UnderArmour Case Review
The company I selected is one of the most up and coming and edgy athletic equipment and apparel firms in the world. It is UnderArmour, and it is fastly climbing the ranks of athletic gear concerning such competitors as Nike and Adidas. UnderArmour has been able to distance themselves with a new, fresh image but at the same time they are still producing equipment that rivals the biggest competitors of the business. Not only has Under Armour seen success in their industry, but their success Financially has been completely overlooked and underrated. Their value added has ben unbelievable for their shareholders and in the public eye the company has been a fast rising competitor.
According to the Under Armour SEC filing February 28 of this year, “ Our net revenues have grown to $606.6 million in 2007 from $115.4 million in 2003. We believe that our growth in net revenues has been driven by a growing interest in performance products and the strength of the Under Armour brand in the marketplace relative to our competitors, as evidenced by the increases in sales of our men's, women's and youth apparel products, footwear and accessories...Our license revenues have grown to $24.0 million in 2007 from $1.7 million in 2003. We have entered into licensing agreements with established, high-quality manufacturers to produce and distribute Under Armour branded products to further reinforce our brand identity and increase our net revenues and gross profit. In exchange for the use of our trademarks, our licensees pay us license revenues based on their net sales of core products of socks, hats, bags, watches, eyewear, and other accessories. We seek to continue to grow our license revenues by working with our existing licensees to offer additional products and increase their distribution, and by selectively entering into new licensing agreements,” (UA SEC Filing).
There is no secret to the fact that Under Armour has been very profitable over the last 5 years, but exactly how profitable remains to be seen. To find out if they are adding value for their stock holders, we must calculate many numbers. These numbers signify many calculations and are understood in the Business world as important numbers.
The net revenues over the past three years for Under Armour have skyrocketed exponentially during that time. There has been an uprising in those that have allowed for very high NOPAT numbers. The NOPAT number for 2005 was $267,798 which was dwarfed by the number from 2006 which was $410,581 and this number was subsequently passed over by the number from the year 2007 which was $570,076 (Numbers in Thousands). These numbers will be the catalyst for us to be able to understand what the economic profit for Under Armour is and why it is important.
That being shown, the economic profit of this company is staggering. This is amazing considering that Under Armour does most all of its business domestically, not internationally, like most of their major competitors. The economic profit in 2007 seven was: $268,559. This number is a combination of the success of their product and the freshness of their approach and the way the market the Under Armour name.
There are many possible reasons for their success. “We plan to continue to increase our net revenues by building upon our relationships with existing customers, expanding our product offerings in new and existing retail stores, offering new products and building our brand internationally. In recent years, we expanded our product offerings to include cleated footwear and additional men's and women's performance products as well as additional products for off-field outdoor sports, including hunting, fishing, running, mountain sports, skiing and golf. New product offerings in 2008 will include non-cleated footwear, with the introduction of performance training footwear in May 2008. As we have expanded into new product lines, sales of our existing product...
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