Under Armour is putting out a public relations fire this week after the Wall Street Journal reported an internal change that happened earlier this year: Under Armour employees can no longer charge strip club visits to their corporate cards.
Yes, that fix apparently took until 2018 to make.
This year, companies across many industries are waking up to their own cultural issues and trying to fix them—often as a reactive measure after bad press, less often as a proactive step. The Journal also reported that in one instance at Under Armour, “Women were invited to an annual company event based on their attractiveness to appeal to male guests.”
In a statement in response to the Journal story, Under Armour (UAA) CEO Kevin Plank said, “Our teammates deserve to work in a respectful and empowering environment… We will embrace this moment to accelerate the ongoing meaningful cultural transformation that is already under way at Under Armour. We can and will do better.”
Under Armour has had two high-profile executives depart in the past few years under dark clouds: Scott Plank, brother of Kevin Plank, left in 2012, reportedly amid accusations of sexual misconduct; this year, Scott Plank was accused of exposing himself in the lobby of his condo building, according to a Baltimore police report. Kip Fulks, college friend of Kevin Plank, left last year after disclosing to Under Armour HR a relationship with a subordinate, which is a violation of company policy, the Journal reports.
Under Armour, founded in 1996, is still seen as, and markets itself as, an underdog challenger to sports apparel big dog Nike.
And Nike (NKE) has also dealt with #MeToo issues in 2018.
In the first half of this year, a slew of high-profile Nike executives left the company after an internal investigation of conduct. Among them was brand president Trevor Edwards, who was thought to be the heir apparent to CEO Mark Parker.
In addition to Edwards, Nike vice presidents Greg Thompson, Jayme Martin, and Antoine Andrews all departed. Andrews was VP of diversity and inclusion, a particularly striking blow.
Last May, Nike’s own head of HR said that Nike has failed to hire and promote enough women and minorities. About half of Nike’s workforce is female, but the senior management level is overwhelmingly male.
While the #MeToo movement has roiled a number of industries, sports apparel is a particularly vulnerable one, where workforces tend to be young and hard-charging. “We cannot protect this house,” Plank wrote in an internal email to employees, “if we are not protecting each other.”
(Interestingly, the other of the “big three” sports apparel giants, Adidas, has also suffered scandal this year, but of a different kind: Adidas marketing executive Jim Gatto was convicted of wire fraud in a far-reaching bribery scandal that upended college basketball.)
Under Armour has fundamental problems with its business that go far beyond strip club visits: the company posted losses in 2017 and will again see a loss this year, though its stock has rebounded 52% this year. Yahoo Finance’s Brian Sozzi writes that it’s time for Kevin Plank to consider selling.
Nike, on the other hand, has managed to make consumers forget its #MeToo drama from earlier in the year thanks to a high-profile marketing campaign with Colin Kaepernick and strong financial success this year. Its stock is up 23% this year.