Under Armour, one of the hottest sports apparel line on the market today, came under fire last week when CEO Kevin Plank told analysts he didn't expect UA footwear to make a profit in 2010. Shares fell more than 11% after the company confirmed it would not be introducing new footwear products next year as it works to improve shoe offerings for 2011. Footwear, starting with the cleats UA debuted in 2006, has been a major source of growth for the company in recent years and anyone who watched the Super Bowl last year saw the confidence the company had in its product. UA spent a reported 25 million on the 60-second ad during last year’s game announcing the launch of its cross-training footwear line that wasn’t even going to hit stores for another three months. Consequently, UA’s announcement last week was a major disappointment to all who thought it would live up to the hype. According to Matt Powell via AdAge, "They tried to go big because that's who they are and that's what they do," but "they would have been much smarter to start small." Even when the Super Bowl ad debuted last year, the stock tumbled as investors questioned the intelligence behind blowing that much budget on a shoe ad.
However brazen the advertising, I am a big UA fan and I really think its ads and branding efforts capture and inspire consumers more effectively than its competition. The company portrays a very intense image and designs for the pro-athlete, but has been successful in the mainstream because of its ferocity and passion. The company’s stop-at-nothing spirit and loyalty to its origins has always been present in the advertising strategy, and it continually uses University of Maryland (where the company was founded) as a theme. Take for example, the company spokesperson, Eric Ogbogu, a Maryland football player who befriended Plank in college who has been a part of the organization from the beginning. He still represents the brand and is featured on the website and in many commercials. Before I started wearing UA in 2006, I was in my last marketing class at UM with Eric. He had retired from the NFL and came back to finish his degree in marketing, presumably to further his career as a UA ambassador. He told the class a lot about the start of the company, from the formation of the mission (to make all athletes better through passion, science and the relentless pursuit of innovation) to the grueling hours spent in college locker rooms trying to shill shirt samples. He was a brand cheerleader if there ever was one and inspired me to really take a look into the brand. I have been a fan ever since, and believe the company will continue to succeed despite the pitfalls it has encountered in 2009.
Analyst Tom Shaw was right on last week when he said, "Getting the innovation right is something that resonates better with the consumer. I think it just means its less near-term growth, and people look at Under Armour as a growth story so it may concern them.” Shaw added, "The growth is still here, we just will have to wait an extra year." Passion and the determination to make a better product definitely resonates with me, and I won’t be selling my UA stock any time soon.
