Under Armour goes into damage control

02/17/2014 5:03 PM

02/17/2014 5:03 PM

Instead of going for gold at the Sochi Winter Olympics, Under Armour Inc. has gone into damage control.

The poor performance of the American speedskating team, wearing the Baltimore-based company’s scientifically designed bodysuits, undercut the apparel maker’s claim that its clothing makes the best athletes even faster. The U.S. team voted to revert to older Under Armour suits to improve its performance, and still hasn’t won a medal.

While other squads wearing its products have had success – the American team’s bronze was the country’s first medal since 1952 in the two-man bobsled – Under Armour was forced to defend its products while being careful not to criticize athletes including four-time speedskating medalist Shani Davis.

“Whether it’s an equipment or design fault or not, in this case perception is reality,” Robert Passikoff, founder and president of New York-based marketing firm Brand Keys Inc., said in an e-mail interview. “Particularly when they’re some of the best athletes in the world, having consumers question whether your products are meeting their expectations is never a good thing for a brand.”

Under Armour also lost Olympic champion skier Lindsey Vonn, an endorser and a high-profile medal contender who was sidelined by knee surgery before the Sochi Games.

Matt Mirchin, Under Armour’s executive vice president of global marketing, said in a telephone interview from Baltimore that he doesn’t think the poor speedskating results or the uniform change will hurt international expansion.

“I don’t believe it will slow our international growth in any way, shape or form,” Mirchin said, adding that Under Armour was happy to accommodate the speedskaters’ decision to change uniforms even though “we strongly feel the suits did not contribute” to the disappointing results.

Under Armour shares declined 2.4 percent to $106 in New York on Feb. 14, the last day of trading before the three-day U.S. holiday weekend.

The company’s stock more than doubled in the 12 months through Feb. 13, compared with a 20 percent gain for the Standard & Poor’s 500 Index, with Under Armour’s image as a purveyor of technically advanced clothing fueling more than a doubling of sales in three years.

The company has been on a roll as it competes for a share of the athletic apparel market with companies such as Nike Inc., the world’s largest sporting goods maker. Under Armour has had 15 straight quarterly sales gains of more than 20 percent and it’s pushing overseas to continue that pace, including deals with soccer teams in Mexico, Chile and the U.K.

“You’re always going to have good days and you’ll have days that you face adversity,” Chief Executive Officer and founder Kevin Plank said in a Feb. 14 interview with Bloomberg Television. “We’ve got a big push in global, we’re going to grow, and I don’t see a real parallel between what’s happening right now and what’s happening with Under Armour on the global scene.”

U.S. speedskaters also were on a roll as they entered the Sochi Olympics, where they were expected to compete with the Dutch for medals in many of the 12 races. Instead, the U.S. – which won four speedskating medals at the 2010 Vancouver Games - - has been shut out through the first eight events, and no American skater has finished better than seventh.

Among the biggest disappointments was Shani Davis, who came in as the two-time defending champion in the men’s 1000 meters and with two straight silver medals in the 1500. He placed eighth in the 1000 in Sochi, and 11th in the 1500.

“I’m not necessarily sure what is to blame,” Davis told reporters after the 1500.

Meanwhile, the Dutch have won five golds and 16 of the 24 speedskating medals so far. They went 1-2-3-4 in the women’s 1500 meters, a race in which Americans Heather Richardson and Brittany Bowe were considered medal contenders and finished seventh and 14th.

“The coaching staff and Under Armour have bent over backwards for us, and I’m sure they haven’t slept much over the last week,” Bowe told reporters after the race, adding that she had no idea whether her bodysuit had anything to do with the result. “I am not the brains behind the skinsuit. I just put on what I am given.”

The fact that U.S. speedskaters fared no better after switching out of their Mach 39 suits – which Plank said were developed in conjunction with defense contractor Lockheed Martin Corp. and were the fastest suits in the world – could ameliorate any brand damage to Under Armour.

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