Under Armour is proving its mettle as an apparel warrior. Since its foray into the sports apparel market, the maker of performance athletic undies and clothing has risen to the top of the industry pack, boasting a big portion of the compression garment market. It is gaining a foothold in footwear, too. Under Armour is the official footwear supplier of the NFL and MLB and partners with the NBA. Specializing in sport-specific garments, it dresses its consumers from head (COLDGEAR) to toe (Team Sock). Products are made from its moisture-wicking and heat-dispersing fabrics, able to keep athletes dry during workouts. Under Armour sells its wares online, by catalog, and in more than 25,000 retail stores worldwide.
Headquartered in Baltimore, Under Armour operates its business globally. As part of its operations, it has a European subsidiary incorporated in The Netherlands, a subsidiary focused on retail, and a sourcing and quality assurance arm operating in both Hong Kong and Guangzhou, China. More than half of the fabric Under Armour uses to produce its products are sourced from six suppliers located in the US, Malaysia, Mexico, Peru, and Taiwan. The company relies on about two dozen primary manufacturers that operate in 16 countries, representing Asia (60% of products), Central and South America (22%), Mexico (8%), and the Middle East (8%). For quick turnaround products, Under Armour maintains a 17,000-sq.-ft. Special Make-Up Shop at a Maryland distribution facility. Besides North America, Under Armour's products are sold primarily in Austria, France, Germany, Ireland, and the UK. It sells its wares in Japan, as well, through a minority-owned licensee.
Under Armour logged $1.47 billion in sales in 2011 (up significantly from $606 million in 2007). The company generates revenue through the sale of apparel, footwear, and accessories and through licensing revenue, for others to use its trademarks to put on their socks, team uniforms, baby apparel, eyewear, and custom-molded mouth guards. The performance-apparel maker has grown rapidly by introducing new items each year, entering new product categories (such as basketball shoes in 2010), heavily promoting its products, and expanding its wholesale distribution. In 2011 it rolled out new accessories, such as its own hats and bags previously sold by a licensee, as well as products under the CHARGED COTTON brand name. Still, the company has a long way to go in its race to catch market leaders NIKE ($24 billion in sales) and adidas ($17 billion).
Under Armour generated 70% of its 2011 sales through its wholesale business. Its customers include the likes of Cabela's and the Army and Air Force Exchange, as well as Dick's Sporting Goods and The Sports Authority, which as a pair accounted for 26% of Under Armour's 2011 revenue. The company's direct-to-consumer business, accounting for 27% of sales, is growing rapidly. In 2011 it logged an increase of about 62% vs. 2010 with the help of about 25 stores added during the year. Under Armour operates about 80 of its own factory house and specialty stores. Licensing brings in 3%. While North America accounts for 94% of sales, Under Armour is growing in Western Europe and has a licensing deal (inked in 2002) with Dome Corporation to sell its brand in Japan. Under Armour made a cost-based minority investment in the licensee in 2011.
To compete against its larger rivals, Under Armour spends heavily to promote its products, forming endorsement deals with athletes across multiple sports. Its strategy is to identify the next generation of stars, such as skier Lindsey Vonn and Milwaukee Bucks point guard Brandon Jennings, and sign them to multiyear endorsement deals. The company also spends about 11% of its net income each year on marketing. It spends its money on commercials and print ads, as well as sponsorships for leagues, teams, players, and events. To date, Under Armour's primary consumer segment has been men, but it is actively working to expand its apparel offerings for women and children. Product lines are sold to almost 400 women's sports teams at NCAA Division I-A colleges.
Chairman and CEO Kevin Plank added the president's title to his job description following David McCreight's departure in mid-2010. Plank, a former college football player who founded Under Armour in 1996, is the company's largest shareholder. He controls about 73% of the voting shares.