Under Armour Investors Wary Of New Ad Spending

Shares of Under Armour "plummeted yesterday to less than half of the high they hit last summer, as investors showed concern about the company's decision to sacrifice earnings in the first half of this year to spend heavily on advertising," according to Andrea Walker of the Baltimore SUN. Shares closed at $37.06 yesterday, down $5.79, after Wachovia Securities analysts reported that the company will "front-load its 2008 ad spending by, among other things, running a 60-second" spot during the February 3 Super Bowl on Fox.  The company is also preparing ads for the May launch of a cross-trainer athletic shoe. Under Armour said that it spends "about [12-13%] of its revenues -- which were about $605[M] last year -- on marketing, and that that ratio won't change" in '08. The company said that earnings for the first half of the year "would probably be only 3 to 5 cents a share because of the unbalanced ad spending," compared to average analysts' estimates of 39 cents a share.  But Wachovia analysts wrote of the cross-trainer, "With a big marketing campaign, we believe sell-throughs will be strong, and the visibility for the brand could accelerate over the next several months" ( Baltimore SUN, 1/18 ).  As of presstime, Under Armour shares were trading at $29.76, down 19.70% from Thursday's close ( THE DAILY ).