Under Armour CEO Kevin Plank says he wants to build a “diverse” and “inclusive” company, following a report earlier this year that exposed that the company had been letting its employees charge visits to strip clubs on their corporate cards.
“No one would ever tolerate that,” Plank told CNBC’s Sara Eisen on Thursday morning, on the heels of Under Armour’s annual meeting with investors. “I want to make sure that I set the record straight on that.”
The practice of letting workers expense strip club visits to win over athletes was stopped in February, though it had been happening for years, The Wall Street Journal reported last month. Meanwhile, two of Under Armour’s top executives were reportedly ousted recently after reviews of their credit card charges.
“All these things that are coming out, it’s difficult,” Plank said Thursday. “You know, we are in our 14th year as a public company. That much time in the arena means that at some point you are going to have to retool the machine.”
Plank’s comments about creating a more welcoming workplace come after Under Armour on Wednesday delivered what was largely received by Wall Street as underwhelming financial targets for the next five years, especially for North America. In the U.S., Under Armour is struggling to compete with rivals as it focuses on selling more directly to consumers and pulling product out of wholesale channels and off-price chains.
Its shares closed Wednesday down more than 10 percent and were still falling more than 5 percent midday Thursday. The company has lost roughly $1.3 billion billion in market cap from Tuesday’s market close and is currently valued at about $8.3 billion.
Though Under Armour’s #MeToo problems weren’t once mentioned by the company or by analysts during the investor meeting, some people are drawing a connection between the retailer’s poor performance and bad corporate governance.
As the retailer says it sees a huge opportunity in targeting women in the U.S. with new products, this could prove to be one setback.
“Under Armour still has work to do to capture a great share of consumers’ wallet and gain traction in women’s and in footwear, its two biggest opportunities,” Telsey Advisory Group analyst Cristina Fernandez said, noting that both Nike and Adidas are calling for higher growth rates for their businesses in North America from 2019 to 2020.
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