Dive Brief:
- Under Armour has started a multiyear distribution logistics initiative to streamline its supply chain operations, President and CEO Kevin Plank said during an Aug. 8 earnings call.
- The updates aim to enable cross-channel capabilities to drive cost efficiency, maximize speed, ensure inventory availability and improve service levels across the sportswear company’s direct-to-consumer and wholesale businesses.
- "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,” the CEO told analysts.
Dive Insight:
The plan to weed out unnecessary supply chain complexity comes as Under Armour faces sinking revenue, with sales down 10% for the quarter ending June 30.
Higher than expected ocean freight costs have also prompted a “newer developing headwind,” CFO Dave Bergman told analysts during the call. Earlier this year, the retailer noted that normalizing freight costs had initially helped it increase its gross margin.
The sportswear brand said that its initiatives to improve its supply chain and end-to-end planning capabilities — alongside proactive efforts to shed excess inventory and reduce discounting and SKUs — will help its overall gross margins as it looks to drive savings, Plank said in a May earnings call.
Several retailers have been investing in supply chain initiatives in a bid to optimize operations while saving on costs. Macy’s three-part transformation plan, for instance, relies heavily on improvements to its supply chain. The company is planning changes such as trimming its distribution network and increasing automation across its operations, with projections of $100 million in cost savings in the current fiscal year.
Discount retailer Dollar General is also implementing an operational shift across its supply chain to curb costs. The company is currently focusing on optimizing inventory levels in an attempt to simplify its upstream and downstream supply chain operations.
