Jordan Fuller, Zach Greene, Courtney Starzer,

Pallavi Somani, Lifeng Wang

MAJOR STRATEGIC CHALLENGE :

Global Expansion

RECOMMENDED SOLUTION:
Enter European market through Foreign Direct
Investment (FDI) + retail and athletic
partnerships

Under Armour Primarily Competes in the

U.S. Athletic Apparel Industry
INDUSTRY
FOCUS:
provide
sportswear for
customer
performance,
comfort, and
fashion needs
GROWTH
FACTORS:
lifestyle changes
active seniors
activity needs
attire trends

Source: Freedonia Focus Reports: Athletic Apparel United States

The Industry Consists of Many Companies

with Similar Product Offerings

BRANDS

Nike

Adidas

Columbia

Puma

LuluLemon

Patagonia

ATHLETIC
APPAREL

ACCESSORIES

PERFORMANCE
APPAREL

The Industry is Highly Competitive

and Relatively Unattractive to Enter
Bargaining
power of
buyers
High

HIGH
Threat of
Substitutes

Intensity of Rivalry

Low
Bargaining
power of
suppliers

Medium-High

Medium
Threat of New
Entrants

Under Armour Resources and Capabilities

Valuable

Brand
Management
Sponsorship
Technology
Engineers
Shelf Space
Stores
Licensee

Rare

Stable

Inimitable

The Continued Strength of the Firm

Depends on Competitive Advantages
First Mover

Innovative

Solid
Relationships
with Retailers

Marketing
Strength

High Quality
Products
Current Competitive Position: STRONG
However intense competition makes the company vulnerable

Under Armour is Facing Three

Major Challenges

Corporate Challenges

Footwear Line
Development

1) Market Dominance
by Nike
2)Negative Initial
Reviews

International
Expansion

Increase Direct Retail

Presence

1) Low Brand Awareness

abroad

1) Capital Intensive

2) Lack of managerial
capacity
3) Uncertain of customer
preferences

2) Labor Intensive

International Expansion is the Most

Important Challenge to Address

Fast
growing
market
segment

Variety of
popular
sports in
Europe

Sponsorship
deals with
soccer and
rugby clubs

Nike losing
apparel
market share
in Western
Europe

Three International Expansion Strategies

Comparison Chart

Pros

Foreign
Direct
Investment
(FDI)

Cons

Elevate brand image

Lack of local knowledge

Partnership

Local knowledge supply

Dependence on counter party

Licensing

Prior success
experience

Limited expansion potential

The Key to Success

Athletic and Retail Partnerships

Madrid
Barcelona
London
Tottenham
Hannover
Frankfurt
Rome
Lisbon

Our Game Plan Across the World

2013 Europe
2014 Asia & Brazil

Sponsorship
Flagship Stores
World Cup Campaign
2015 Rugby World Cup Product Innovation
Product Modification

2016 Emerging Markets

Utilize Previous
International
Experiences

Projected Tangible and Intangible Results

Financials:
$886 Million
Revenue
$58 Million
Net Income
Product
Line:
New
Innovations
for New
Markets

Brand Image:
Superior
Performance
Wear

Appendix Begins
So does a new chapter of Under Amour Inc. International

APPENDIX FINANCIAL PROJECTIONS (I)

Raw data
(In thousands, except per share amounts)

2011

2010

2009

2008

2007

2006

2005

2004

2003

2002

2001

1,472,684
759,848

1,063,927
533,420

856,411
446,286

725,244
370,296

606,561
301,517

430,689
215,089

281,053
145,203

205,181
109,748

115,419
64,757

49,550
26,329

19,732
9,348

Gross profit
Selling, general and administrative expenses

712,836
550,069

530,507
418,152

410,125
324,852

354,948
278,023

305,044
218,779

215,600
158,682

135,850
100,040

95,433
70,280

50,662
40,709

23,221
18,908

10,384
7,035

Income from operations

Interest & other expense, net

162,767
-3,841
-2,064
156,862
59,943

112,355
-2,258
-1,178
108,919
40,442

85,273
-2,344
-511
82,418
35,633

76,925
-850
-6,175
69,900
31,671

86,265
749
2,029
89,043
36,485

56,918
1,457
712
59,087
20,108

35,810
-2,915
-79
32,974
13,255

25,153
-1,283
-226
24,096
7,774

9,953
-2,214

4,313
-894

3,349
-305

7,739
1,991

3,419
653

3,044
36

96,919

68,477

46,785

38,229

52,558

38,979

19,719

16,322

5,748

2,766

3,008

Net revenues
Cost of goods sold

38.42%
42.45%

24.23%
19.52%

18.09% 19.57%
20.52% 22.81%

40.84%
40.18%

53.24%
48.13%

36.98%
32.31%

77.77%
69.48%

132.93%
145.95%

151.11%
181.65%

Gross profit
Selling, general and administrative expenses

34.37%
31.55%

29.35%
28.72%

15.55% 16.36%
16.84% 27.08%

41.49%
37.87%

58.70%
58.62%

42.35%
42.34%

88.37%
72.64%

118.17%
115.30%

123.62%
168.77%

Income from operations

Interest & other expense, net

44.87%

31.76%

10.85% -10.83%

51.56%

58.94%

42.37%

152.72%

130.77%

28.78%

Income before income taxes

Provision for income taxes(1)

44.02%
48.22%

32.15%
13.50%

17.91% -21.50%
12.51% -13.19%

50.70%
81.45%

79.19%
51.70%

36.84%
70.50%

211.36%
290.46%

126.35%
12.32%
204.90% 1713.89%

Net income

41.54%

46.37%

22.38% -27.26%

34.84%

97.67%

20.81%

183.96%

107.81%

Statements of Income data:

Net revenues
Cost of goods sold

Income before income taxes

Provision for income taxes(1)
Net income

Growth rates

-8.05%

Percentage of revenue
Net revenues
Cost of goods sold

Gross profit
Selling, general and administrative expenses

1
1
1
1
1
1
1
1
1
1
1
0.5159613 0.5013689 0.5211119 0.51058 0.4970926 0.4994067 0.5166392 0.5348838 0.5610601 0.5313622 0.4737482
3
8
4
1
3
6
1
3
4
6
3
0.4840386 0.4986310 0.4788880 0.48941 0.5029073 0.5005932 0.4833607 0.4651161 0.4389398 0.4686377 0.5262517
7
2
6
9
7
4
9
7
6
4
7
0.3735146 0.3930269 0.3793178 0.38335 0.3606875 0.3684375
0.3425268 0.3527062 0.3815943 0.3565274
2
7
7
1
5
5 0.3559471
4
3
5
7

Provision for income taxes(1)

0.1105240
5
0.0026082
0.0014015
0.1065143
6
0.0407032
3

Net income

0.0658111
0.0546291 0.05271 0.0866491 0.0905038 0.0701611 0.0795492 0.0498011
0.1524427
3 0.0643625
4
2
6
2
4
8
6 0.0558224
3

Income from operations

Interest & other expense, net

Income before income taxes

0.1056040
5
0.0021223
0.0011072
0.1023745
1
0.0380120
1

0.0995701 0.10606
8
8
-0.002737 0.00117
0.0005967 0.00851
0.09638
0.0962365
1
0.0416073 0.04366
6
9

0.1422198
3
0.0012348
3
0.0033450
9
0.1467997
4
0.0601505
9

0.1321556 0.1274136 0.1225893

9
9
2
0.0033829
5 0.0103717 -0.006253
0.0016531
7 0.0002811 0.0011015
0.1173230 0.1174377
0.1371918
7
7
0.0466879 0.0471619
8
2 0.0378885

0.0862336 0.0870433 0.1697243

4
9
1
0.0191823 0.0180424 0.0154571
0
0
0
0.0670513 0.0690010 0.1542671
5
1
8
0.0172501 0.0131786 0.0018244
9
1
5

APPENDIX FINANCIAL PROJECTIONS (II)

APPENDIX FINANCIAL PROJECTIONS (III)

(In thousands, except per share amounts)

2011

2010

2009

2008

2007

2006

2005

2004

2003

2002

2001

Statements of Income data:

Net revenues

1,472,684 1,063,927 856,411 725,244 606,561 430,689 281,053 205,181 115,419 49,550 19,732

Cost of goods sold

759,848

533,420 446,286 370,296 301,517 215,089 145,203 109,748 64,757 26,329 9,348

Gross profit
Selling, general and administrative
expenses

712,836

530,507 410,125 354,948 305,044 215,600 135,850 95,433 50,662 23,221 10,384

550,069

418,152 324,852 278,023 218,779 158,682 100,040 70,280 40,709 18,908 7,035

Income from operations

162,767

112,355 85,273 76,925 86,265 56,918 35,810 25,153

Interest & other expense, net

-3,841

-2,258

-2,344

-850

749

1,457

-2,915

-1,283

-2,064

-1,178

-511

-6,175

2,029

712

-79

-226

Income before income taxes

156,862

Provision for income taxes(1)

59,943

108,919 82,418 69,900 89,043 59,087 32,974 24,096

40,442 35,633 31,671 36,485 20,108 13,255

Net income

96,919

68,477 46,785 38,229 52,558 38,979 19,719 16,322

7,774

9,953 4,313 3,349

-2,214

-894

-305

7,739 3,419 3,044

1,991

653

36

5,748 2,766 3,008

Europe Projection
(In thousands, except per share amounts)

2022

2021

2020

2019

2018

2017

2016

2015

2014 2013 2012

Statements of Income data:

Net revenues

885,709

639,872 515,067 436,180 364,801 259,027 169,032 123,401 69,416 29,801 11,867

Cost of goods sold

456,992

320,812 268,408 222,705 181,340 129,360 87,329 66,005 38,946 15,835 5,622

Gross profit
Selling, general and administrative
expenses

428,718

319,060 246,660 213,475 183,461 129,667 81,704 57,396 30,469 13,966 6,245

330,825

251,487 195,374 167,210 131,579 95,435 60,167 42,268 24,483 11,372 4,231

Income from operations

97,892

67,573 51,285 46,265 51,882 34,232 21,537 15,128

Interest & other expense, net

-2,310

-1,358

-1,410

-511

450

876

-1,753

-772

-1,332

5,986 2,594 2,014

-538

-183

-1,241

-708

-307

-3,714

1,220

428

-48

-136

Income before income taxes

94,341

65,507 49,568 42,040 53,553 35,536 19,831 14,492

4,654 2,056 1,831

Provision for income taxes(1)

36,051

24,323 21,431 19,048 21,943 12,093

7,972

4,675

1,197

Net income

58,290

41,184 28,138 22,992 31,610 23,443 11,860

9,816

3,457 1,664 1,809

393

22

International Expansion Strategies

General Comparison
Risk

Time Cost

Financial
Cost

Potential
Profit

Control

High

High

High

High

High

Partnership Medium

Medium

Medium

Medium

Medium

Licensing

Low

Low

Low

Low

Foreign
Direct
Investment
(FDI)

Low

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2009. Web. 6 Dec. 2012.
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<http://beta.fool.com/lynbetz/2012/04/05/hold-underarmour-despiteeuropean-expansions/3396/>.
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Works Cited Cont.

Burke, Monte. "Under Armour CEO Kevin Plank And His Underdog Horse Farm."
Forbes. Forbes Magazine, 07 Sept. 2012. Web. 06 Dec. 2012.
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04 Apr. 2012. Web. 06 Dec. 2012.
<http://www.forbes.com/sites/freddreier/2012/04/04/under-armour-flexingits-muscles-overseas/>.
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<http://http://globalbb.onesource.com.proxy.lib.duke.edu/Web/Reports/Rep
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Under Armour, Inc. Profile. Rep. N.p.: n.p., n.d. Hoover's Online. Web. 6 Dec.
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<http://subscriber.hoovers.com.proxy.lib.duke.edu/H/company360/company

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