Should Under Armour Inc (UAA) CEO Kevin Plank Step Aside?

The latest speaking gaffe by Under Armour Inc (NYSE:UA, NYSE:UAA) CEO Kevin Plank set off a firestorm of social media buzz Feb. 7 that was either for and against him with some even calling for a boycott of UAA products.

Should Under Armour Inc (UAA) CEO Kevin Plank Step Aside?

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This isn’t Plank’s first example of misspeaking.

UAA stock investors might remember Plank’s comments during Under Armour’s Q3 2016 earnings conference call in October.

“Our demand is still there,” Plank said during the UAA conference call. “This doesn’t mean the demand for the Under Armour brand has disappeared, but it certainly hasn’t reappeared dollar-for-dollar in our distribution.”

UAA stock lost 13.5% in a single day of trading, its biggest one-day decline in eight years, as investors tried to come to grips with the meaning behind those words.

What Plank’s Gaffes Could Mean for UAA Stock

The praising of Trump was silly given Plank is one of 28 CEOs on the Manufacturing Jobs Initiative; by simply serving on that advisory group he’s implying without having to say so that he and Under Armour are willing participants in the president’s plans for boosting the U.S. economy.

The two statements raise a once unthinkable question: Should Kevin Plank step aside?

I’m a fan of Kevin Plank and admitted as much in a late-December comparison of UAA stock and Nike Inc (NYSE:NKE) suggesting that he has done a masterful job for Under Armour up to now, but things are only going tougher as its peers get serious about the competition.

But here’s the thing …

As I read the stories about Plank praising Trump, it suddenly occurred to me that Under Armour is entering its 21st year in business. It’s no longer that entrepreneurial startup funded by credit card debt, but a company with $180 million in cash in the bank, annual revenues approaching $5 billion and a market cap of almost $9 billion despite a 47.1% decline in UAA stock over the last 52 weeks.

If it’s going to successfully execute on its direct-to-consumer plans, Under Armour needs a top-notch CEO leading the charge; I’m not the only one suggesting it might not be in the best interests of UAA shareholders if it were Plank.

Reuters’ recent headline, “Under Armour’s founder-led approach wears thin”, says it all. Not only has Plank grabbed more control of the company through the dual-class share structure implemented in 2016, but he has managed to chase away Under Armour’s CFO after just a year in the job. That’s got founder meddling written all over it.

Let’s consider Nike co-founder Phil Knight for a moment.

He stepped down as CEO in November 2004 after having served as NKE’s chief executive on two occasions, the first for 22 years between May 1968 (when Nike became the corporate name) and 1990 and the second for four years between 2000 and 2004. That’s a total of 26 years — five more than Plank has currently put in.

In NKE’s situation, Knight stepped aside in 2004 when it hired William Perez, the CEO of privately held S.C. Johnston & Son. Looking for new blood, Perez didn’t work out and left after just 13 months in the top job; current CEO Mark Parker took over and it hasn’t looked back since.

Bottom Line on Under Armour Stock

Granted, Plank is only 44 while Knight was 66 when he became chairman in 2004, but it would make sense for Under Armour to bring in someone who’s more experienced at direct-to-consumer retail, leaving Plank to think bigger picture — and hopefully, to speak less.

Under Armour and UAA stock are at important points in its history.

What happens next for investors depends on the personnel decisions the company chooses to make moving forward. One of them should be to seriously consider whether Kevin Plank needs some help in the C-suite.

I’m not saying he does, but it can’t hurt to consider it. Soon.

As of this writing, Will Ashworth did not hold a position in any of the aforementioned securities.

Article printed from InvestorPlace Media,

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