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WSJ Your Money Briefing
Under Armour: Are #MeToo and Growth Problems Connected?
00:04:23
Heard on the Street columnist Elizabeth Winkler explains how Under Armour investors should have seen the companies #MeToo issues as a sign of poor corporate governance and anticipated potential growth weakness.
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A
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B
With your Money briefing. I'm J.R. whalen at the Wall Street Journal in New York. Under Armour stock shareholders should have been doing their homework when the you know what hit the fan a few months ago. Now many of them have endured a nearly 10% drop in the stock. We'll explain more in a moment. First, these money in market stories you should know the number of Americans filing applications for new unemployment benefits fell last week by the most in three and a half years. Initial jobless claims decreased by 27,000 to a seasonally adjusted 206,000 and the week ended December 8th. The retreat in the claims level the last two weeks should reinforce the view that that the labor market remains historically tight and employers are generally reluctant to let workers go. And Bitcoin fell to $3,233, down 6.1% since Wednesday at 5pm Eastern Time. That's its lowest level since September 15, 2017. It's been tough going for the cryptocurrency since it plunged through the 6000 level on November 14, falling in four of the past five trading weeks. Smaller cryptocurrencies such as Ether Litecoin, XRP and Bitcoin Cash have moved lower with bitcoin as well. It's been a rough couple of months for sports apparel company Under Armour. It became entangled in the MeToo movement, and just this week the company warned of slower growth. But are the two connected? Heard on the street columnist Elizabeth Winkler is here to discuss. So, Elizabeth, the problem involving how visits to strip clubs were charged can be traced to bad corporate governance. And bad governance can affect many areas of a company.
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C
That's right. Yeah. It's not just about women feeling uncomfortable at a company or, you know, not being treated fairly. You know, usually. We've now come to understand that bad corporate governance impacts the financial performance of a company more broadly and can be an indicator of other problems beyond just the treatment of women.
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B
So to what degree is the company warning about slower growth?
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C
Well, at an annual investor meeting yesterday, it lowered its outlook at least below what analysts were hoping for. So that was quite disappointing for investors.
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B
And that was on December 12th?
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C
That's right.
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B
It's been a struggle for Under Armour to keep up with the rapid changes in the sports apparel landscape, and that's a much bigger problem for the company.
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C
Yes, it really took off in its early years. The Stock hit a high in 2015, but it hasn't really evolved for one, with the athleisure trend. Under Armour is more of a gym only, performance driven brand, or at least that's how it's perceived. And athleisure brands like Lululemon and Athleta have become really popular. Sports Authority, which was a major retailer for Under Armour, went bankrupt. So that's also been damaging.
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B
And Under Armour says it's going to be focusing more on footwear and womenswear going forward. They've got some pretty strong company in that space.
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C
Yeah. That means they're going up against Adidas and Nike and Lululemon and trying to steal sales, especially in the women's wear market, is challenging when so many women really, they love Nike, they love Lululemon.
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B
And in your column you say that investors should have been more wise in observing things and that company sponsored strip club visits are never a good omen. That's how you finish up your column more broadly in it's a good lesson for investors to do their homework.
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C
It really is. It's interesting because when the Journal reported over a month ago that women were experiencing really inappropriate behavior at Under Armour and the strip club visits charged to corporate cards were just one factor there, the stock didn't move at all. Investors apparently didn't care. They didn't think it mattered. It wasn't important as long as the company appeared to be doing well financially, the fact that behavior there was inappropriate wasn't relevant to them. And then you find out a month later that some other problems are going on with the company's performance as well. And then all of a sudden they start caring. But I think if those who are really watching closely would have started to wonder what those earlier problems may have portended.
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B
All right, that is Wall Street Journal heard on the street columnist Elizabeth Winkler joining us here in our studio. Elizabeth, thanks for being with us.
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C
Thanks.
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B
And that's your money briefing. I'm JR Whalen in New York for the Wall Street Journal.
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