Please ensure Javascript is enabled for purposes of website accessibility

Is Under Armour Costing the U.S. Olympic Medals?

By Tamara Walsh – Feb 14, 2014 at 3:32PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Under Armour could be to blame for the U.S. speed skating team's lack of medals at the Sochi Winter Olympics.

Under Armour (UAA 0.21%) is under fire this week as the U.S. speed skating team grapples with a flaw in their racing suit, which was designed by the sports apparel maker. Under Armour specially designed high-performance suits for the U.S. speed skating team and promoted the outfits as "a competitive advantage" heading into this year's winter Olympics, according to The Wall Street Journal. Unfortunately, the uniforms may be working against the racers.

Crumbling credibility
Members of the U.S. team worry that vents on the back of the suits may, in fact, be creating drag and slowing down the skaters. "One skater said team members felt they were fighting the suit to maintain correct form," the Journal reported.

The designer of the Dutch Olympic team's uniforms said he had tested a similar vent on the back of his team's suits three years ago, but he found that it "slowed his skaters by letting in air and creating drag," the Journal says.

Under Armour's senior vice president of innovation said the company would "move heaven and earth to make [the uniforms] better." Nevertheless, the damage this could do to Under Armour's brand shouldn't be understated.

After all, the reason Under Armour sponsored the U.S. Olympic team in the first place was to promote the technical fabrics and quality of its products. Today, that quality is being called into question for the entire world to see. NBC's coverage of the Winter Olympics opening weekend pulled in 26.3 million viewers according to Nielsen, not to mention the games' overall global reach.

Ultimately, this could be damaging to Under Armour's brand -- particularly because the company first promoted the outfits as "the fastest speedskating suits in the world ." Just look at what happened to athletic apparel rival lululemon athletica (LULU 0.17%) after its very public quality control problems. If you remember, Lululemon was forced to recall more than 17% of its signature luon pants from stores last year due to problems with the material being too sheer.

On top of hurting Lululemon's brand image, the snafu cost the company as much as $67 million in lost revenue last year. Unlike Lulu's debacle, Under Armour's recent wardrobe malfunction won't necessarily hit the company's bottom line. However, it could hurt Under Armour's international aspirations.

Under Armour generated just 6% of its annual revenue outside of North America last year. The winter Olympics is a global event that attracts the attention of millions of viewers around the world. However, if this was meant to be Under Armour's big global debut, it's not speed skating its way to the top anytime soon.

The importance of branding
To be fair, Under Armour put significant thought into the design of the outfits. The company even put the suits through 300 hours of wind tunnel testing and brought in aircraft engineers and specialists from Lockheed Martin to counsel on the aerodynamic design. With the Winter Games now under way, Under Armour needs to quickly address the problem and reassure the public that its products are indeed fit for the world's best athletes.

Tamara Rutter owns shares of Lululemon Athletica. The Motley Fool recommends Lululemon Athletica and Under Armour. The Motley Fool owns shares of Under Armour. 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.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Under Armour (A Shares) Stock Quote
Under Armour (A Shares)
$9.67 (0.21%) $0.02
Lululemon Athletica Stock Quote
Lululemon Athletica
$361.16 (0.17%) $0.63

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 11/27/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.