Presented by : Jason McClendon, Kyle Windhorn, Nicole Moore,
Taylor Bemis, Qianni Zhang, and Zach Christiansen
Company Information
Sector: Consumer Goods
Industry: Apparel/Footwear
Formed in 1996, CEO Kevin Plank
Filed with the SEC for IPO August 25, 2005
Headquartered in Baltimore, Maryland
Brand Mission:
To make all athletes better through passion, science and the relentless pursuit
of innovation.
Business Activities
Development, marketing and distribution of performance sports equipment
Focus on wholesale distribution
•Wholesale distribution currently accounts for 78% of revenues
•Only 18% of revenue is derived from direct sales to customers
Products available in over 20,000 stores worldwide
Products
Started as an idea to make a superior T-Shirt
Apparel Footwear
•HEATGEAR® •Introduced in 2006
•COLDGEAR®
•ALLSEASONGEAR®
Sales Categories as a Percentage of Net Revenues
For the 2005 Fiscal Year
Accessories
3% Licensing
Footwear 3%
0%
For the 2009 Fiscal Year
Licensing
Accessories 4%
4%
Apparel Footwear
94% 16%
Apparel
76%
Close
10/29/10:
$46.68
60
Net Income (In Millions)
$52.55
50 $47.78
40 $38.97 $38.22
30
20 $19.71
10
0
2005 2006 2007 2008 2009
Year
Employees
Approximately 3,000 employees
Mostly located in the United States
Have had no labor-related work stoppages, employee relations are good
Causes
Under Armour Power in Pink
Under Armour Green
Under Armour Freedom
Ronald McDonald House
The V Foundation
The Conservation Fund
The Rock Foundation
Boomer Esiason Foundation
Living Classrooms Foundation
Sales
Approximately 93% in The United States, 4% in Canada, remaining 3% all
other international markets
Sells products in 13 total countries
Apparel sales represent 76% of net revenues, footwear - 16%, accessories -
4% and licensing arrangements for the sale of products - 4%
Supply performance apparel to NFL, NHL, MLB, USA Baseball, and the US
Ski Team
Critical Issues
• US Centric
• Mature market 330 million
• Competitors
• Demo 15-35
Company’s Market
General Environment
• Economic
- The athletic apparel industry has a 67% growth rate over last 10 years
- 2- 3% growth for Under Armour
• Demographic
- Focused aged 15- 35, 25% of 330 million
- 10% potential market
- Now armed with women's product
• Socio-culture
- Rapidly changing fashion and customer needs
• Technology
- innovation
• Global
- Highly fragmented and competitive
- Alliances
• Political and legal
- Copyright problem
External Environment
• Cycle: Moderate
• Disruptive Technologies:
- Lycra
- Spandex
- Synthetic
External Environment: Competitors
• Sports
- Nike
- Adidas/Reebok
- Puma
• Outdoors
- REI
- Columbia
- Sporthill
Porter’s Five Forces
• Threat of New Entrance
• Bargaining Power of Customers
• Bargaining Power of Suppliers
• Threat of Substitute Products
• Competitive Rivalry within industry
Games, Games, Games!
Name the Athletic Brands
Strengths
• Very strong distribution network.
• A lot of financial strength.
• Powerful brand name.
• Initial exponential growth in net income.
• Big market with schools/universities.
• Strong product placement.
Weaknesses
• Very narrow target market focus.
• Perceived as a male brand.
• High product costs, hampers profitability.
• Limited online offerings in an increasing
electronic market.
• Smaller marketing strategy than their
competitors.
• Currently no patent for UA material.
Opportunities
• Smart phones and the development of electronics
merit a possibility to indulge in more of an online
presence.
• There is a lack of market focus on women and
children lines in general and could be very profitable.
• They are strong in the athletic apparel market and
could explore related product markets with the
Under Armour brand.
• Expanding to foreign markets could be very
profitable, (IE: Europe).
Threats
• There is a lot of competition that can offer cheaper
athletic products.
• The American market has become very cost-
conscious in recent years and may not be as receptive
as they used to towards expensive products by Under
Armour.
• There are many substitute products on the market
similar to Under Armour at a lower expense to
consumers.
• Schools/Universities suffering from budget cuts may
choose to use a cheaper substitute of Under Armour
in regards to athletics.
Distinctive Competencies
Brand recognition and name, very strong
message portrayed.
Value of the products is great, particularly in
perceived benefits.
Very profitable, margins are exceptional
Strategic Alternatives
Focus on penetrating current international markets as well as expanding into new
international markets
Extreme sports market
Patent the materials used in its products
Lower prices to reach other market segments
Increase scope of distribution, sell to greater number of retailers
Strategic Alternatives
Or use pricing tiers for different product lines
Diversify into other product markets (sports drinks? Sports bars? Bedding?
Towels? Workout videos? )
Build more Under Armour specialty stores and outlets
Acquire other companies in niche markets
Create fabrics with more designs
Our Recommendation
Expand into foreign markets
Secure Patent for material
Diversify wholesale distribution
