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Under Armour Idea Proposal (UA)

Under Armour Idea Proposal (UA)
 

Has Under Armour’s brand been tarnished by CEO Kevin Plank’s comments about and involvement with President Trump?

Report Available:March 23, 2017

 

Blueshift’s initial research found controversy surrounding UA on the heels of CEO Kevin Plank’s praise of President Trump. Backlash ensued, including from some of the brand’s highest profile athletes, and Plank was forced to clarify his comments. It may amount to nothing, but other brands have been hurt as consumers flex their muscle with boycotts and campaigns, while some retailers have begun stepping away from some Trump-branded products, whether pressured or not.

 

Observations

  1. UA had a disappointing Q4 with earnings and revenue falling short of expectations. Wholesale revenue grew 5% and direct-to-consumer revenue was up 23%. Gross margin dropped 4.2% and operating income fell 6.1%. Full-year revenue and operating income were below company guidance. Footwear revenue grew 36%, though apparel and accessories revenue climbed only 7% each, while inventory grew 17% year to year. UA also noted an expected decline in gross margin and operating income in 2017, with revenue up 11% to 12%.
  2. Kevin Plank, UA’s founder and CEO who is also serving on the American Manufacturing Council, ignited some controversy in early February when he praised President Trump’s pro-business approach, calling him an “asset for the country.” This was met with criticism in some circles, including a comment from UA’s high-profile endorser Steph Curry agreeing with Plank’s assessment “if you remove the ‘et.’” Others associated with the brand, including ballet star and UA athlete Misty Copeland, were critical of Plank’s comments, significant because of UA’s push to attract female customers and athletes. Plank attempted to clarify his comments in a full-page ad in the Baltimore Sun, highlighting his company’s values and publicly opposing the travel ban. Also, Plank’s political contributions show donations to Hillary Clinton’s, Jeb Bush’s, Chris Christie’s, and Martin O’Malley’s presidential campaigns, but not Trump’s.
  3. Companies are in a sticky spot in this politically-charged environment, with the potential to alienate consumers at any turn. Uber’s CEO removed himself from the President’s economic council after a boycott campaign by users because of his involvement with Trump. UA dropped its endorsement deal with a hunter after her husband posted video of himself killing a black bear, but the company faced backlash from hunting enthusiasts for this move. A marketing executive started a campaign called Grab Your Wallet to keep track of retailers selling Trump-branded goods, calling on customers to boycott these businesses. Retailers like Nordstrom have recently dropped Ivanka Trump branded clothing and shoes, claiming it is because of falling sales, not politics.

 

What has been the effect of Plank’s comments and controversy regarding President Trump? How are customers responding? How are employees responding? Have there been any organized boycotts of UA? How long with this last? How significant will this be to UA’s brand? To answer these and other questions, Blueshift will gather data and issue a market research report from independent sources in the following areas: Store personnel, UA personnel, and Industry specialists.

 

Companies: Under Armour (UA),Nike (NKE),Adidas (ADDYY), Skechers (SKX)

 

Research Begins: March 6, 2017