Analyst reacts to report on Under Armour culture after strip club report

Under Armour could face long-term consequences from allegations that it fostered a workplace culture that women found demeaning, an analyst said Tuesday.

The analyst’s comments stem from a report Monday in the Wall Street Journal that said Under Armour executives and other employees over the years had accompanied athletes and co-workers to strip clubs after sporting and corporate events, and that employees were allowed to expense those visits or the company paid. The newspaper said a company executive alerted employees earlier this year that they were no longer permitted to pay for strip club, gambling or other adult entertainment using corporate cards.

The Baltimore-based sports apparel maker issued a statement in response to the story Monday saying the company has addressed “these serious allegations of the past.”

In a note Tuesday, Camilla Yanushevsky, an equity analyst at CFRA Research, said she expects long-term damage.

“With the #MeToo movement building global momentum, we expect these allegations to strain [Under Armour’s] partnerships with influential female athletes, and to dampen brand trust long term,” wrote Yanushevsky, who maintained her sell rating on the stock.

“Executives at Under Armour have for years taken athletes and employees to strip clubs, the WSJ alleged in a November 5 report,” Yanushevsky said in her note. “The Journal also cited sources that these trips were among other practices within the company that women found to be demeaning.”

The Wall Street Journal found that “some top male executives violated company policy by behaving inappropriately with female subordinates” and that women were invited to an “annual company event based on their attractiveness to appeal to male guests.”

Under Armour has identified its women’s business as a high growth opportunity. The brand has aggressively courted female consumers, in part by signing high-profile athlete endorsers such as principal ballet dancer Misty Copeland and skier Lindsay Vonn and building apparel collections around such celebrities.

In a letter to employees, Under Armour founder and CEO Kevin Plank and company President Patrik Frisk said of the Wall Street Journal report: “This was tough to read. This is not the culture we envision for Under Armour.”

“We believe that there is systemic inequality in the global workplace and will embrace this opportunity to accelerate the ongoing meaningful cultural transformation that is already underway at Under Armour,” the letter read. “We can and will do better.”