+ERStephanie Light, Dana Cook, Austin Bastian, Philip Winfield,

Tyler BushmanJordan Jones, Ian Walraven, Bryson Bell

UNDER ARMOUR

History of Under ArmourFounded in 1996 by Kevin Plank

◦Former Maryland football playerOriginated what we know as

performance apparel◦The superior shirt was designed to keep

perspiration off your skin◦Works to regulate body temperature and

enhance performanceMission: to make all athletes better

through passion, science, and the relentless pursuit of innovation

Industry EnvironmentEconomic 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 EnvironmentPolitical characteristics

◦The industry has been under scrutiny for sweat shops and violation of labor laws

◦NIKE is the most well known caseDemographic 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 ChangeMarketing 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 ForcesTop 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 IssuesUnder Armour’s strategies are:1.) Expanding their product line

◦Footwear and innovation2.) 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 forcesThreat 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 forcesThreat 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 forcesIntensity 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 forcesBargaining 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

SWOTStrengths

◦Innovation

◦Brand name/logo

◦Brand equity Growth

◦Marketing Sponsorships/Promotions

SWOTWeaknesses

◦Pricing Expensive

◦Narrow Focus

◦Advertising Sometimes to intense

SWOTOpportunities

◦Emphasis on a variety of sports Not just football

◦Marketing More sponsorships - colleges, soccer,

etc…

◦Lowered pricing

SWOTThreats

◦Economic recession

◦Competition

◦Highly dependent

◦Pricing on raw materials

Current Strategy EvaluationPeople, Product, Drive“Our people are smart, innovative,

and frankly, not sure of what they cannot accomplish”

5 key growth factors1. Men’s Apparel2. Women's Apparel3. Footwear4. International 5. Direct-to-Customer

Current Strategy EvaluationSome 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 EvaluationFinancial 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 PositionUA 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

http://underground.underarmour.com/tnptraining/index.cfm/2010/3/4/Suh-McCoy-Shine-at-2010-NFL-Scouting-Combine-Powered-by-Under-Armour

StrengthsPassion

Pay cut

Under Armour’s OptionsBroaden Their Brand

Debt Management

Costs

Broadening Their BrandWomen’s Apparel

Children’s Apparel

Footwear

International Sales

Debt ManagementCredit Agreement

Focus on Liquidity

CostsAbility to lower prices

Cutting Costs to Produce

ConclusionHeavily saturated industry, yet

UA continues to expand rapidly

Top 3 Competitors:◦Nike◦Adidas◦Reebok

Key Success FactorsInnovation

Brand Equity and Image

Marketing Strategies

Industry Attractiveness

Building a Sustainable Competitive AdvantageFocus 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