In this episode of Influencers, Andy is joined by Under Armour President & CEO Patrik Frisk as they discuss new challenges for the retail industry, big changes for college athletics, and how raising the wage floor is affecting Under Armour's business overall.
ANDY SERWER: Under Armour is one of corporate America's most unlikely pandemic success stories. After retail fell off a cliff last year, the sports apparel company rethought its business and shocked analysts. But Under Armour president and CEO Patrik Frisk isn't standing pat, the company has cut back on discounts amid inflation, hiked its minimum wage during the labor shortage, and just announced a vaccine mandate for employees.
On this episode of "Influencers," I speak with Patrik just as football season kicks off. We talk about how the company adapted to COVID-19, what the wave of athletic activism means for player partnerships and why he's optimistic about the company's outlook despite the Delta variant.
Hello, everyone, and welcome to "Influencers." I'm Andy Serwer. And welcome to our guest Patrik Frisk, Under Armour CEO. Patrik, nice to see you.
PATRIK FRISK: Nice to see you, Andy.
ANDY SERWER: So let's start off and talk about Under Armour broad brush and tell us about the major product lines and markets, and what makes it different from Nike and Adidas, your competitors?
PATRIK FRISK: Well, I think first of all, Under Armour's purpose, the fact that we empower those who strive for more, the fact that we are a company with a mission to make you better. For us, everything starts with that. So we're really a little bit different because we're also this company, this brand if you like, that's part of the journey to compete.
So we're not just about the highlight reel. We're not just about that moment of glory. We're actually that hard-core blue-collar, hard-working brand that is with you from the time you start to train until you get to the moment of competing. And then also, in your moment of recovery.
So it's about the journey for us. And really the way that we tell that story, the narrative if you like, is really through goals, struggle, and ultimately results. And I think that is the big differentiating factor for Under Armour.
ANDY SERWER: But you know, people know about you from your apparel and shoes and that's what you guys do, right?
PATRIK FRISK: It is. And you know, one of the ways that we drive innovation today is really more comprehensively than ever before. We look upon ourselves as the human performance company. And the research that we do and the understanding of human performance is now what we build back into what we do with our incredible apparel in terms of having, for example, bioceramics that can really help you actually recover better or in our HOVR platforms in run or for example, the latest Flow basketball shoe that helped Steph Curry have one of his best seasons ever last year.
ANDY SERWER: You guys refashioned your business amid COVID-19 and it seems to have worked out pretty well. What specifically, Patrik, did you change and why has it worked?
PATRIK FRISK: I think this whole time, first of all you know, when we went through this entire COVID beginning last year in 2020, we, of course, were focused around making sure we kept our people safe. But we also took the opportunity to go deeper in terms of our work with transformation, making sure that we truly became a more consumer-centric company. And driving digital-first for us this is, of course, really important.
But really understanding how the consumer now in this new world is moving through their different touchpoints with the brand, the experience that they're expecting from the brand. And then really re-engineering ourselves to be able to do that better. In other words, bring them along on the journey, deliver the experiences that they are expecting. And we're doing that by becoming more digital-first but also by building better stores, by making sure that we're connecting with them in many more different ways.
ANDY SERWER: Now I should know this, Patrik, but can you talk about your distribution channels? I mean, are you guys selling through different retailers, you just talked about your own stores, DTC, online, what's the mix?
PATRIK FRISK: Yeah, so today we're still very heavily distributed here in North America. So North America today for us is still our largest market. But we're growing the fastest in our international markets, both in Asia-Pacific as well as EMEA.
But we distribute today through various ways, wholesalers like Dick's Sporting Goods or these big sporting goods retailers around the world. But we also have now a much improved direct-to-consumer experience as a brand. I talked about connecting the dots before, we're doing that through our own stores and also through our own e-commerce. So we're really focused around where the consumer would like to engage with the brand today. So being more consumer-centric helps us understand what the expectation is in terms of when, how, and where the consumer wants to interact with us.
ANDY SERWER: You guys raised prices this year and said recently you expect to continue raising them perhaps throughout the balance of the year. What does that mean in terms of your inflation outlook, Patrik?
PATRIK FRISK: Yeah, I think inflation is definitely going to play into everything here in the back half and into 2022. And I think a lot of it is driven by consumer demand. We see for the first time here in North America for example, a real back-to-school happening, which is great for us. Team sports are being played, kids are back out on the field.
But it's also about what's happening in the supply chain around the world for our category but I think also in more general terms, as both manufacturing is disrupted to some extent and the shipping and logistics situation both in Asia, specifically, in Asia-Pacific but also here in North America in terms of the port congestion that's building, is going to pose a problem to get the right stuff to the right place at the right time. If you take the demand and that issue, you're going to get a situation where it's going to be hard to come by products at times. And we're seeing that then resulting in definitely less discounting I believe but also an opportunity for us to raise prices where we feel it's appropriate.
ANDY SERWER: Have you had any real specific issues though with supply chain being unable to get specific goods or finished goods?
PATRIK FRISK: To some extent. I think and certain categories are worse hit than others. And we're working through what's going on and it's happening real-time and it's all more or less COVID-related. And it's affecting the Asia-Pacific region more so than other regions.
So yes, there is some impact from this. And we also called it out in our last earnings call, the fact that we're going to be seeing some of this disruption play out in the back half. We also think it's going to be a factor, especially early in '22 but at this point in time, it's kind of still early days. So we're going to be, of course, working through what that means for us here in the back half.
ANDY SERWER: What about consumer confidence? You're hearing people are saying they're not confident, and does that worry you?
PATRIK FRISK: Well, I think right now we're in a good moment in time for our business because we're in back to school. And I think people are scrambling a little bit because they haven't been in that environment for some time. And I do think that there is demand out there for our category. And I'm talking about people wanting to stay more active, people running more, people working out. Maybe in a different way, maybe not necessarily going to the gym as much but still working out at home and trying to stay fit. So I think our category has shown to be resilient in this current environment. So demand is in our category currently.
What's happening in terms of the rest of the year I think is maybe harder to predict, right, in terms of what the patterns are going to be in terms of consumer traffic but we're seeing some phenomenons happening in the world too which is interesting right now. For example, in Europe we're seeing more pivot in back into retail versus digital to some extent, simply because people are wanting to have that experience with the brand more and more you know, in the real world so to say, not just in digital. Which is something we were maybe not expecting to the extent that we're currently seeing it.
ANDY SERWER: Under Armour announced a mandate for all employees to be vaccinated by the end of the year before the company reopens its offices in start of next year. Why did you opt for that mandate, Patrik? And what do you think is stopping other companies from doing the same?
PATRIK FRISK: Well, I think first of all, like I said earlier today, you know, we're trying to make sure that the first thing that we do is keep our teammates safe. And we've also now as a company done a really good job in making sure that we're able to operate remotely. So those two things work together I think in terms of how we think about making sure that we can get the job done, we keep our people safe. And by doing it this way, we're allowing you know, the business to go on and people to have the optionality and the flexibility if you like. And I think that is the right way to think about things, the way they are currently playing out.
The reality, though, of course, is for every company it's a changing landscape. We are going back to work here fully so to speak, in terms of opening up our campus in Baltimore for the very first time since March 13th in 2020, right after Labor Day more or less. And at that point in time, the teammates that want to come on campus we're asking them to be vaccinated. I think we will monitor and see how this plays out in the back half and what happens to the pandemic but at this point, that is the approach that we're going to take. And you know, my first responsibility here is to keep people safe, right? So the good news I think, is the fact that we've enabled work from home, work remotely, and the flexibility to also work in favor of everyone at this point.
ANDY SERWER: I want to go back to the business itself because you recently announced optimistic full-year guidance includes I think it was a low 20s percentage increase in top line. You talk about back-to-school, I understand that but what makes you so optimistic going forward beyond that, Patrik?
PATRIK FRISK: Well, I think for Under Armour, we've been in a journey to slow down to speed up here now for a few years. And we've done really great work in terms of repositioning our brand, in terms of making sure we have the right strategy in place, becoming more consumer-centric, having an ability to execute better in our go-to-market, bringing new innovation into the marketplace. And the great news is the consumer's responding. The consumer has been responding all through the back half of 2020, all the way through 2021. And just by the nature of what we're doing right now also in terms of continuing to bring newness into the marketplace in a better way, connecting with the consumer better in the touchpoints that we have, we feel confident that we can continue to drive this growth into the back half.
ANDY SERWER: You've been at the company for a while, became CEO early last year, succeeding Kevin Plank, of course. And the company as you suggested had some issues. What was it like succeeding Kevin, how much do you talk to him? And what's it like filling his shoes and taking the company to the next level?
PATRIK FRISK: Yeah, you know, it's incredible. We're 25 years old this year. And we really have been doing this work over the last few years now to get ready for the next 25. And of course, you can't replace somebody like Kevin Plank. You can just continue the legacy I would say. And I think Kevin and I work together very closely still today. I mean, he's the executive chairman. So ultimately, he is involved in the business on a weekly basis. And we do a lot of work together still as it relates to the strategic direction for the company.
And Kevin lives in Baltimore, right? So it makes it very easy for both of us to be together quite frequently. But it is a legacy, my job here is to build an eternal brand, and to have the founder still in place I think is a tremendous asset. Because ultimately, it helps us in terms of how to think about that legacy. It helps us in terms of the roots of where we came from. And now what we're excited about is all of the things that we put in place to help us get bigger, better, stronger in the years to come. And doing that now from being previously just product-led to more purpose-led through this purpose of empowering those who strive for more, we believe is an incredibly powerful way to think about Under Armour's future.
ANDY SERWER: I want to ask you about the athletes because that's a key part of your business. Does the rise of player activism create a challenge for marketing to consumers of all political persuasions?
PATRIK FRISK: I think ultimately, you know, we're a brand. I think if you're very clear around why you're here and we're very clear about the fact that we're empowering those who strive for more. But we're living it every day through our mission of making you better. So we're focused on human performance ultimately, and that's our job here, job number one, right, is to get that done here at Under Armour.
And really the way that it manifests itself for us is to give people the edge to you know, win or to get better. So as long as we're focused on that you know, we're going to be, I think, very clear as a brand and that is what's important ultimately for us. So I'm feeling very good about that. And I think that making this transition for us from just a product-led company to this purpose-led also helps clarify why people should be excited and inspired by our brand.
ANDY SERWER: I want to talk about college athletics a little bit, Patrik, because that is a wild and crazy environment right now, changing dramatically. I mean, first of all, you've got the institutions that you guys have relationships with, and there's positives and negatives there. I understand that there's some issues with UCLA right now that your guys are working through. How is that going with all the different schools that you're working with?
PATRIK FRISK: Well, I think when we took a hard look at how we think about our strategy and how tactically we then deployed that, you know, one of the important things for a brand like us is to be able to activate around our athletes and around the relationships that we have. And if I go back four years where we started this journey together, myself and the brand, you know, we had a lot more assets than we could actually activate.
So we've been going through this refinement process now over the last four years. And we're now at a stage where we have the right number of athletes, the right number of schools, for example. And listen, we still have over 90 Division I schools and 350 colleges and universities that we work with. So we have a tremendous amount of the various relationships that we're trying to support and drive day-to-day. But what's important to think about going forward for us is really how we activate this to align with the purpose that we have and the mission that we have and really also being a great partner in terms of being able to service these athletes with the best possible product to enable them to win.
And you're absolutely right, the landscape of college athletics is going to evolve faster probably and go through more change than it ever has in a very short amount of time here in the next few years. And Under Armour will be part of that. We will do what we can to support our athletes and our partnerships through that. And we're excited about the fact that we're going to have a normalized season this year, right? And that's the first thing we're looking forward to right now at this point in time.
ANDY SERWER: Let me ask you to drill down a little bit more specifically with the athletes because the new rules have made it possible for the college athletes to get endorsement deals. Are you guys open to that with athletes at that level? Are you considering any right now? It's very exciting possibilities there, right?
PATRIK FRISK: Lots of possibilities, lots of opportunities, and I think also there's a lot of I think cooperation that's needed to help these very young people sometimes also navigate this new new. So there's a lot of conversations happening right now also with the universities to support them in this journey but I think yes, you're right, there's going to be opportunities in the future. And certainly, at this point in time, you know, one of our strongest values as a company is loving athletes, love athletes.
So we're going to do what we can to support the athletes as these opportunities come along. And of course, as a company, we have a lot of opportunity to share in our knowledge and experience if you like in terms of how to deal with this new new. And we're going to be able I think, to also be a little bit of a guide to making sure that things happen in the right way and that it's being done in the right way. So I think it's going to evolve you know, we're at very, very beginning of this, and we'll see a lot of evolution over the next 12, 24, 36 months. But we'll be there, we'll be part of it. And we'll try to make sure that we're handling it in the right way.
ANDY SERWER: Where does Under Armour stand in terms of women's sports, Patrik? How big a business is that? How supportive are you of women's teams, women's sports women's leagues?
PATRIK FRISK: Yeah, I'm incredibly excited about the work that we've done there. If you went back three years ago, only about 15% to 18% of all of the things that we were involved with in terms of athletes were actually female. Today, that's over 40%. So we made a dramatic shift as we've gone through this filtration process if you like in terms of what matters to us as a brand and that's how we think about it going forward we really are supportive of a lot of things happening in women's sports.
In terms of how we think about what we activate against, it's very much looking through the filter of that being incredibly important to us. And you know, the proof is in the pudding here, right? In terms of the numbers. You know, having almost equal amount of female athletes as we have male athletes at this point in time is clearly a message about where we stand on that.
ANDY SERWER: And as you also have to kind of turn that lens on to the company itself because you know, there were accusations that you were a company that was more male-oriented internally in terms of the culture and the executives there. How have you addressed that, Patrik?
PATRIK FRISK: Well, I think you know, today you know, we're very transparent. It's all available, right? It's data that's available that we publish. So we're not shying away from where we are and where we want to go. But we made tremendous amount of progress.
That comes down also to my leadership team, right, in terms of the composition of the leadership team now being much more evenly calibrated. So we will continue to always drive towards you know, one of our values again is standing for equality. And I believe in that deeply and we will continue to make sure that as we move into the future as a brand, as an organization, as an enterprise, that that's always on top of our mind.
ANDY SERWER: And same goes for racial diversity as well? How's that process going?
PATRIK FRISK: Yes, same thing there. Today you know, we're absolutely transparent in terms of what we publish also on our site and we're continuing to work like everybody is, of course, to make sure that we're doing what's right there as well. And we have I think today an incredibly robust way of thinking about that as it relates to everything that we do as a company.
ANDY SERWER: I want to shift gears a little bit and ask you about pay because you guys increased minimum wage to $15 an hour in May. Did that come in response to difficulty hiring amid the labor shortage? And if so did it help? How's it going?
PATRIK FRISK: Thank you for asking that, Andy, because it's probably one of the most proudest moments in my management career when we were able to do this. And we have worked for over two years to get to that point. And because we are doing better as a company I felt together with the entire management team and the HR team that this was a moment in time where we could not just afford it but also it was just simply the right thing to do.
And it's been incredible because I've been out there. I've traveled you across America throughout this entire pandemic and the change let's say, in how our teammates feel we have supported them, not just through the pandemic, where I felt we did a fantastic job keeping our teammates safe but also what happened as we suddenly elevated minimum pay. And it was a big move, it was a 50% move overnight and very unexpected.
It changed lives. You know, when I'm out there I'm talking to these young people very often, you know, they now had an opportunity to go from maybe two or three jobs to one job. They were now may be able to get a car lease payment so they can actually get to work, right? Which is tremendously important to them.
And more importantly, raising the minimum pay was only one thing that we did. We also looked more comprehensively at all of our benefits. Now, they have a clear path also in terms of career with Under Armour. So yes, everybody is feeling better. Yes, our recruitment also benefited from that because we were able to recruit more easily absolutely right. But it wasn't the first reason why. It's something that we'd been working on for two years and we finally decided to stop being incremental and take the final step and make it all in one big go.
And I'm incredibly proud of it. And I'm excited when I'm out there talking to teammates. And when I actually physically see what it means to them. And I've done that across-- you know, I've been in Phoenix, Tucson, El Paso, Oklahoma City, Cleveland, Columbus, Indianapolis; in Florida, Orlando; Sevierville, Tennessee, the response has been incredible.
ANDY SERWER: You guys are based in Baltimore, you mentioned that. And obviously, Baltimore has had issues of all sorts. And I'm wondering what your relationship with the city is like, Patrik, in terms of the leadership there and the people? You're one of the flagship companies in that town.
PATRIK FRISK: Well, first of all, we're incredibly proud of being from Baltimore. And we are deeply, deeply engaged in the city at many different levels, both in terms of you know, some of the big projects that we have for kids, like Project Rampart for example, where we supply most of the schools in Baltimore at a high school level with uniforms every year, to building new fields for play for students around the city in disadvantaged areas, to you UA House that we have here in the city that is actually a free zone for people to come after school and where we do a lot of teaching around cooking and sports and computer literacy and other things.
So we're involved in so many different ways in Baltimore, very proud of the city. And we're also very excited about what we're going to be doing here over the next few years as we build a whole new campus for the brand. And also at the same time, are able to invest back into the community that is around the new campus. So we're doing what we can to do our part for Baltimore and will continue to do so. And we're excited to be in Baltimore.
ANDY SERWER: And you worked on a get out the vote campaign ahead of last year's election, you said it'd be easier for Americans to vote. How did you make that decision to do that?
PATRIK FRISK: Well, I think, again here it's you know, standing for equality, one of our key values. We responded really to what was becoming something that we heard internally first and then more externally with our consumers as they were coming into our stores and our website, et cetera, was just this general feeling of not having enough or the right information. So what we said was well, we're going to make that information available to you but we're also going to try to inspire you to actually get out and vote.
So we did some really fun things where we opened up our stores and had the information available there, we did it on our website. But we also created this thing on our MapMyRun app where you could run to vote, actually write it as you ran. And we had over 60,000 people do that and it was like you know, so what I believe we did ultimately after all was said and done, was inspire people to participate. And that really was the aim of the exercise, nothing more, nothing less.
ANDY SERWER: I want to ask you a little bit about you and your background, Patrik.
PATRIK FRISK: Yeah.
ANDY SERWER: You were born in Sweden. I told you before that's a Swedish born USA CEO club includes you and Hans Vestberg, the CEO of Verizon. I don't know if there are any other, are there any others?
PATRIK FRISK: Well, I think Stefan Larsson, that's now head of PVH, which runs you know, Tommy Hilfiger and a few of those brands. No, not a lot of us, you know, there's not a lot of Swedes, right, in the world. It's only about 10 million so. But I'm now naturalized. I'm an American now. So I was born a Swede, I guess I'll die an American and I'm very proud of that. And I love being in America.
And I've had an opportunity to lead American brands for a very long time. You know, I've led some of the brands like The North Face, I've been involved with Vans, I've been leading the acquisition of the Timberland Company when I came to America from VF Corporation and integrated that into VF. So I've had a lot of experience here in North America.
I also grew up going to school in Minneapolis when I was a kid. My dad was in the computer industry. So I have a long relationship with this country and I love it.
ANDY SERWER: Having said that, is there a difference between the corporate world in Sweden and the corporate world in the United States?
PATRIK FRISK: It certainly is. You know, first of all, I think you know, Sweden is a very small country. And just the size and scale of everything. But I've had the opportunity to move out of Sweden, very early in my career and I've worked in 10 different countries now. So the majority of my career as it relates to leading larger organizations has been in Germany and in Switzerland and Italy.
And in all of those different countries you know, the funny thing is, it's all a little bit different, right? And in terms of how leadership is done. And what I love about America is the ability to scale for sure, in terms of size but also the cooperative nature of leadership here and I see it every day in my leadership team. And it's very, very satisfying.
ANDY SERWER: Having that international experience though, you talked about the opportunity for Under Armour globally. And it seems to be that that would be somewhere where you could expand versus, and compete against an Adidas very nicely, right?
PATRIK FRISK: Absolutely, and you know, that is a big opportunity for us because we are still relatively small in international markets. So we have a long runway not just in Europe but also we believe in APAC and we have a great global operating model now, where we're able to execute like you asked before, across channels of distribution, across countries, and across categories. And a great leadership team in place. So we're ready for growth.
ANDY SERWER: What is this company going to look like 10 years from now, Patrik?
PATRIK FRISK: Well, I think, first of all, we're going to be really known as a company that empowers you to strive for more. I believe that we are going to show how we make you better. And I think when people think of Under Armour, they're going to think of us as the human performance company.
ANDY SERWER: And last question, what do you want your legacy to be, Patrik? Where do you see people thinking about you in the years ahead?
PATRIK FRISK: I think-- I hope that they're going to be looking at me as the person who helped Kevin make Under Armour an eternal brand.
ANDY SERWER: All right, Patrik Frisk, Under Armour president and CEO. Thank you so much for your time.
PATRIK FRISK: Thank you, Andy.
ANDY SERWER: You've been watching "Influencers." I'm Andy Serwer. I'll see you next time.