+ER
Stephanie Light, Dana Cook, Austin Bastian, Philip Winfield, Tyler Bushman
Jordan Jones, Ian Walraven, Bryson Bell
UNDER ARMOUR
History of Under Armour

Founded in 1996 by Kevin Plank
◦ Former Maryland football player

Originated what we know as performance
apparel
◦ The superior shirt was designed to keep
perspiration off your skin
◦ Works to regulate body temperature and
enhance performance

Mission: to make all athletes better through
passion, science, and the relentless pursuit of
innovation
Industry Environment

Economic environment
◦ Sporting apparel industry has suffered less
than other industry’s through the most recent
recession
◦ Sales of equipment, apparel, and footwear is
only down 4%
◦ This is due to the growing popularity of
exercise and fitness
Industry Environment

Political characteristics
◦ The industry has been under scrutiny for
sweat shops and violation of labor laws
◦ NIKE is the most well known case

Demographic characteristics
◦ Aging population has realized the importance
of staying fit
◦ More and more women are working out
 Due to American culture that is obsessed with
fitness
Driving Forces for change
• Going global
 Under armour relies heavily on overseas
manufacturing but only 5% of their sales are
international
 Adidas is wanting to use the 2010 World cup to
help generate sales
 Nike is stepping up their footwear market across
China
 All firms realize the importance of having a global
presence
Driving Forces For Change

Marketing Efforts
◦ Becoming more popular within the industry
to have interactive websites and get
consumers involved in the decision making
process
 Ex. NIKE Plus, NikeID
 Ex. Adidas Originals Website
 Ex. Under Armour “boom boom tap” that leads to
exclusive women’s website
Evaluating Strength of Competitive
Forces
Top Competitors:
 1.) Nike

◦ #1 shoemaker in the world
◦ Sells athletic apparel and equipment along
with Cole Haan dress and casual shoes
◦ Owns a variety of stores
◦ Nike acquired soccer star Umbro in 2008
Top Competitors (cont’d)

2.) Adidas
◦ #2 maker of sporting goods worldwide
◦ They have deals with a variety of sports
◦ Had sponsorship rights to the Beijing Olympics in
2008
◦ Purchased Reebok in 2006
◦ Signed an 11 year agreement with the NBA and
WNBA
◦ They are currently trying to strength their brand in
western European markets
Top Competitors (cont’d)

3.) Columbia Sportswear
◦ One of the world’s largest outerwear makers
◦ Includes a variety of brand names
◦ They licensed their name to RC pet products in
2007
◦ About 40% of sales are outside of US, which is why
they focus on worldwide expansion
◦ They are looking to expand more on their
footwear line
Strategic Issues
Under Armour’s strategies are:
 1.) Expanding their product line

◦ Footwear and innovation

2.) To continue the growth of the
company
◦ Since 2006, UA has been signing distribution
agreements to increase their international
expansion
◦ Since Dec. 31 2009, their products are sold in
20,000 retail stores worldwide
Porter’s five forces

Threat of substitute products or services
◦ Compression t-shirt
◦ UA claims 79% of market for compression
sports apparel
 Nike
 Adidas
 Columbia Sportswear
 Omni-Tech
 Omni-Dry
Porter’s five forces

Threat of entry of new competitors
◦ Help of customers/supporters (Roger
Clemens/Jerry Rice)

Five year growth rate is increasing 40%
above the industry average
Porter’s five forces

Intensity of competitive rivalry
◦ UA
 HEATGEAR®, COLDGEAR®, and ALLSEASONGEAR®
 Protect this House
◦ Columbia
 Omni-core technologies
◦ Adidas
 Clima365 and TechFit
 Impossible is Nothing
◦ Nike
 Dri-Fit and Pro Combat
 Just Do It
Porter’s five forces

Bargaining power of customers
◦ Companies compete with each other using price
ranges

Bargaining power of suppliers
◦ UA has 22 manufacturers in 17 countries
 No long term contracts
 Distributors: 31% sales go to Dick’s and Sports
Authority
◦ Nike has independent manufacturers in 34
countries
 16% of sales occur in Sojitz America (Trading Company)
Key Success Factors




Innovation of material
Brand Equity
Quality Products
Marketing Strategies
◦

Team/School sponsorships, commercials,
Olympics, etc.
Brand Control and Expansion
◦
Current and future markets
SWOT

Strengths
◦ Innovation
◦ Brand name/logo
◦ Brand equity
 Growth
◦ Marketing
 Sponsorships/Promotions
SWOT

Weaknesses
◦ Pricing
 Expensive
◦ Narrow Focus
◦ Advertising
 Sometimes to intense
SWOT

Opportunities
◦ Emphasis on a variety of sports
 Not just football
◦ Marketing
 More sponsorships - colleges, soccer, etc…
◦ Lowered pricing
SWOT

Threats
◦ Economic recession
◦ Competition
◦ Highly dependent
◦ Pricing on raw materials
Current Strategy Evaluation
People, Product, Drive
 “Our people are smart, innovative, and
frankly, not sure of what they cannot
accomplish”
 5 key growth factors

1.
2.
3.
4.
5.
Men’s Apparel
Women's Apparel
Footwear
International
Direct-to-Customer
Current Strategy Evaluation

Some important accounting/financial data
◦ Revenues=$856,411(thousands), increase of 18%
from 2008.
◦ Gross profit=$413,025(thousands), increase by a
comparable rate of 16%.
◦ EPS=$0.094
◦ Diluted EPS=$0.92(Class B convertible stock)
◦ Cash and cash equivalents make up nearly half of
the company’s current assets.
◦ Cash on hand at year end=$187,297(thousands)
Current Strategy Evaluation

Financial Ratio Analysis
◦
◦
◦
◦
Quick ratio=2.49
ROA= 8.5% (not very good)
ROE=12%
PE ratio= 34.30
 Suggests that investors can expect higher earnings
growth in the future.

All of UA’s ratios show that there has
been an increase in profitability and
financial health for UA.
UA’s Relative Cost Position
UA has never had a low-cost market
strategy.
 Factors that influence UA’s cost position

◦
◦
◦
◦
Seasonality
Source of manufacturing
Competition
Distribution/inventory management
Relative Competitive Strengths

Brand recognition

Founder
Strengths

Passion

Pay cut
Under Armour’s Options

Broaden Their Brand

Debt Management

Costs
Broadening Their Brand

Women’s Apparel

Children’s Apparel

Footwear

International Sales
Debt Management

Credit Agreement

Focus on Liquidity
Costs

Ability to lower prices

Cutting Costs to Produce
Conclusion

Heavily saturated industry, yet UA
continues to expand rapidly

Top 3 Competitors:
◦ Nike
◦ Adidas
◦ Reebok
Key Success Factors

Innovation

Brand Equity and Image

Marketing Strategies

Industry Attractiveness
Building a Sustainable Competitive
Advantage

Focus on their strengths and improve
their weaknesses

Use opportunities in their industry to
expand their brand

Create a strategy with both innovation
and low prices