doors. We've also started a multiyear distribution logistics modernization initiative to enable cross channel capabilities to optimize cost, maximize speed, ensure inventory availability, and increase service levels across our DTC and wholesale businesses.
That takes us to our third priority, elevating consumer experiences, where we're focused on driving excellence across our direct consumer and wholesale businesses. In DTC, the first quarter marked the beginning of our journey to elevate our North American e-commerce business toward a more significant and premium consideration. As expected, our e-commerce revenue was down, driven by roughly a third fewer promotional days than last year, however, positively, the percentage of full price sales in our digital channel rose significantly, along with a reduced mix of outlet and clearance sales. So although still in the early days of this strategy, we're optimistic about initial performance metrics, which include higher average order values.
Regarding physical retail, we're focused on delivering service excellence and identifying areas to improve upselling, repeat business and profitability. To support this, we're testing a new full price brand house concept and are pleased with the initial results, seeing an improvement in productivity and revenue per visitor, with cleaner sight lines and more curated product assortment, including nearly 50% fewer SKUs and an evolved instore presentation. Athletes can more easily see and feel the power of the Under Armour brand. All of this will come together even more beautifully later this year as we open our new flagship store at our new headquarters here in Baltimore before the end of December.
In our Factory House outlets, we're digging in to optimize this business better, especially in North America, which is critical to balancing future revenue and margin opportunities. During the quarter, we initiated trials with mixed results as we dialed various promotional levels up and down to assess volume and aSP impacts. An excellent test and learn as we solidify our go forward strategies. We're also working to change our assortment and segmentation, including less made for outlet products, SKU reductions, elevated visual presentations, and full price selling, all geared at harnessing this platform more effectively to generate capital for other parts of our business.
Our loyalty program is also giving us an added boost in realizing improved long term growth, profitability and higher brand engagement. With less than a year under our belts in North America, UA rewards has grown quickly, and its performance has been a positive contributor. The program has nearly five million members and is growing month by month. It's exciting too that about half of recent enrollments are new to the brand. This is an excellent sign of expanding our reach with unique visitors. Further, nearly 60% of our north American DTC revenue comes from UA Reward members, and we're showing roughly 50% higher revenue per consumer, along with a threefold increase in the 90 day repurchase rate compared to non-members, so very encouraging for the long term.
Now, shifting to wholesale. Following meetings with key global retail partners, I'm happy to report that they are encouraged by our progress and optimistic about the potential of our strategy. As mentioned, it will take time for the wholesale channel to inflect, we must allow for improved storytelling to take shape. In the interim, we're changing the script on what it means to be a UA partner and are committed to strengthening our crucial account relationships in each distribution tier. In addition to working out improved segmentation with our current mix of products, we're partnering on better integrated planning and joint marketing opportunities.
In closing, though early in our journey to reconstitute Under Armour's brand strength, we're making tangible progress in building a more premium product offering, we're running smarter plays by tightening up our SG&A, reducing SKUs and materials and beginning to elevate consumer shopping experiences. Amid the early progress we're making and Eric coming on board to fill a critical missing piece of our puzzle through the marketing lens, we'll continue to empower and evolve our culture to reduce complexity and be more deliberate in everything we do. I have every confidence that our improving level of execution will result in a better presentation of the Under Armour brand through building this sports house. There is much to do, but we're undeniably back on offense.
With that. I'll hand it over to Dave for more details on the results and outlook. Dave?
