Shadow-A-Company Project

Under Armour, Inc.

Group 4
BUS 1000 Section BMM
Professor Sweibel
May 9, 2014

TABLE OF CONTENTS:
COMPANY OVER VIEW by Aashish Pareek
FINANCIAL PROFILE by Travis Knight
STRATEGY (PART I) by Jacklyn Shakarov
STRATEGY (PART II) by Roza Dul
RECCOMENDATIONS by Maryann Long

COMPANY OVERVIEW:
In 1995, Kevin Plank, then captain of the football team for the University of Maryland,
just ended another day of practice: exhausted. It did not help that his cotton t-shirt that he wore
under his pads was drenched in sweat. The 23 year old then thought to himself, There has to be
something better. Little did he know, this thought would motivate him to create a performance
apparel industry known today as Under Armour ("Kevin Plank, 2014).
After Plank graduated from college, he set out to solve the problem he personally faced:
make a better t-shirt that stayed mostly dry even in the hottest of days. He went on a search to
find the best performance fabric to make the shirt. Finally, in 1996, Plank created his specialized
t-shirt. This shirt eventually evolved into the patented HeatGear line that the company sells
now. Kevin Plank opened shop and took to the roads with his revolutionary product ("Kevin
Plank, 2014).
In 1996, Plank made his first team sale and earned $17,000. One year later, he expanded
his product line by creating the ColdGear and AllSeasonGear brands. By the end of 1998,
Plank relocated and established his business in a warehouse in Baltimore. In 1999, in the Oliver
Stone film, Any Given Sunday, the football players wore Under Armour apparel and accessories.
This move paid off in the end as sales increased by $750,000 ("Under Armour, Inc. (UA.N)
Company Profile, 2014). Plank was determined to establish his brand in the market.
During 2003 and 2004, the company decided to make apparel for women and children
also. This also increased sales for the company. The following year, Plank announced that the
company was going public and filed for an IPO with the New York Stock Exchange on
November 18, 2005 ("Under Armour, Inc. (UA.N) Company Profile, 2014).

The companys mission statement is To make all athletes better through passion, design
and relentless innovation (Our Mission, 2014). This can be applied to Kevin Planks own
struggle to his ideal t-shirt. Time and again, he worked on his goal until he was able to make it a
reality (Kevin Plank, 2014).
Under Armour, Inc. is in the retail business. The companys market is sports and athletics
enthusiasts from around the world. All products made by the company are sold to athletes at
various levels of experience from youth to professional. It is branching out internationally as it
sells products and manages shop in China and certain countries in Europe and licenses its name
to a third party in Japan ("Under Armour, Inc. (UA.N) Company Profile, 2014). The products
that the company sells are apparel, footwear and other accessories for athletic use.
The various options for apparel are HeatGear, ColdGear, and AllSeasonGear.
HeatGear is designed for warm temperatures; it keeps its user dry even in the hottest of
conditions and is sold in one layer. Its counterpart, ColdGear, is designed for the wearer to feel
as warm as possible even in the coldest of conditions and also sells in one layer. AllSeasonGear
is the middle ground for both extremes and is worn for changing temperatures; this product is
also sold in one layer ("Under Armour, Inc. (UA.N) Company Profile, 2014).
The footwear that the company sells also varies from sport to sport. The current options
include football, lacrosse, softball, soccer, slides, performance training, running and basketball.
In 2012, the company introduced hunting boots as part of its selection. Around the same time, the
company started to sell hats and bags, thereby limiting the need to license its name to other
companies that produce merchandise under the companys name and increase profits ("Under
Armour, Inc. (UA.N) Company Profile, 2014).

The current size of the company is rather large and it continues to grow as it branches out
into the international market. To attest to its extensive reach, the company currently employs
5,900 people and has more than 25,000 stores in North America, Europe and Asia. The company
also grossed $162.33 million in profit as of December 31, 2013 ("Under Armour, Inc. (UA.N)
Company Profile, 2014). To put this in the perspective when comparing Under Armour, Inc. to
Nike, Inc., the former is roughly one-tenth the size of the latter and is still expanding at a
remarkable rate (Cardenal, 2014).
The companys central headquarters is located in Baltimore, Maryland and its European
headquarters is located in Amsterdams Olympic Stadium. Other offices are located in Colorado,
China, Indonesia and Canada ("Under Armour Fact Sheet, 2009). There are no known divisions
in the company ("Under Armour, Inc. (UA.N) Company Profile, 2014).
FINANCIAL PROFILE:
The Under Armour brand is known for its rapid growth in comparison to other sports
apparel franchises, such as Nike. The financial statements put forth from this corporation suggest
that this growth is not only rapid, but also surprisingly steady. In terms of revenue, Under
Armour had generated $1.47 billion in 2011, which had increased to $1.83 billion for the 2012
year, and approximately another $500 million for 2013(Financial History, 2014). That is $2.33
billion in revenue, more than double the amount in 2010 (Financial History, 2014). In terms of
revenue, Under Armour is definitely enjoying success with almost a $1 billion increase in the
past three years.
The increasing revenue is not the only attention-worthy figure in the Income Statement.
What is perhaps even more impressive is this corporations ability to churn out a 2:1 profit ratio.

This is to say that they consistently more than double the amount they spend on their sold goods
with the amount of revenue they earn. For example, in 2012, Under Armours revenue was $1.83
billion, more than doubling its cost of revenue, which amounted to $912 million (Financial
History, 2014). In a sense, for every dollar they spend on inventory, they earn over two dollars.
Moreover, this ability to charge double the cost of production for sales is consistent over the
three years in scope (Financial History, 2014). This is to say that either they are able to
consistently keep production costs low, or they have a clientele willing to pay just a little bit
more for the brand they want.
Under Armour has also seen rises in the expenses of operation for this period, which is
unavoidable given the nature of business growth. The amount of selling, general and
administrative expenses grew from $550 million in 2011, to $670 million in 2012 (Financial
History, 2014). This increase was even higher in 2013, climbing by $201 million to $871
million. This growth, a 30% increase in operating expenses, was paralleled by the 30% growth in
gross profit (Financial History,2014). Despite the rise in general expenses that faced this
company for the past three years, the rise in profit reflects its success.
Now for the net income, after all the taxes, interest payments, and other deductions taken
out of this corporations revenue, what exactly is the net income of this corporation? In 2011,
Under Armour netted $96.2 million of net income after taxes, up more than $28 million from the
previous year. The next two years saw similar gains, over $30 million each year, ending 2013
with 162.33 million dollars of net income (Financial History, 2014). This is the same
consistent growth that has been Under Armours claim to fame these past few years.

As can be expected, Under Armours stock performance follows the trend set by its
financial information. Simply put, the trend is steady growth. The past year has actually seen
Under Armours stock price nearly double, beginning last year with a price of $48.32, and ending
with a price of $87.30, which equates to an increase of 80% (Quote and Chart, 2014). The
graph provided by Under Armours investor relations page, shows a steep price increase in the
summer months. This probably has to do with Under Armours flagship product line,
HeatGear. Ultimately, Under Armours stock price performed so well, that on April 14th of this
year, Under Armour actually completed a two for one stock split (Quote and Chart, 2014). This
split, effectively split the price of each stock in half, and awarded each shareholder with two
shares for each previously held share (Quote and Chart, 2014). This sort of split is not
uncommon with highly valued stocks, and helps to promote easy trading and liquidity for
shareholders, which of course speaks to Under Armours success.
One of the main attributors to the steady growth of this company is the lack of dividend
payments. From the past three years, the company has not paid any dividends to any of its
shareholders, which should, and probably does mean that the profit from one year is being
withheld, and spent on growing the brand. This is indicated in the Other income (net) section
of the statement, which is reported as a negative for all three years (Financial History, 2014).
This means that the company is actually spending more than it makes on things like advertising,
sponsorships, and things of that nature, to help expand the company, and enjoy more profit
(Quote & Chart, 2014).
STRATEGY (PART I):

As one of the biggest companies in the sports apparel industry, Under Armour continues
to supply American sports apparel and casual clothing for its customers. In 1996, Kevin Plank
took an idea that he had and made it into something that changed the sports apparel industry
forever. Engineered with material that keeps the moisture inside, the shirt helps keep athletes dry
when working out. Starting out as something that just keeps an athlete dry, his ideas began to
expand and broaden thus generating the now-famous ColdGear fabric, which keeps athletes
warm in cold conditions and the AllSeasonGear line, which allows athletes to be comfortable
during changing seasons (Under Armour (UA:N) Company Profile, 2014). Thus, people
started to take notice of such a brilliant innovation thus started to buy his new invention,
expanding Under Armour.
Under Armour has been revolutionary in the athletic department as the company
continues to go above and beyond, trying to change the world, one step at a time. A current goal
of the company is to expand their company to footwear. The people of the athletic field want a
shoe that can handle their toughest training days something with high resistance, yet very light
on the foot.
As Under Armour continues to produce its own footwear, the company began listening to
what the consumers wanted. As a result, Under Armour has created the UA Spine, which
offers customers a lightweight, responsive cushioning without sacrificing stability (Gacinga,
2014). The newly developed UA Spine allows the consumers to travel at a certain speed while
allowing them to be comfortable (MENS UA SPINE RPM RUNNING SHOES, 2014).
Under Armours second goal is to expand its accessories. The company has expanded its
line of accessories from making bags and balls to sunglasses and hats. This will help to appeal to
consumers that are not athletes as well. This ties in with its third goal to expand its market to the
main stream consumer.

Under Armour also strives to appeal to not only athletes but as well as younger
generations as the teenagers are one of the most influenced consumers of our time. Expanding
the companys attention to the likes of children and teenagers will bolster sales and encourage
them to go out and exercise. In total, all three of these goals allow Under Armour to push to be
the best, to work on their strategy and to keep improving to meet the needs and the wants of the
customers.
There are many ways in which Under Armour has been tackling these goals. For the
footwear, Under Armour has shown how productive they are. As the years pass, Under Armour
has not only shown their success but the shoe industry is growing as the days pass stating,
Under Armour is reaching its prime, theres no doubt (Gacinga, 2014). With Under Armour,
science is used more than just coming up with ideas. The company tries to develop the most
high-tech products available (Under Armour, 2014).
Having the shoe industry up for a while now, they have added cleats, which prove to be a
big plus for the company. The company is also focusing on direct-to-consumer categories:
online sales and outlet and specialty stores (Under Armour (UA:N) Company Profile, 2014),
opening stores around the globe including China. As for the accessories, Under Armour
continues to uphold its mission statement as well. Not only are they going global with the
accessories, but they are also offering more products to women including advertisements with
women. They have begun showing woman wearing their products as an effort to increase the
consumption of the product and allow the human eye to see the consumers wearing the product
rather than just hear about it, thus showing growth in the Under Armour accessories. In addition,
Under Armour shows the appeal they have to the younger generation with new additions such as
superman shirts and hero jackets. Under Armour also makes everything in children sizes too,
appealing the young people for a healthy environment in athleticism. Having all of this, the

production of the childrens clothing increases the companys overall rating and makes children
all over the world want them too, which is why they stock up in these all over the world.
However, none of any of these goals could possibly be achieved without strong
leadership presence as the driving force of the company. Management like in any company must
be included, as it is needed to be successful in anything one does in life. Brad Dickerson is the
Chief Financial Officer along with Kip J. Fulks who is the Chief Operating Officer and President
of Product. James H. Hardy, Jr. is the Chief Supply Chain Officer along with Karl-Heinz
(Charlie) Maurath who is the International President, Matthew C. Mirchin is the Executive Vice
President of Global Marketing. Last but certainly not the least in any regard, is Kevin Plank, the
CEO, president and founder of the company (Executive Team, 2014).
Under Armour only strives to improve and better its quality and clothing for its
customers. A simple idea was made into something that changed the life of athletes clothing
forever. Engineered with material that keeps athletes cool, athletic wear is forever changed with
this invention. Through the use of strategy, diversification, marketing etc. Under Armour has
been successful in producing sportswear for adults and kids, footwear and accessories.
STRATEGY (PART II):
Under Armour has been in the news under some negative light when Adidas attempted to
sue Under Armour for patent infringement. As Under Armour has become the official apparel of
the NFL it has started to expand to personalized fitness technology. After acquiring a program
called MapMyFitness for $150 million, Adidas has claimed that that Under Armour is infringing
10 of their patents. The company is in the early stages of the case, and since the reveal of the
case on February 5th, 2014 no comment has been made yet on behalf of Under Armour. The
question is if any infringement actually took place, or if with the competitive market, with Nike
and Adidas being on top of the game, Under Armour is being pushed back to the smaller
league (Meehan, 2014).

As stated in the Baltimore Business Journal website, South and Central America are key
growth markets for Under Armour. The company opened offices Brazil and Chile last year, and
Under Armour products will now be available throughout Brazil in more than 70 stores and on
websites. Under Armour has been clawing to gain traction in international markets. Just 6% of
the companys $2.3 billion in revenue last year came from outside North America. The timing
could not be better for Under Armour to enter the Brazilian market, as the country prepares to
host the 2014 World Cup and the 2016 Summer Olympics. This expansion to foreign markets
plans to increase the revenue for the company with the upcoming multinational sports events that
could be a great opportunity for the company (Meehan, 2014).
In this years Sochi Winter Olympics there has been controversy on the US Speedskating
teams performance and Under Armours new skin suit Mach 39. According to USA Today,
Americans won four medals in 2010 and a combined 19 medals over the previous three Winter
Games yet have failed to put a skater inside the top six of any event with four races left in the
2014 Sochi Games. The complaints are now steered towards Under Armour and their claims to
guarantee the already fast US Olympic team faster results (Myerberg, 2014).
Under Armours new products include the Superhero cleats. Called the Alter Ego
Highlight MC the product is aimed to capture the inner comic book enthusiast in athletes. They
are set to sell at $140 a pair and could be a problem for some players who are under strict
uniform color restrictions (Meehan, 2014).
When it comes to the big competitors that Under Armour has to try to catch up to, its
revenue growth is set to astonish some onlookers as it climbs the success ladder to join the big
companies such as Nike and Adidas. While there are setbacks that the company is facing, it must

keep focus and make sure to not make more mistakes such as the Sochi Olympics. This kind of
publicity hurts the brand.
RECCOMMENDATIONS:
Under Armour has expanded its merchandise vastly since its founding in 1996. Although
their sales have went up significantly due to their new products made for a variety of purposes,
there are still ways where the company can further their range, beginning with the expansion of
its exportations. North America, although well populated, is only a portion of where potential
consumers are located. Exporting Under Armour merchandise to other continents, such as Asia
and Europe, can considerably increase the rate of sales and profit for the company.
Furthermore, new products will also allow the growth of the company for evident
reasons, along with the recognition of the brand name. The companys newest additions, Under
Armour running shoes, have definitely caught the attention of both old and new customers. In
turn, this will bolster sales and revenue for the company.
Expanding from their cleat sneakers, running shoes have become a great asset to the
company due to the increasing amount of runners nationwide. Due to the upsurge in awareness
regarding physical health and fitness, many more people are partaking in daily exercise,
increasing sales. In preparation of daily training, people are looking for products that will be able
to sustain the intensity of everyday usage. In aim for customer satisfaction, the company also
maintains their goal in maintaining the durability of their products, focusing on quality.
Under Armour has already taken initiative in creating a new line within the company
which will not only involve these running shoes, but also other gadget devices that will measure
many different bodily functions. This will allow athletes to visually see their progress during

their workout and training. These technological advances may allow many different
opportunities that can further the expansion of the brand exponentially.
Focusing on the health of their consumers, these products will allow them to view for
themselves of their training results. Taking into consideration the amount of increasing women
athletes as well, there will be a substantial increase in sales along with the original marketing that
was initially held mainly for the male population. As a long term goal, this would greatly
influence those who use technology to track fitness and do not use Nike or Adidas products.
Along with these expansions both physically and materialistically, there should also be
consideration in expanding the company through media means. Social media has become one of
the most prevalent and efficient ways of advertising products, especially new trends arising. By
utilizing these sources, both through Internet and television, the brand can have more exposure to
the public and therefore, more interest from customers. This would be a short term approach to
make an effort to establish the brand in potential markets around the world.
Many

forms

of

advertisements

include

commercials,

billboards,

sponsored

advertisements, fliers, or even special coupons or deals featured in catalogs and newspapers.
With more advertisements in populated areas, the brand will be further recognized and have
more exposure than simply word of mouth from peers. New customers would acknowledge the
brand symbol and become more informed of the products available from Under Armour.
CONCLUSION:
Like any other influential company, Under Armour, Inc. was simply an idea. Everything
takes time to grow and mature and for the past eighteen years or so, that is exactly what Under
Armour, Inc. is doing. While there were some slip ups and mistakes along the way as well as

fierce competition from companies such as Nike and Adidas, the company is well on its way to
establish itself as one of the worlds most prolific sports apparel brands within the industry.

Works Cited
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Lululemon?. The Motley Fool. Retrieved from:
http://www.fool.com/investing/general/2014/04/10/best-buy-in-sports-apparelunder-armour-or-lu.aspx
Gacinga, J. (2014). Under Armour Is Perfectly Primed for Growth. The Motley Fool.

nike-

[ONLINE] Retrived from:

armour-is-

http://www.fool.com/investing/general/2014/02/10/under-

perfectly-primed-for-growth.aspx.

Meehan, S. (2014). Under Armour debuts in fast-growing Brazil as international growth effort
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http://www.bizjournals.com/baltimore/news/2014/03/12/under-armour-debuts-in- fastgrowing-brazil-as.html
Myerberg, P. (2014). Under Armour defends suits as U.S. speedskaters go cold. USA

Today.

[ONLINE] Retrived from:

http://www.usatoday.com/story/sports/olympics/sochi/2014/02/17/under-armour- speedsuits-usa-speedskaters/5558843/
Saglimbeni, P. (2014) Will Under Armour Ever Catch Nike? The Motley Fool.
Retrieved from:

[ONLINE]

http://www.fool.com/investing/general/2014/03/12/will-under-armour-

ever- catch-nike.aspx
Thomson Reuters, Inc. (2014). Under Armour (UA.N) Company Profile. [ONLINE]
Retrieved from:

http://www.reuters.com/finance/stocks/companyProfile?

symbol=UA.N
Under Armour, Inc. (2014). Executive Team. [ONLINE] Retrieved from:
http://www.uabiz.com/company/managementTeam.cfm.
Under Armour, Inc. (2014). Financial History. [ONLINE] Retrieved from:
http://investor.underarmour.com/income.cfm
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http://www.uabiz.com/company/kevinplank.cfm
Under Armour, Inc. (2013). MENS UA SPINE RPM RUNNING SHOES. [ONLINE]

Retrieved from: http://www.underarmour.com/shop/us/en/mens-ua-spine-rpmrunning-shoes/pid1233584.

Under Armour, Inc. (2014). Our Mission. [ONLINE] Retrieved from:
http://www.uabiz.com/company/mission.cfm
Under Armour, Inc. (2014). Quote & Chart. [ONLINE] Retrieved from:
http://investor.underarmour.com/stockquote
Under Armour, Inc. (2009). Under Armour Fact Sheet. [ONLINE] Retrieved from:
http://files.shareholder.com/downloads/UARM/2435614465x0x342680/1B32409 A4163-40F5-9225-0FBF11FD9198/factsheet.pdf