Saturday, February 15, 2014

The Agony of Defeat - Sponsor Olympians, if You Dare

Shares of Under Armour Inc.UA -2.38% are taking a hit on Friday after U.S. Speedskating asked Olympic and skating officials for the option to switch out of their new Under Armour suits.

Some skaters think Under Armour’s high-tech racing suits are causing the team’s long-track athletes to underperform at the Olympics. As WSJ reported, the request to switch doesn’t guarantee that American skaters will be wearing different suits when competition resumes on Saturday afternoon in Sochi, Russia.

The alternate suit is also made by Under Armour.

Shares closed down 2.4% at $106 Friday even amid a broad-market rally. The drop is a small blip for the stock price, which is still up more than 20% this year and has more than doubled over the past 12 months.

WSJ reported these Under Armour suits, billed before the Games as a competitive advantage, have a design flaw that may be slowing down skaters. From WSJ:

“Vents on back of the suit, designed to allow heat to escape, are also allowing air to enter and create drag that keeps skaters from staying in the low position they need to achieve maximum speed, these people said. One skater said team members felt they were fighting the suit to maintain correct form.”

It’s unclear what, if any, impact this episode will have on Under Armour’s business. Last month, the athletic-goods maker reported its fourth-quarter profit surged 28% amid strong sales growth, particularly in its accessories business. The company also projected 2014 revenue of $2.84 billion to $2.87 billion, well ahead of analyst expectations.