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 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.
Apparel designed for winter (COLDGEAR), summer (HEATGEAR), and year-round (ALLSEASONGEAR) wear accounts for about three-fourths of sales. Footwear and accessories such as hats, bags, and gloves contribute about 15% and 10%, respectively.
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 and Korea, as well, through a third-party licensee.
Sales and Marketing
Under Armour generates nearly 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 2013 revenue. The company's direct-to-consumer business is also growing rapidly; Under Armour operates about 130 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 2013 sales of $2.3 billion, 27% 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 18 new factory house stores in 2013), new product offerings, and higher average selling prices. Net income that year rose a quarter to about $162 million on the strength of revenue.
After a huge jump to nearly $200 million in 2012, cash from operations fell to $120 million the following year as the company spent more than $160 million more in inventory to support its international and direct-to-consumer operations and deal with supplier delivery issues from the prior year.
Under Armour is working to double its business by 2016 with more offices located outside North America than inside. In 2013 the company began selling directly in Mexico instead of through a distributor, and it launched its products in Brazil and Chile. It also opened more stores in China and has entered into partnerships with sports teams across the globe, including the Tottenham Hotspur Football Club in the UK, the Welsh Rugby Union, and Chile's Corporacion Club Social y Deportivo Colo-Colo football club.
New products and product innovation is also a strategic focus for Under Armour. Recent product launches include COLDGEAR Infrared, designed to help wearers stay warmer longer in cold weather, and UA SpeedForm Apollo running shoes. In addition, the company is looking to expand into wearable technology -- what it is calling Connected Fitness.
Mergers and Acquisitions
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.