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Under Armour CEO: Supply-demand imbalance creates 'opportunity for us to raise prices'

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Under Armour (UA) CEO Patrik Frisk told Yahoo Finance in a recent interview that he expects upward pressure on prices to persist into next year, describing the recent surge in demand alongside supply chain disruption as an "opportunity for us to raise prices." 

The remarks from the head of one of the top sports apparel companies came days after Federal Reserve Chairman Jerome Powell downplayed the threat of long term inflation in a speech at the Jackson Hole Economic Symposium on Friday.

Under Armour has seen consumer demand remain high amid back-to-school shopping, despite supply chain disruptions that have affected the availability of some products, Frisk said.

"I think inflation is definitely going to play into everything here in the back half [of 2021] and into 2022," Frisk says. "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."

"But it has also involved what's happening in the supply chain around the world for our category," he adds.

Patrik Frisk, recently appointed Chief Executive Officer Of Under Armour, speaks at the 2020 Under Armour Human Performance Summit on January 14, 2020 in Baltimore, Maryland. (Photo by OLIVIER DOULIERY / AFP) (Photo by OLIVIER DOULIERY/AFP via Getty Images)
Patrik Frisk speaks at the 2020 Under Armour Human Performance Summit on January 14, 2020 in Baltimore, Maryland. (Photo by OLIVIER DOULIERY/AFP via Getty Images)

"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," he adds. "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."

Under Armour posted strong second quarter earnings earlier this month, as revenue leapt 91% to $1.4 billion and wholesale sales spiked 157% to $768 million, compared to the same quarter last year. Granted, the favorable comparisons to the same quarter last year owe in part to unusually poor performance that coincided with pandemic shutdowns.

On an earnings call on Aug. 3, Frisk said the company could retain pricing power "into [20]22 and beyond." 

Price increases in the U.S. slowed in July but continued to sustain at historically high levels, as supply chain disruptions and reopening demand continued. The shopping surge showed signs of slowing, however, with a 1.1% decline in retail sales last month.

Powell's remarks on Friday countered fears among some that an inflationary spiral could raise prices for a prolonged period. But others, like Federal Reserve Bank of Philadelphia President Patrick Harker, warned in an interview with Yahoo Finance of the risk that elevated prices could become "more persistent."

Frisk took over as Under Armour CEO at the outset of 2020, after the company's founder and then-CEO Kevin Plank stepped down to become executive chairman. Born in Sweden, Frisk has held numerous senior executive positions across the retail sector, including a decade at the Aldo Group, a global chain of shoe and accessory stores.

Speaking with Yahoo Finance, Frisk described COVID-related manufacturing disruptions and shipping delays that have impacted the company's product sourcing, especially in Asia. Recent port congestion in North America has also impeded the supply chain, he said.

"It is going to pose a problem to get the right stuff to the right place at the right time," he says.

"There is some impact from this. But at this point in time, it's kind of still early days," he adds. "We're working through what's going on, and it's happening real time."

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