Investors Shouldn't Worry About Under Armour's Speed-Skating Uniforms

There's no such thing as bad publicity when you're trying to build a brand.

Feb 16, 2014 at 6:00PM

What's wrong with the U.S. speed-skating team in this year's Olympics? We've won 29 medals in this event in past winter games, far more than any other nation -- yet we don't even have a bronze in Sochi.

According to some pundits and stock analysts, the team's uniforms are at fault.

Really? So since Shaun White, arguably the best-ever half-pipe snowboarder, didn't even medal this year after grabbing the gold in the last two Olympics, does that mean there's something wrong with his Burton snowboard? 

Did Peyton Manning's Reebok shoes cause him to fall flat in the Super Bowl, following his dominant regular-season performance? When LeBron James couldn't win in Cleveland even though he was probably the best NBA player at the time, was it just his Nike sneakers holding him back?

You get the idea. Athletes win or lose based on things like talent, team performance, and the level of the competition. Sometimes it's just not your day, as Shaun White said of his showing in Sochi.

But supposing we actually could lay the blame on the speed skaters' Under Armour (NYSE:UA) uniforms, how would that affect Under Armour's stock?

My colleague Jake Mann sees a "worst-cast scenario" for Under Armour in terms of developing new products and global brand awareness. After all, the company is on an international stage right now. But if Under Armour takes some heat over speed skating, it's not going to devastate the company in the same way as if this had happened in a highly visible sport like football or baseball.

Besides, do you even remember what apparel company was involved in the last Olympic controversy? No? 

I'll help. It was Ralph Lauren (NYSE:RL), and the "problem" with the U.S. Olympic Team uniforms that Ralph Lauren designed was that they were made in China, not America. It grabbed headlines at the time, but two years later, Ralph Lauren is alive and kicking, and the "controversy" is a distant memory.

People don't remember things like this in the long term. Shareholders never want to see their companies face even short-term dilemmas, but the bottom line here is that Under Armour took a gamble with its speed-skater uniforms that still may pay off in the long run. Under Armour has long been known as an innovator, taking risks and trying to make products different from and superior to everyone else's. Even if the company fails, it does so attempting something bold.

More importantly, Under Armour is still essentially a North American brand, with little exposure to the global market. Being a major sponsor in the Olympics, with American athletes wearing their clothing, is tremendous from a marketing aspect. No one is going to remember that a few critics blamed Under Armour for the speed-skating team's underperformance in Sochi, but they may well remember the logo emblazoned on the athletes' uniforms.

Building brand awareness has to start somewhere. As they say, there's no such thing as bad publicity.

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Matt Thalman has no position in any stocks mentioned. The Motley Fool recommends Nike and Under Armour. The Motley Fool owns shares of Nike and Under Armour. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

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This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

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The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

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David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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