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+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

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

  2. UNDER ARMOUR

  3. 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

  4. 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

  5. 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

  6. 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

  7. 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

  8. 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

  9. 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

  10. 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

  11. 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

  12. 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

  13. 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

  14. 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

  15. 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)

  16. 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

  17. SWOT • Strengths • Innovation • Brand name/logo • Brand equity • Growth • Marketing • Sponsorships/Promotions

  18. SWOT • Weaknesses • Pricing • Expensive • Narrow Focus • Advertising • Sometimes to intense

  19. SWOT • Opportunities • Emphasis on a variety of sports • Not just football • Marketing • More sponsorships - colleges, soccer, etc… • Lowered pricing

  20. SWOT • Threats • Economic recession • Competition • Highly dependent • Pricing on raw materials

  21. Current Strategy Evaluation • People, Product, Drive • “Our people are smart, innovative, and frankly, not sure of what they cannot accomplish” • 5 key growth factors • Men’s Apparel • Women's Apparel • Footwear • International • Direct-to-Customer

  22. 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)

  23. 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.

  24. 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

  25. Relative Competitive Strengths • Brand recognition • Founder

  26. Strengths • Passion • Pay cut

  27. Under Armour’s Options • Broaden Their Brand • Debt Management • Costs

  28. Broadening Their Brand • Women’s Apparel • Children’s Apparel • Footwear • International Sales

  29. Debt Management • Credit Agreement • Focus on Liquidity

  30. Costs • Ability to lower prices • Cutting Costs to Produce

  31. Conclusion • Heavily saturated industry, yet UA continues to expand rapidly • Top 3 Competitors: • Nike • Adidas • Reebok

  32. Key Success Factors • Innovation • Brand Equity and Image • Marketing Strategies • Industry Attractiveness

  33. 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

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