Under Armour Wants to Have It Both Ways
Under Armour is the latest company to find itself mired in a Trump-related controversy.
The Baltimore-based athletic-gear purveyor has generated a slew of headlines in the past two days, starting with comments made on Tuesday after CEO and founder Kevin Plank when he expressed enthusiasm for President Donald Trump. In an interview on CNBC, Plank said “to have such a pro-business president is something that is a real asset for the country.”
Just a little over 24 hours, after a #BoycottUnderArmour hashtag began circulating on Twitter (TWTR) and other social media platforms, the company put out a more formal statement to clarify Plank’s position:
At Under Armour, our culture has always been about optimism, teamwork, and unity. We have engaged with both the prior and the current administrations in advocating on business issues that we believe are in the best interests of our consumers, teammates, and shareholders.
Notably, Under Armour pointed out that Plank is a member of the American Manufacturing Council that includes over two dozen high-profile executives that have been called on to help Trump craft policies that will encourage job growth in the U.S. Other notable names on that list include Tesla CEO (TSLA) Elon Musk, Ford Motor (F) CEO Mark Fields, and Johnson & Johnson (JNJ) CEO Alex Gorsky.
Plank and Under Armour made no mention he would intend to step down from that council and the statement issued yesterday strongly implies he will remain actively involved. That contrasts with the move that Travis Kalanick, CEO of Uber, made after a consumer-led revolt targeted his association with the administration.
Under Armour finds itself in a pickle that is becoming increasingly familiar in today’s political polarized America. Brands are being asked to essentially pick a side, but by doing so, also risk incurring the wrath of some 40% of American voters that either backed President Trump or the nearly equal number of voters that voted against him. The Trump comments from Plank was such a big deal that star Under Armour-endorsed athlete Stephen Curry was asked to weigh in.
Social media has fueled resentment and protests. And Under Armour wants to have it both ways. It wants to have a close relationship with the current administration to advocate for issues that are important for the apparel and shoe manufacturer. But it doesn’t want to upset the other side of the aisle. The company got a taste of this cultural divide last year when it pulled an endorsement with a hunter whose husband was filmed killing a black bear with a spear. That move was to appease animal-rights activists, but ended up angering hunting enthusiasts.
More broadly, Americans are essentially saying: tell us where you stand Nordstrom. And Macy’s. PepsiCo. Starbucks. Kellogg. But by taking a side, a company could lose out on millions in sales. Of course, no corporation has yet blamed poor sales on these social media-driven boycotts. And there aren’t any firm indications that consumer spending patterns are changing. Starbucks, for example, has been a perennial target of these campaigns but sales in the U.S. keep rising.
“We engage in policy, not politics,” Under Armour said in the company’s statement on Wednesday. The company went on to say it would advocate for fair trade and an inclusive immigration policy. But it also touted a team that includes individuals from “different religions, races, nationalities, genders and sexual orientations; different ages, life experiences and opinions.“
Some Twitter users weren’t entirely convinced.
In a way, brands have brought on this bind themselves. Companies have in recent years touted “authenticity” has a key marketing tool. Ask any high-ranking executive about what shoppers want today and they’ll tell you people want a brand with a clear identity that they can support. Consumers, in particular millennials, will loyally support a brand as long as it is viewed as “authentic.” A highly divisive election has made that authentic messaging a bit tougher to achieve.
Perhaps going forward, Under Armour and other companies should be more like luxury retailer Nordstrom (JWN). The company last year refused to stop selling apparel and other goods under the Ivanka Trump brand, saying it wanted to stay agnostic. But this year, it moved to unload the brand because of poor sales—a move that upset President Trump, Ivanka’s father, and even led him to tweet his displeasure. Twitter users both praised and bashed Nordstrom’s move.
Investors ultimately sent the company’s shares higher on Wednesday, unfazed by Trump’s tweet and instead focusing on fundamentals. A National Retail Federation report published that day gave a rosy 2017 industry forecast, trumping any social media noise.