Kevin Plank, the CEO of athletic wear company Under Armour, is learning that sometimes it pays - literally - to keep your mouth shut. His recent praise for President Trump has dinged the company's public profile and financial performance, a stock analyst reported on Wednesday.
On Feb. 9, during an interview with CNBC, Plank said having a "pro-business president" like Trump is "a real asset to this country." Following the interview, three of Under Armour's celebrity endorsers promptly disagreed with Plank's characterization of Trump. Stephen Curry, a point guard for Golden State Warriors, said he agrees with Plank's description of Trump "if you remove the 'et'" from the word "asset." Misty Copeland, the first African-American principal dancer at the American Ballet Theatre, said on Instagram that she "strongly" disagrees with Plank's comments. Dwayne Johnson, former professional wrestler and actor, said Plank's pro-Trump comments were "divisive" and lacked perspective.
On Wednesday, things got worse for Plank and Baltimore-based Under Armour after Sam Posner, senior analyst at Susquehanna Financial Group, downgraded Under Armour's stock to negative from neutral in a note to clients, MarketWatch reported. Posner reduced his stock price target for the company from from $24 to $14. According to MarketWatch, Under Armour's stock has not traded below $14 since April 2013.
One of the main reasons for Under Armour's downgrade, Posner wrote, was due to "reputational risk" after Plank's "sloppy" comments about President Trump in a polarizing political climate. Posner also says Under Armour's apparel lines are "too basic" and the young company has failed to design iconic apparel like Nike, Adidas, and Puma have been able to do over the years.
Plank's comments "make it nearly impossible to effectively build a cool urban lifestyle brand in the foreseeable future," Poser wrote.
Plank tried to weather the storm by publishing a full-page open letter in the Baltimore Sun on Wednesday which stated how Under Armour stands firm for equal rights, "believes immigration is a source of strength" and how the company is publicly opposed to Trump's travel ban on Muslim-majority countries.
But, Posner predicts the damage will result in Under Armour losing market share in 2017.
"The point is that reputational damage to Under Armour appears to be done, and such damage may have lasting effects on brand perception and, ultimately, sales in our view," Posner wrote.