Here’s Why Under Armour Shares Are Sliding

May 4, 2016, 3:40 PM UTC

Shares of Under Armour are dipping on Wednesday a day after the athletic gear purveyor reported two key executives would leave the brand, including the crucial chief merchant.

Chief Merchandising Officer Henry Stafford and Chief Digital Officer Robin Thurston are both leaving Baltimore-based Under Armour (UA), which has been a star performer in the broader athletic gear space that is dominated by Nike (NKE). Both are being succeeded by internal candidates.

Under Armour, which generated nearly $4 billion in sales last year, has reported consistent double-digit sales growth as it expands into new product categories, places a bigger bet on the women’s market, and sees stronger brand interest with key athlete endorsement deals including NBA star Stephen Curry and golfer Jordan Spieth.

But the executive losses are clearly concerning to Wall Street, with investors sending shares down nearly 6% on Wednesday.

Why? The chief merchandising officer is an important position for any apparel and footwear designer – they are the executive that sets the overall aesthetic for the brand. Stafford first joined Under Armour in 2010 and led the company’s apparel line, which is by far Under Armour’s largest product category. He later earned a few key promotions before becoming the merchandising chief in late 2014. Stafford will leave the company in July.

He is being succeeded on an interim basis by Kip Fulks, who most recently served as chief marketing officer.

“Henry Stafford is a great talent,” said Matt Powell, sports industry analyst at research firm The NPD Group. “He built a very good team at UA that should be able to carry on with his direction and vision.”

Meanwhile, Sterne Agee CRT analyst Sam Poser issued a note to clients advising the long-term outlook for Under Armour remained “intact” despite the departures.

“It is a coincidence the two are departing at the same time. Both employees have a non-compete in place. UA has a qualified bench under both positions,” Poser said. “Our long-term thesis that UA will continue to grow & investors should have 18-month-three-year time horizon remains intact despite the departures.”

The departure of Thurston is also notable as he first joined the company in 2013 after the $150 million acquisition of MapMyFitness, a fitness technology company that Thurston co-founded.

The digital business has become increasingly important to Under Armour, which touts “connected fitness” as the potential future of fitness. Under Armour CEO Kevin Plank has been especially bullish about the opportunity, spending $710 million to scoop up a handful of apps in the space. Connected fitness revenue only totaled $53.4 million in 2015 but some analysts say the business can perhaps hit $200 million by 2018.

Michael Lee, co-founder of MyFitnessPal, will assume the responsibilities of chief digital officer. MyFitnessPal is another digital platform that Under Armour recently acquired. He previously served as senior vice president, North America Digital, overseeing digital product strategy for Under Armour Connected Fitness.