Thursday, February 20, 2014
Instead of going for gold at the Sochi Winter Olympics, Under Armour 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,” said Robert Passikoff, founder and president of marketing firm Brand Keys. “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 Monday 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 on Friday, a few hours after the speedskaters voted to change to suits they used during pre-Olympic competition.
However, shares gained $1.46 Tuesday to $107.76 after the old suits didn’t result in any speedskating medals over the holiday weekend.
The company’s stock has 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, 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 Kevin Plank said Friday in an 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.”
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 and were the fastest suits in the world — could ameliorate any brand damage to Under Armour.
“For a high-performance brand suiting a high-performance team with multiple gold expectations, this is pretty damaging,” said Bob Dorfman, executive creative director at San Francisco’s Baker Street Advertising. “The good news, if you can call it good, is that Shani Davis and Heather Richardson both failed in the 1500 even after switching out of the new bodysuits. So maybe it’s not the suits; maybe it’s the athletes.”
Dorfman added, “It certainly would have been much worse for Under Armour if this happened to their NFL gear” instead of in speedskating.
“This is a very esoteric sport, not an event your average weekend jock follows closely, or bases their equipment purchases upon,” Dorfman said. “And in another week, we’ll all have forgotten about Winter Olympic sports and have moved on to the NBA and MLB.”
Still, the speedskaters’ poor performance in Under Armour suits could hurt the company’s image, said Passikoff, whose company has worked with firms including Samsung, Burger King and American Express.
“It is an absolute fact that brands that do meet expectations always do better than those that can’t,” he said. “You know what they say: ‘It doesn’t matter whether you win or lose, it’s where you place the blame!’ ”