Under Armour's founder and chief executive made a mistake praising President Donald Trump, and investors of the sportswear brand will pay for it, an analyst has warned, slashing his rating of the stock.
CEO Kevin Plank's recent comment that Trump was a "real asset" to the country drew rebukes from Under Armour's own celebrity endorsers, including NBA star Steph Curry. The move could take a toll on the reputation of the brand, whose ambassadors also include supermodel Gisele Bundchen and NFL legend Tom Brady, and weigh on its share price, according to Susquehanna International Group analyst Sam Poser.
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Plank's pro-Trump commentary makes it "nearly impossible to effectively build a cool urban lifestyle brand in the foreseeable future," Poser said in a report.
The controversy, along with broader concerns about Under Armour's valuation and slowing growth, led him to downgrade the stock to negative from neutral and slash his share price target for the stock to $US12 from $US25, putting him at the low end of Wall Street estimates.
![Under pressure: Under Armour chief executive Kevin Plank.](/web/20170217024025im_/http://www.smh.com.au/content/dam/images/g/n/j/2/d/q/image.related.articleLeadwide.620x349.gue01e.png/1487299091920.png)
"At this point we don't believe Under Armour is in danger of losing Steph Curry," Poser said. "However, it simply cannot be good for business if the face of Under Armour spoke out so pointedly against the CEO's comments. Other Under Armour brand athletes such as wrestling pro Dwayne 'The Rock' Johnson and star ballet dancer Misty Copeland have also spoken out against Mr Plank's comments."
Baltimore-based Under Armour has lost almost a quarter of its sharemarket value this year as the company drastically cut its annual sales forecast amid slowing growth in January, causing many shareholders to dump the stock and ratings agency Standard & Poor's to cut its credit rating to junk. They rose 0.6 per cent to $US21.89 in New York on Wednesday.
In responding to Plank's remark about Trump, Curry said he agreed with the description "if you remove the 'et'" from asset.
Lululemon's example
Sharemarket analyst Poser compared the incident to a gaffe by Lululemon Athletica in 2013.
![Golden State Warriors' Steph Curry said he agreed with Plank's description of Trump "if you remove the 'et'" from asset.](/web/20170217024025im_/http://www.smh.com.au/content/dam/images/g/o/3/d/0/j/image.related.articleLeadwide.620x349.gue01e.png/1487299091920.jpg)
In responding to concerns about yoga-pant pilling, founder Chip Wilson said the problem was the bodies of some customers. "Some women's bodies just actually don't work," he said. "It's about the rubbing through the thighs."
That incident led to a "strike" by some Lululemon customers, Poser said. And the stock price went from $US68 to $US46 in a few months.
In Under Armour's case, the company later took steps to distance itself from Trump by opposing his executive order on immigration.
"We are against a travel ban and believe that immigration is a source of strength, diversity and innovation for global companies based in America like Under Armour," the athletic brand said in a statement last week.
Plank, 44, also took out an ad in the Baltimore Sun on Wednesday saying that his earlier comments "did not accurately reflect my intent." He said the company supports equal rights and that immigration is a "source of strength" for companies like Under Armour. The ad didn't mention Trump by name.
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