Under Armour Case

Topics: Balance sheet, Asset, Revenue Pages: 9 (2391 words) Published: February 25, 2014
Case Study #1

Under Armour – Challenging Nike in Sports Apparel
Problem Statement
Under Armour is a sport performance apparel brand that is looking to move ahead of its competition and branch out into different sectors of the sporting goods industry. Kevin Plank and his company’s problem is that their footwear only makes up for about 15% of the firms revenue and they only generate about 6% of their revenue in international sales. In order to compete with the top brands in the industry, Under Armour must find a way to raise the revenues on its footwear and enter into the global market.

SWOT Analysis
Strengths * Brand Equity * High Profit to Earnings Ratio * Collegiate and Professional Sponsorships * Customer Loyalty – (U.S.) * Innovated| Weaknesses * Price * Limited Product Line * Product Focus is Narrowed * Not prominent internationally| Opportunities * Branch out internationally * Expand product line * More competitive pricing * Joint Ventures to maximize profits * Specialty Stores| Threats * Competition * Economic Recession * Substitute Products|

Company Overview
Under Armour is the originator of performance sports apparel. Kevin Plank and his company wanted to create a product that was able to keep athletes cool, dry, and light throughout sporting competition and workouts. Plank began marketing his products by giving them out to consumers to test out. As popularity grew, Plank created the name Under Armour and revenue began coming in. The company’s market share in the sports apparel industry is at 2.8%; about 4% lower than Nike and 2.5% lower than Adidas. There are roughly 25 brands that compete in this market that generates $60 billion in the US. Under Armour’s annual revenue growth from 2000-2005 rose at 127%, while the operating income grew at 124% during that same time. Under Armour has three main product lines that it generates revenue from. The first is the apparel portion. This contains HeatGear, ColdGear, and All-SeasonGear. Apparel generates about 75% of the company’s total revenue. This is 45% higher than Nike branded apparel. The second line of product is footwear. Footwear makes up for less than 15% of Under Armour’s total revenue. This number is drastically lower than Nike’s 64% revenue from footwear. The final product line is accessories. This includes hats, bags, gloves, and other specialized equipment. Under Armour Strategic Initiatives for Future Growth

1. Targeting additional consumer segments for the company’s ever-expanding lineup of performance products. 2. Continuing to broaden the company’s product offerings to men, women, and youths for wear in a widening variety of sports and recreational activities. 3. Growing global awareness of the Under Armour brand name and strengthening the appeal of Under Armour products worldwide. 4. Securing additional distribution of Under Armour products in the retail marketplace in North America via not only store retailers and catalog retailers but also through Under Armour factory outlet and specialty stores and sales at the company’s website. 5. Expanding the sale of Under Armour products in foreign countries and becoming a global competitor in the world market for sports apparel and performance products. Porter’s Five Forces

1) Competitive Rivalry in the Industry
As mentioned, Under Armour is in tough competition with Nike and Adidas, along with other sport apparel brands. The thing these two companies hold over Under Armour is their international presence. Under Armour only generates 6% of its revenue from international markets. Nike and Adidas could look to increase their brand recognition and build up their marketing efforts internationally. Also Under Armour does not currently have and fabric patents on their products, which could allow for other companies to move in and use similar fabrics to make similar products.

2) Bargaining Power of Buyers...

References: Thompson, A., Peteraf, M., Gamble, J., & Strickland III, A. J. (2014). Crafting and executing strategy: The quest for competitive advantage. (19th ed., pp. C-42-C-58). New York, NY: McGraw-Hill Irwin.
Income Statement
Period Ending | Dec 31, 2012 | Dec 31, 2011 | Dec 31, 2010 |
Balance Sheet
Period Ending | Dec 31, 2012 | Dec 31, 2011 | Dec 31, 2010 |
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