Under Armour Inc., known for its “We Must Protect This House” advertisement, must protect its brand name before it goes head-to-head with Nike and Adidas.
The Baltimore sports apparel company has gained steady traction in the $13 billion U.S. sports apparel market, but a recent immigration raid is testing its mettle.
On March 30, a federal sting revealed that Under Armour had hired illegal aliens through the Jones Industrial Network, a temporary employment agency in Baltimore.
One of eight Baltimore businesses targeted in the raid, Under Armour maintained that it was unaware that the employees were illegal aliens.
“At Under Armour, we are patriots first and last, and we’re fully committed to compliance with all laws and regulations,” said Kevin Haley, general counsel for Under Armour.
“We’re furious that apparently one of the temp agencies we use was not so committed or gave the appearance of being not so committed,” Mr. Haley said.
After the raid, shares of Under Armour fell 13 cents on April 2, and then quickly rebounded to $52.28 the next day, a sign of the company’s brand resilience.
Shares of Under Armour Inc., rose 64 cents yesterday, and closed at a six-month high of $52.82.
The 10-year-old company cannot afford to have its brand name tainted, especially since it has become somewhat of a status symbol.
“People who have a lot of money and can choose to wear anything, choose Under Armour. I think that is fascinating,” said Angelique Dab, a senior research analyst at Nollenberger Capital Partners, a San Francisco investment company.
Ms. Dab said that she expects the company will meet its high expectations from investors, and has the potential to take more market share from competitors.
“They are a force to be reckoned with,” said Tom Doyle, vice president of information and research at the National Sporting Goods Association, a national trade association that represents sporting goods retail stores.
“The major retail chains are representing Under Armour very heavily in their advertising,” said Mr. Doyle. The company’s revenue is generated from its sales to retail stores and on the Web.
“Retailers are offering very little discounting in their products, which is a sign that the brand is strong.”
Most spectators would agree that the brand has become somewhat of an icon in the sporting world.
Yesterday, Under Armour’s chief executive officer, Kevin Plank, attended opening day at Wrigley Field, where his company’s logo is nestled among the field’s historic ivy walls in left and right field.
“The company has incredible brand strength,” said Margaret Mager, an analyst at the Goldman Sachs Group Inc. “It has the opportunity to emerge as a leading competitor in the athletic apparel and sporting goods industry.”
In 2006, net revenue grew 53 percent to $430.7 million from $281.1 million a year ago.
Net income in 2006 nearly doubled, growing to $39 million, compared with $19.7 million the previous year.
The company said it will announce its first-quarter earnings on May 1.
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