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. 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, through its own factory house stores, and in more than 25,000 retail stores worldwide.
Headquartered in Baltimore, Under Armour operates its business globally. It has European and Asian subsidiaries and sources from suppliers worldwide. Besides North America, where it generates about 95% of sales, 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.
Sales and Marketing
Under Armour generates about 70% of its 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 22% of Under Armour's 2012 revenue. The company's direct-to-consumer business is growing rapidly. In 2012 it logged an increase of about 34% vs. 2011 with the help of more than 20 stores added during the year. Under Armour operates about 100 of its own factory house and specialty stores.
Under Armour has shown strong growth in both revenue and net income over the past decade, with 2012 sales of $1.8 billion 25% higher than the prior year. The company saw about 25%-30% growth in all categories (apparel, footwear, accessories), as well as in licensing. The results were powered by an increase in direct to consumer sales (Under Armour opened 22 new factory house stores in 2012), new product offerings, and higher average selling prices. Net income that year rose a third to about $129 million on the strength of revenue.
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. The sports apparel maker is looking to expand into wearable technology.
Mergers and Acquisitions
To this end, in late 2013 Under Armour acquired fitness-tracking firm MapMyFitness for $150 million as it seeks to expand into the growing fitness technology market. It was the company's first acquisition.