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Under Armour CEO assures shareholders company is on track for growth

Under Armour CEO Kevin Plank wasted no time at the company's annual shareholder meeting Wednesday before addressing its depressed stock price.

"While we have a lot of great things happening... the performance of our stock has not held to the standard that all of us as shareholders have come to expect after 12 years as a public company," Plank said of the company he founded 21 years ago. "We want to be clear that we do not accept it. We are not happy about it, and we have a committed team that's working every single day to build the best business in the world."

Plank told about 300 shareholders at the company's Port Covington offices that his vision of growing from $4.8 billion to $10 billion a year in sales on the way to building the world's biggest sport brand "has never been bolder, never been stronger."

The company's stock price, which started last year in the low-$40s, has since fallen under $20, closing Wednesday at $17.83 each.

After years of rapid growth, Under Armour has struggled with shifting consumer buying habits and a slowdown in sales in its core U.S. apparel business. In April, the Baltimore-based company announced its first quarterly loss since it became a public company in 2005.

Plank told shareholders he envisions the near future as a time to reset. That means fine tuning products, merchandising and distribution through existing retail channels, meeting growing online shopping demand and focusing on areas with growth potential.

Those include footwear, now a relatively small part of the business, and women's merchandise, segments that each grew to $1 billion in sales last year, and international sales, which account for just 15 percent of the company's business but which grew more than 60 percent last year.

Under Armour's struggles come after a year in which the company outfitted several hundred athletes at the summer Olympics in Brazil, signed an endorsement deal with actor and former athlete Dwayne "The Rock" Johnson and signed major deals including a 15-year outfitting agreement with UCLA and another to make uniforms for Major League Baseball starting in 2019.

"We have enough. We have plenty. We just need to activate it to make it great," Plank said. "Becoming excellent everywhere we do business is our mandate and our focus today."

Shareholders asked the CEO about how the company intends to compete as more stores close and consumer buying shifts online and whether it would consider expanding into categories such as sailing or polo.

Tony Commodari, a shareholder and Pasadena resident, asked Plank to address reports that "Under Armour is not cool with kids, which would be very disturbing because that would be our future."

Plank said the brand ranked higher than competitors "for a long time," and has developed "a pipeline of product that is full of innovation."

"Cool factor is one of those things that didn't happen just because we have a nice logo or good commercial," he said. "It happens because of great product. It's the number one focus that we have."

Other investors voiced confidence that the company and its stock would recover.

"I feel that they have the capability to regain where they were," said Louis Kistner, a Cockeysville resident and retired communications director for a global chemical company. "They obviously are aggressive in growth, and to the extent that they can take market share away from the other two major sports companies, Adidas and Nike, as they eat into their markets, which I think they can and should do, particularly outside the United States where there's greater opportunity, I think the share price will go up... What you need is patience."

Moses "Tony" Undayag, an acquisition manager for a consulting firm and new Under Armour shareholder, said he was looking to invest in a sports apparel brand and sees Under Armour as a value proposition.

"People are always going to need to be clothed, and there's a big market right now for athletic apparel," the Columbia resident said. "The stock's going to go back up. This is a really good chance to buy at a good price."

lorraine.mirabella@baltsun.com

lorraine.mirabella@baltsun.com

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