CNBC Exclusive: Under Armour CEO and Chairman Kevin Plank and Under Armour President and COO Patrik Frisk Speak with CNBC’s Courtney Reagan

AddThis Social Bookmark Button

Under Armour CEO and Chairman Kevin Plank along with Under Armour President and COO Patrik Frisk spoke with CNBC’s Courtney Reagan on CNBC’s "Squawk Box" today, at the new NYC store in the Westfield World Trade Center shopping center.

COURTNEY REAGAN: Hi, good morning to you, Joe. I am here at Under Armour in New York City. It’s a brand house store at the Westfield World Trade Center. CEO Kevin Plank and Chief Operating Officer Patrik Frisk. Gentlemen, thanks for joining us here today.

PATRIK FRISK: You’re welcome.

COURTNEY REAGAN: We just had Steven Mnuchin talking about a variety of things, including tariffs. I know you’ve been working to lower your sourcing out of China. It’s getting lower. It is still there. And since we heard from you last during the earnings call, there have been new tariffs that have been imposed. List 4a and 4b on things like clothing, shoes, socks. What does that mean for Under Armour, Kevin, when it comes to cost, the margins and ultimately the prices that we would pay in a store like this?

Beltway Insider: Trump Invites Taliban to Camp David, Pence/Europe, Dorian Devastates, Walmart/Kroger, 2020

KEVIN PLANK: Thanks, Courtney. We wanted to come have this conversation because this is a brand-new transformation that’s been moving from defense to offense. And as part of that transformation, so much of what we did was setting ourselves up for the future. And in large part to be credited to our operations team for actually making China as not a place we’re going to feel that great of an effect.

PATRIK FRISK: No, it’s great. With the current tariffs, we’re actually not being affected very much at all. We only have about 10% of what comes to the U.S. from China. So, in the current state, we’re okay.

COURTNEY REAGAN: You’re okay, like you figured out other mitigation tactics?

PATRIK FRISK:  We have, we have. And like Kevin said, going from defense to offense, we feel this is actually quiver in our arrow right now.

COURTNEY REAGAN: And so speaking of going from defense to offense, you’re in year three of a three-year turn around. You have lowered inventory, gross margins have improved, North American sales though haven’t stabilized as much as you’d hope and you just hired a new North American president. So, Patrik, is this a symbol that maybe something needs to change with the North American strategy?

PATRIK FRISK:  Well, I think, you know, six months ago we came out and laid out a plan that is really actually over 20 quarters. We’re two quarters into that plan. We’re confident with that plan but any plan needs a great leader. We think we have hired that great leader right now in Stephanie. Stephanie is going to start on Monday. She’s got great merchandising experience, great proven leadership talent. And we also think she is going to be, you know, that growth mind-set we need for North America. So, we’re excited about, you know, what lies ahead.

World News: Boris Johnson, Populism and The Political Reality

COURTNEY REAGAN: Kevin, you’ve talked about getting a louder voice with your brand and with your brand messaging. Obviously, Under Armour is founded on performance. Some have pointed to an opportunity, though, in athleisure that perhaps you’ve missed to take the opportunity to use your product for more of a streetwear. Is that something you want to move into with your innovations and your transformation?

KEVIN PLANK: So, when we’re doing it right it means we’re a quiet company and a really loud brand. That’s some when we say getting on offense, you’re going to start to see and feel that from us. We’ve -- listen, we’ve heard all the reads on athleisure, what it means, are you in or not? Let’s be crystal clear. We’ve identified our consumer as something we call the focus performer. And that is a mind-set the consumer has. That means when they’re thinking about what they wear, what they do with Under Armour, there’s no here’s performance and here’s athleisure. It is all performance. We say that without beauty there is no performance. And so, imagine product -- the thing that makes it Under Armour is when you look, you see an Under Armour product, like this incredible IntelliKnit sweater that I’m wearing right now, yes, I’m plugging And as you think that about what that sweater means it should say, Wow, that’s a really cool sweater. Your next question should be, what is it? I’d say, well, it’s Under Armour. If the next question out of your mouth is if it’s Under Armour, then what’s it do? We’re the ‘what’s it do?’ brand. We’re the ones where, it actually has a two-side layer where it can breathe as well as it can repel and keep the cold out. So, like, that idea of innovation, everything we do, that’s what the DNA of the brand. That’s what the consumer knows when they buy Under Armour that it is something that is actually making them better. And so that is -- that’s what and who we are. And that’s what drives through.

COURTNEY REAGAN: So, Patrik, are these innovations getting customers to come into the stores? This store is not an outlet store. 90% of your physical direct to consumer stores are. And traffic in North America -- and traffic was an issue last quarter. That was something that pressured the result. So, are the innovations driving traffic in the stores?

PATRIK FRISK: You know, one of the interesting things we talked about in the plan that I mentioned before that we talked about at our Investor Day is that we’re going to continue to build more direct to consumer, more full price direct consumer also here in North America going forward. We believe that’s one way to drive our innovation is to make sure the consumer is able to come into stores like this and actually see the innovation that we’re driving. We’re going to couple that with great messaging, becoming a louder brand, and that’s really what you’re going to see as you turn the corner from ’19 to ’20. Under Armour going from defense to what we do best, which is playing offense.

COURTNEY REAGAN: How do you see the current U.S. consumer, Kevin? We see the consumer is sort of the linchpin holding the economy together right now as we’re seeing other points of weakness. What are you seeing for the U.S. consumer when it comes to Under Armour? 70% of your business is still here.

KEVIN PLANK: Well, we continue to see it through the lens of Under Armour. And one thing that we know is that when, you know, the barbell effect we think that has happened is the consumer is looking for massive value or they’re looking for quality. What we find is when we deliver innovation, when we deliver things like the hover platform, we deliver things like this $100 IntelliKnit sweater, hat the consumer is looking and saying, we’ll buy there. I think the beautiful thing about being in sport is football is going to be played in the fall, baseball in the spring, lacrosse, et cetera. So, sport has this luxury in our industry that, you know, we have a tendency to endure. It doesn’t guarantee you a thing, but I think with our brand in particular it’s one that when we deliver the right product, the right price the right time, we’re going to win. So, we’re a little bit shielded from that I think in sport. But I mean, our perspective is the opportunity basically sits in our hands. So, we love controlling our own destiny and you’ll continue to watch us do that.

PATRIK FRISK: And we are extremely excited about the innovation pipeline we have coming up. So, great pipeline with great messaging and actually turning on the loudness is we think a recipe for success going forward.

CNBC Exclusive: Facebook Co-Founder Chris Hughes Speaks with CNBC’s "Squawk Box" Today

COURTNEY REAGAN: So, we talked a little bit about direct to consumer. But obviously, wholesale is still a big business for you. You sell in a number of department stores, or other stores, some of which are mall based like a Dick’s Sporting Goods. Some are malls, some aren’t. How are your brands selling in those locations when we know that traffic to the malls are pressured?

PATRIK FRISK: Yeah, I think that was a little bit lost in our last earnings call. You know, we were talking about B to C, we’re talking about wholesale. You know, one of the great things is we see now as some of our old inventory is going off the shelves and we’re putting new inventory in with new innovation and new messaging, it’s really resonating with the consumer. So, like we said, we see -- we’re a little more optimistic about our wholesale business than we first thought for this year.

KEVIN PLANK: And I think you’ve seen that shake out that happened three years ago, through 2016, that we felt in our industry especially, the strong would survive and we knew that. You’ve got terrific partners that are -- Dick’s Sporting Goods is really dictating a tempo. And that’s what we like to say about our business as well. So, the success that we’re seeing in our wholesale business is something that gives us great confidence. But it’s our job to say, you know, one of the things we’ve learned is how we segment, how we differentiate, how we make sure that wholesale, different from our own retail stores. This is one of 1200 stores that we have around the world right now. One of the things we declared on the last earnings call that we’ll have close to 2,400 - 2,500 stores in the next five years. So, that commitment to understanding retail is one of the things we think is going to make us a better wholesale partner as well. And so, we’re equally distributed in both of them.

The following is a link to video of the interview on

COURTNEY REAGAN: What about your business on You are a first party vendor for amazon. Is that going well for you and how do you feel when it comes to competitive questions that have been surrounding Amazon’s business and their sellers?

Business/Finance: CNBC Exclusive: CNBC’s David Faber Speaks with Quibi CEO Meg Whitman

PATRIK FRISK: Yeah. That’s a great question. I think, you know, what we’re focused on is the consumer. So ultimately our job is to understand how the consumer moves through their purchase journey. And today, certainly, you know, most searches start on Amazon. So, it’s important for us to be there. I think, you know, the balance of what we do and how we distribute will continue to evolve as the consumer evolves. And so, our aim is to really stay focused on what the consumer is doing and follow the consumer. That’s important to us, I think. Kevin, do you want to add anything?

KEVIN PLANK: This world has just been changing so fast. I mean, that’s the beautiful thing about – you know, Patrick now here, two – you know, over two years. You know, July 11, 2017, and just watching that partnership build of, well, let me tell you how Under Armour works. Let me tell you how things work. Versus the transformation, and the transition that we’ve had from being this next level brand. So, our job is to meet the consumer wherever they want to transact and making sure that we are there. Again, right product, right price, right time. And we’re seeing that Amazon has been a part of that. But our strategy is also making sure our own e-commerce, our partner’s own e-commerce, you know, making sure we’re doing a great job with them, again, with that segmented product. Because, it should be special. When you buy Under Armour it should be special. And so that’s something where that uniqueness is something that we want to make sure we offer that on our own website, giving people a reason to come and shop our brand.

COURTNEY REAGAN: Very quickly before we go here, we have gotten some news out of California. The state senate has at least approved the idea that college athletes may be able to accept compensation. Right now, you do sponsorships, UCLA, Berkeley. Would you look at potentially going after individual superstar athletes instead of an entire athletic program? Is that something that makes sense for Under Armour?

KEVIN PLANK: Well, I don’t know if we can speak to that. But we have seen the legislation come down, you’re right, having two great partner schools like Cal and UCLA. It’s a massive deal in the state of California. Our first value, which is -- we are a values-led company, we’ve got eight of them. The first one says love athletes. So, we absolutely love athletes. We also recognize how much value that athletes are generated for some institutions. And as a part of that, you know, the classic quid pro quo has been the college education. I’m someone who actually benefited having been a student athlete at University of Maryland. But I do think there are athletes driving incredible value for the institutions and frankly they should be fairly compensated. And I’m not sure that is exactly the case today. So, we look forward in support and that drives again to we back the athlete and we want them to make sure there is an even keel that takes place there.

COURTNEY REAGAN: Got it. Kevin Plank, Kevin Frisk. Thank you very much for joining us and bringing us into the brand house here today in New York City.

Haute Tease

  • World News: After Daesh, an Islamic State 2.0

    AddThis Social Bookmark Button

    The death of the Caliph Abu Bakr El-Baghdadi marks the end of the Islamic State in its territorial version identified. But this disappearance does not announce the appearance of a new state defeated by geographical ties in favor of a sprawling spread?

  • And the Oscar For Best Animated Short Film Goes To . .

    AddThis Social Bookmark Button

    With The Academy Awards quickly approaching the nominees for the Animated Short film category are bringing together a group of delightful and difficult choices to the screen. Watching each of them, it does becomes a battle between the faithful, "Get A Horse" from Walt Disney to the modern, "Mr. Hublot" with "Room on a Broom" flying in to mix up the pot.

  • Beltway Insider: Obama on ISIS; Iran Deal; Greece; Vietnam; Cyber Security; The Stones Exhibition

    AddThis Social Bookmark Button

    President Obama, German Chancellor Angela Merkel and President François Hollande of France have remained committed to offering sound suggestions to assist Greece reached a conclusion that allows the beleaguered nation to remain in the Eurozone and manage its debt.

  • John Legend, Get Lifted and Jesse Williams to Produce Doc on 1968 Olympic Gold Medalist Tommie Smith

    AddThis Social Bookmark Button

    Grammy® and Academy Award®-winning sensation John Legend, his Get Lifted production company, and actor and activist Jesse Williams to executive produce doc about 1968 Olympic Gold Medalist Tommie Smith, "With Drawn Arms."  

  • Elvis & Nixon Review – An Enjoyable Cultural Flashback

    AddThis Social Bookmark Button

    Elvis & Nixon, from Bleecker Street Productions and Amazon Studios, brings to the screen the fictionalized account of the December 21, 1970 meeting between the two most powerful men in the known world, President Richard Nixon and Elvis Presley.

  • Judge in Stanford Rape Case Stops Hearing Criminal Cases

    AddThis Social Bookmark Button

    Judge Aaron Persky, who sentenced the Stanford convicted rapist to six months including time served, has stopped hearing felony cases due to the public outrage over his leniency in what has been deemed a travesty of justice.

  • The Hurt, Set to Release “Sleeping,” Featuring Lyrics Co-Written by Rikki Turner and Stephen Evans

    AddThis Social Bookmark Button

    The Hurt, an electronica, post punk, sound with Rikki Turner of Paris Angels teaming with Stephen Evans of Cabbage, co-write lyrics that have been called a brooding masterpiece, is set to release Sleeping from Blindside Records in May.  

  • Paris Fashion Week: Patuna Spring/Summer Couture Collection -Tempting, Captivating, Seductive

    AddThis Social Bookmark Button

    Patuna, the Georgian couture designer, recently debuted her Spring/Summer 2017 couture collection during the Paris Fashion Week, earning rave reviews for the alluring, inventive, unique and inspirational pieces.

  • PA Newlywed Confesses to Craigslist Thrill Kill and 100 Others

    AddThis Social Bookmark Button

    Miranda Barbour, the Pennsylvania newlywed charged with murder, has made a shocking revelation in a jailhouse interview confessing to committing up to 100 other murders across several states.

  • Z by Zevarra - The New Name in Plus Size Fashion

    AddThis Social Bookmark Button

    This has been a long time coming! A plus size brand that is actually worth wearing. It is known plus size women to have a hard time finding a brand that has the sex appeal they deserve. Z by Zevarra is not just a brand it’s a lifestyle. Every woman should exude confidence and be care free of fashion disasters!

  • Home, Décor: Tips for Enhancing Any Home's Entryway

    AddThis Social Bookmark Button

    First impressions are vital and a home’s entrance, front door and interior foyer, the area of the home that reveals as much about the homeowner as it does about the home needs to convey the homeowner’s signature message.

  • Kettner Exchange Restaurant San Diego Review – Expert Culinary Prowess

    AddThis Social Bookmark Button

    San Diego’s Little Italy section has morphed into a culinary craft hotspot, with exciting new restaurants pushing food and beverage boundaries like never before. Among the array of notable establishments that have cropped up is the hip hotspot Kettner Exchange.

  • Interview and Review: HITCHCOCK, from FOX Searchlight Films and Director Sacha Gervasi, is a Film Lover’s Dream

    AddThis Social Bookmark Button

    HITCHCOCK, the screen adaption surrounding the making of PSYCHO, the most gripping and successful film from the master of suspense, recently held its Los Angeles premiere at the Academy of Motion Picture Arts and Sciences.

  • SF Theatre: San Jose Stage Company Announces The Cast And Creative Team For The 2019-2020 Season‘s Opening Production The Rocky Horror Show

    AddThis Social Bookmark Button

    San Jose Stage Company (Randall King, Artistic Director and Cathleen King, Executive Director) is pleased to announce the cast and creative team for the first production of The Stage's 37th Season, the beloved cult musical THE ROCKY HORROR SHOW.

  • Celebrity Interview: Director Jocelyn Moorhouse Talks On Making The Dressmaker, Kate Winslet, Her Sixteen Year Autism Imposed Hiatus

    AddThis Social Bookmark Button

    After a sixteen-year hiatus for deeply personal reasons, Jocelyn Moorhouse, the director of the critically acclaimed and commercially successful dark comedy, The Dressmaker, has triumphantly returned and sat down for a surprisingly forthcoming and real interview.