Under Armour Founder, Chair & CEO Kevin Plank yesterday appeared on CNBC for a nearly 30-minute interview where he defended his company and its strategy in the wake of last week's sharp stock price drop. CNBC’s Scott Wapner said to Plank, "This is the second quarter in a row that we've sat together following a big slide in your stock and investors seem to be questioning where your growth is going." Plank: “We need to control the narrative a bit. ... We are a growth company. You’ll never hear us not saying that. ... I am the largest shareholder. I share the brunt of what’s happening here and we’ve got a long-term strategy. We remain committed to it and when you look at the numbers and when you look underneath the hood, we’ve got a great business and a great brand."
REMAIN CALM: Plank: "When you look and understand what the long-term vision of the company is, we've had a great run as (a) company and ... we’ve seen it all. ... I would not bet against Under Armour. If there's a message today for shareholders it’s look at the body of work. ... The reason I wanted to wait a week -- and just let everybody settle down -- was to talk about how this company plays offense, how this company throws punches. That is what we do and it's how we continue to expect to be able to run again." Plank added the type of growth UA has had "does hide a lot of inefficiency and there are some opportunities for us to be better,” but this is "not a company that’s on the ropes."
TEACH THE CHILDREN WELL: Plank said of the brand's appeal, "Kids want to wear our brand, ask the people out there. Your kids' closets have Under Armour, they love Under Armour. There’s no brand issue here." Plank added of the growth the company has enjoyed, “We don't want to press our product into a market that has now become so price focused. We don't want to be the $30 option in the store, we want to be the $75 premium that’s driving people through innovation.”
PROJECTING CONFIDENCE: Plank said of whether the company has to regain the confidence of investors, “Our team of people, they're pissed off. They feel it. ... We had a tough time in the fourth quarter. I think we were incredibly transparent about it. We gave it great logic as to why that happened, we gave great logic to the deep root cause that we are now taking action for and addressing. We'll address that in 2017. Wall Street can count on us. They've always been able to count on us and our track record and our history is worth something. Did we build up an enormous amount of credibility? Yes. Trust is built and dropped and it's lost in buckets. Do we have to spend some of that credibility and that equity? I believe we probably did, but no one's changed, no one's picked up a new hobby, there’s nothing else happening in the company. This is the same growth company. ... My team at Under Armour couldn't be more excited and more angry and ready to go.”
STAYING OR GOING? Plank said of his role in the future, “I've had lots of opportunities to sell my stock and I haven't. ... I believe we have the opportunity to be the No. 1 brand in the world and I think our competition knows it, and they’re really good at what they do and they should feel good and people will have fun and continue to kick us a little bit. That's alright, because we can demonstrate our own toughness and we can take it.”
HUMBLE PIE: Plank said whether the recent drop in share price and loss of confidence from Wall Street has affected his enthusiasm for the company, “I'd like to think I never needed to be humbled but we all probably get over our skis from time to time and it's always good to have your wings clipped a little bit. When I think about what happened and immediately my reaction goes to, 'I feel wiser'" (“Fast Money Halftime Report,” CNBC, 2/7).
CAN THEY COME BACK? Wapner said UA “may be the victim of their own success,” as the company “set their own expectations so high” with 26 consecutive quarters of 20% growth. CNBC contributor Jan Kniffen said UA’s growth "will be hard to get back because they’re already a $5 billion company" (“Power Lunch,” CNBC, 2/7). But CNBC contributor Dan Nathan said UA right now is "Apple in 2002 with the launch of iPod." But CNBC’s Melissa Lee asked, “What is their iPod? Another shoe? Sleeping pants?” CNBC contributor Karen Finerman said UA has had “somewhat of a hiccup, but it’s still on a tremendous trajectory." Finerman: "Their biggest problem is they were trading way too high” (“Fast Money,” CNBC, 2/7).
