Under Armour reported Q3 earnings yesterday and said that it will "ramp up brand marketing in the coming months," according to Adrianne Pasquarelli of AD AGE. UA Founder, Chair & CEO Kevin Plank said that '20 will be the first time in recent years that the company will have the "right mix of resources and scale to fuel its brand marketing efforts." He added that UA is "increasing its marketing spend." It is "unclear which agencies will get a piece of the larger marketing pie." In the past, UA has "worked with Droga5 and Giant Spoon." Yet a recent "marketing push around the Curry 7 shoe with Stephen Curry was created completely in-house." Pasquarelli noted UA yesterday "exceeded analyst expectations with earnings, but lowered its full-year forecast." On Sunday, the Wall Street Journal reported that UA has been "under investigation" by the Justice Department and SEC since '17. The federal agencies are "looking into whether the brand shifted sales reporting by quarter in order to appear more financially sound" (ADAGE.com, 11/4).
TAKING A HIT: The WALL STREET JOURNAL's Khadeeja Safdar notes UA shares yesterday "fell nearly 19% after the company confirmed it was the subject" of the federal investigation for its accounting practices. Execs on an earnings call yesterday declined to provide details about the probe or explain why UA "hadn't previously disclosed its existence, even though they had been responding to document requests for more than two years." UA CFO David Bergman said, "We have been fully cooperating with these inquiries for nearly 2 1/2 years. We firmly believe that our accounting practices and disclosures were appropriate" (WALL STREET JOURNAL, 11/5). Susquehanna Int'l Group Research Analyst Sam Poser said, "Underlying everything that goes on with Under Armour is that Kevin Plank believes firmly that Under Armour's a growth company and he wants to get back there quickly." CNBC's Lauren Thomas said of Plank stepping down as CEO at the end of the year, "Looking forward, and especially with this probe, still a lot of uncertainty." Poser said, "They think of their product as performance driven and I don't think they realize that performance and fashion and function work well together and I think that's why they continue to lose share to their competitors" ("The Exchange," CNBC, 11/4).
