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+ER Stephanie Light, Dana Cook, Austin Bastian, Philip Winfield, Tyler Bushman Jordan Jones, Ian Walraven, Bryson Bell
+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
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
