Under Armour, Inc.

– 2013
Forest R. David

A. Case Abstract

Headquartered in Baltimore, Maryland, Under Armour (UA) produces and markets compression,
fitted, and loose sports apparel, including athletic footwear. UA is the official footwear supplier
of Major League Baseball. UA dresses athletes from head (COLDGEAR) to toe (Team Sock) with
products that are made from the company’s patented moisture wicking and heat-dispersing fabrics that
keeps athletes dry during workouts. With 1,800 employees, UA sells its products globally online, by
catalog, in company-owned stores, and in sporting goods stores such as Dick’s Sporting Goods. UA
derives 97 percent of its revenue from the USA, although its products are desired globally, so a clear
strategic plan is needed to capitalize on this global opportunity. In September 2013, Credit Suisse
downgraded Under Armour stock from buy to hold. Analyst Jim Cramer however disagreed with the
downgrading, saying to buy the stock. UA fell 2.6 percent that day to $78.50.

B. Vision Statement (proposed)

To empower male and female athletes, domestically and internationally, to win championships, by
using superior comfort and performance attire.

C. Mission Statement (proposed)

We strive to make all athletes (1) around the world (3) better through passion, design, and relentless
pursuit of innovation (4, 7) in developing and marketing high performance, fashionable, sporting
apparel (2). We provide the best working environment possible for our employees (9) so they
can contribute to the communities where they live and work (8) and provide an excellent return
for our shareholders (5). Our motto in all we do is that good ethics is good business (6).

1. Customers
2. Products or services
3. Markets
4. Technology
5. Concern for survival, growth, and profitability
6. Philosophy
7. Self-concept
8. Concern for public image
9. Concern for employees
D. External Audit
Opportunities

1. Women’s sales in the apparel industry account for 55% of sales, with men around 28% and
children accounting for 17% of sales.
2. Since the middle of 2011 to the end of 2013, the specialty retail index has risen 70%.
3. The top 10 national brands only account for 16 percent of wholesale apparel sales.
4. Sports footwear is expected to be one of the most significant areas of growth moving forward in
the footwear industry.
5. People are becoming more health conscious and exercising more worldwide.
6. Latin America, Eastern Europe, China, and India are all emerging markets with large population
bases.
7. US cotton active wear market is a $12 billion industry, four times the size of the performance wear
market that UA was limited to with its synthetic only line
8. Expiring apparel contracts with existing major college and professional sports teams.
9. Children are more easily persuaded about products and account for 17% of industrywide apparel
sales.
10. Customers are increasingly shopping at outlet stores.

Threats

1. Nike and Adidas were quick to copy UA’s fabric technology.

2. Fabrics UA uses are not unique to them, and UA does not control any patents on fabrics or
processes.
3. Based on total revenues, Nike and Adidas both are around 10 times the size of UA.
4. Apparel industry has a mediocre outlook where consumers are faced with less discretionary
income for higher end items.
5. Cotton and other commodities’ prices used in the production of apparel can be quite volatile in
nature.
6. Apparel industry is extremely fragmented with many firms competing for the same customers.
7. High product substitution in the market (Ex. Starter’s brand at Walmart).
8. Adidas based in Germany has a large presence in Europe
9. Footwear industry is growing at a much slower rate than apparel.
10. Increasing downward pressure on prices.
Competitive Profile Matrix

Under
Nike Adidas
Armour
Critical Success Factors Weight Rating Score Rating Score Rating Score
Advertising 0.05 2 0.10 4 0.20 3 0.15
Market Penetration 0.06 2 0.12 3 0.18 4 0.24
Apparel Sales 0.12 2 0.24 4 0.48 3 0.36
Footwear Sales 0.12 1 0.12 4 0.48 3 0.36
Profit 0.12 1 0.12 4 0.48 3 0.36
Debt/Equity 0.07 4 0.28 3 0.21 2 0.14
ROA 0.07 3 0.21 4 0.28 1 0.07
Customer Loyalty 0.07 2 0.14 4 0.28 3 0.21
Market Share 0.12 1 0.12 4 0.48 3 0.36
Product Quality 0.06 4 0.24 2 0.12 3 0.18
International Scope 0.09 1 0.09 3 0.27 4 0.36
Contracts With Major Sports Teams 0.05 1 0.05 3 0.15 4 0.20
Totals 1.00 1.83 3.61 2.99

UA is performing well in the industry despite a score of only 1.83. Nike and Adidas are just so much
larger than UA, which derives 97 percent of its revenue from the USA, that economies of scale hurt
UA’s competitive position.

EFE Matrix

Opportunities Weight Rating Weighted Score

1. Women’s sales in the apparel industry account for 55% of sales, 0.04 4 0.16
with men around 28% and children accounting for 17% of sales.
2. Since the middle of 2011 to the end of 2013, the specialty retail 0.06 3 0.18
index has risen 70%.
3. The top 10 national brands only account for 16 percent of 0.04 3 0.12
wholesale apparel sales.
4. Sports footwear is expected to be on of the most significant 0.05 2 0.10
areas of growth moving forward in the footwear industry.
5. People are becoming more health conscious and exercising 0.03 3 0.09
increasingly more worldwide.
6. Latin America, Eastern Europe, China, and India are all emerging 0.06 2 0.12
markets with large population bases.
7. US cotton active wear market is a $12 billion industry, four times 0.05 2 0.10
the size of the performance wear market that UA was limited to
with its synthetic only line
8. Expiring apparel contracts with existing major college and 0.04 3 0.12
professional sports teams.
9. Children are more easily persuaded about products and account 0.04 2 0.08
for 17% of industry wide apparel sales.
10. Customers are increasingly shopping at outlet stores. 0.02 3 0.06
 Threats Weight Rating Weighted Score
1. Nike and Adidas were quick to copy UA’s fabric technology. 0.07 2 0.14
2. Fabrics UA uses are not unique to them, and UA does not
0.07 2 0.14
control any patents on fabrics or processes.
3. Based on total revenues, Nike and Adidas both are around 10
0.08 2 0.16
times the size of UA.
4. Apparel industry has a mediocre outlook where consumers are
0.04 2 0.08
faced with less discretionary income for higher end items.
5. Cotton and other commodities’ prices used in the production of
0.05 2 0.10
apparel can be quite volatile in nature.
6. Apparel industry is extremely fragmented with many firms
0.04 2 0.08
competing for the same customers.
7. High product substitution in the market (Ex. Starter’s brand at
0.07 2 0.14
Walmart).
8. Adidas based in Germany has a large presence in Europe 0.05 2 0.10
9. Footwear industry is growing at a much slower rate than apparel. 0.05 2 0.10
10. Increasing downward pressure on prices. 0.05 2 0.10
TOTALS 1.00 2.27

UA is performing just below average in addressing external issues, primarily due to being slow to
extend its products globally and to female athletes.

E. Internal Audit
Strengths

1. UA products are worn by some of the largest American college football and European soccer teams
and are worn by mega stars such as Tom Brady, Cam Newton, Bryce Harper, Michael Phelps, and
many more.
2. UA products are sold in major retailers, online, and in outlet stores worldwide.
3. UA's moisture-wicking fabrications are designed to wear in nearly every climate to provide a
performance alternative to traditional products.
4. By hosting camps, clinics, and other activities for young athletes, they are able to gain a first-hand
appreciation for UA’s product quality and brand equity.
5. UA's bold logo and brash and edgy marketing campaigns inspire movement and physical fitness,
positioning the company very well within the healthier lifestyle megatrend.
6. European products are distributed out of the Netherlands, and products sold in Japan are distributed out
of Japan.
7. Many items are produced in Mexico, providing better quality control and reduced shipping costs.
8. CEO Plank’s vision is for women’s products to outpace men’s in revenues, and for the international
revenues to be larger than USA revenues.
9. 5 year annual sales growth rate is 25% compared to Nike’s 6%.
10. UA compression products have great brand recognition.
Weaknesses

1. With no long-term debt, UA is not utilizing cheap financing as well as it could.

2. Inventory turnover is 2.3 compared to 4.3 for Nike.
3. Footwear and accessories only account for 20% of total revenue.
4. Only 6% of 2012 revenues were derived from outside of North America.
5. Latin American products are distributed out of the USA.
6. Majority of UA apparel is high priced. The average price for clothing apparel for UA is $29.99, for
Nike is $19.99 & for Adidas is $15.00.
7. High majority of UA apparel and stores are male focused.
8. UA hasn’t patented their “sweat-wicking” material and technology.
9. UA hasn’t made much progress in athletic shoes outside of cleats.
10. Currently, no one endorses a particular shoe from UA in a manner similar to Nike producing the Air
Jordan’s.

Financial Ratio Analysis

Profit Margin Percent UA Industry

Debt/Equity Ratio 0.06 0.58
Current Ratio 3.33 2.39
Quick Ratio 1.44 1.07

Liquidity Ratios
Debt/Equity Ratio 0.06 0.58
Current Ratio 3.33 2.39
Quick Ratio 1.44 1.07

Profitability Ratios
Return On Equity 16.96 14.38
Return On Assets 11.65 6.99
Return On Capital 15.67 9.6

Efficiency Ratios
Income/Employee 22,513 11,568
Revenue/Employee 340,204 182,656
Receivable Turnover 10.34 8.73
Inventory Turnover 2.38 3.05
Asset Turnover 1.76 1.16

UA is doing very well financially, but should consider debt financing given available low interest rates and
a debt/equity ratio of 0.06. Also, the firm could improve on its inventory turnover.

Net Worth Analysis (in millions)

Under Armour Company Worth Analysis

Stockholders' Equity - (Goodwill + Intangibles) $813
Net Income x 5 $645
(Share Price/EPS) x Net Income $8,201
Number of Shares Outstanding x Share Price $8,277
Method Average $4,484
 Nike Company Worth Analysis
Stockholders' Equity - (Goodwill + Intangibles) $10,643
Net Income x 5 $12,425
(Share Price/EPS) x Net Income $61,476
Number of Shares Outstanding x Share Price $64,952
Method Average $37,374

Nike is worth 9 times more than UA, but UA is growing.

IFE Matrix

Strengths Weight Rating Weighted Score

1. UA products are worn by some of the largest American college
football and European soccer teams and are worn by mega stars
0.04 4 0.16
such as Tom Brady, Cam Newton, Bryce Harper, Michael Phelps,
and many more.
2. UA products are sold in major retailers, online, and in outlet
0.06 4 0.24
stores worldwide.
3. UA's moisture-wicking fabrications are designed to wear in
nearly every climate to provide a performance alternative to 0.04 4 0.16
traditional products.
4. By hosting camps, clinics, and other activities for young
athletes, they are able to gain a first hand appreciation for UA’s 0.03 3 0.09
product quality and brand equity.
5. UA's bold logo and brash and edgy marketing campaigns
inspire movement and physical fitness, positioning the company 0.04 4 0.16
very well within the healthier lifestyle megatrend.
6. European products are distributed out of the Netherlands and
0.04 3 0.12
products sold in Japan are distributed out of Japan.
7. Many items are produced in Mexico, providing better quality
0.06 3 0.18
control and reduced shipping costs.
8. CEO Plank’s vision is for women’s products to outpace men’s in
revenues, and for the international revenues to be larger than 0.08 4 0.32
USA revenues.
9. 5 year annual sales growth rate is 25% compared to Nike’s 6%. 0.10 4 0.40
10. UA compression products have great brand recognition. 0.04 4 0.16
 Weaknesses Weight Rating Weighted Score
1. With no long-term debt, UA is not utilizing cheap financing as
0.05 2 0.10
well as they could.
2. Inventory turnover is 2.3 compared to 4.3 for Nike. 0.05 1 0.05
3. Footwear and accessories only account for 20% of total revenue. 0.05 2 0.10
4. Only 6% of 2012 revenues were derived from outside of North
0.07 1 0.07
America.
5. Latin American products are distributed out of the USA. 0.04 2 0.08
6. Majority of UA apparel is high priced. The average price for
clothing apparel for UA is $29.99, for Nike is $19.99 & for Adidas 0.05 2 0.10
is $15.00.
7. High majority of UA apparel and stores are male focused. 0.04 2 0.08
8. UA hasn’t patented their “sweat-wicking” material and
0.04 1 0.04
technology.
9. UA hasn’t made much progress in athletic shoes outside of
0.04 1 0.04
cleats.
10. Currently, no one endorses a particular shoe from UA in a
0.04 1 0.04
manner similar to Nike producing the Air Jordan’s.
TOTALS 1.00 2.69

UA scores above average in addressing internal issues. The firm can improve on a score of 2.69 by
expanding its shoe line and targeting women more in their overall strategy – and extending their products
more aggressively outside the USA.

F. SWOT
SO Strategies

1. Develop a line of jogging shoes for $20 million (S2, S9, O4, O5).
2. Sign contracts with 10 major sports teams for $100 million per year (S1, O8).
3. Build 20 new outlet stores in the USA over 3 years at $1 million each (S2, O10).
4. Build 20 new UA stores in Eastern Europe over 3 years at $500k each (S6, O6).

WO Strategies

1. Develop a line of jogging shoes for $20 million (W3, W9, O4, O5).
2. Spend $100 million to market and develop products to women (W7, O1).
3. Build 20 new outlet stores in the USA over 3 years at $1 million each (W4, O6).
4. Sign a shoe contract deal with Tom Brady and Bryce Harper for $20 million each (W10, O4).

ST Strategies

1. Spend $100 million in extra advertising to promote to kids and young adults (S5, T3, T7).
2. Move all production and distribution to Mexico for all North and South American sales (S7, T10).
3. Spend $50 million promoting how UA products are superior for casual exercise use (S3, T2, T7).
 WT Strategies

1. Develop a line of cheaper products for a more price conscious customer (W6, T7, T10).
2. File for patent protection on the process in which UA products are produced (W8, T1, T2).

G. SPACE Matrix

FP
Conservative Aggressive
7

4
X = 0.0
3 Y = 0.8

CP IP
-7 -6 -5 -4 -3 -2 -1 1 2 3 4 5 6 7
-1

-2

-3

-4

-5

-6

-7
Defensive Competitive
SP

Internal Analysis: External Analysis:

Financial Position (FP) Stability Position (SP)
ROA 6 Rate of Inflation -3
Debt/Equity 6 Technological Changes -5
Net Income 5 Governmental Regulations -2
Revenues 5 Competitive Pressure -7
Company Worth 4 Barriers to Entry into Market -5
Financial Position (FP) Average 5.2 Stability Position (SP) Average -4.4
Internal Analysis: External Analysis:
Competitive Position (CP) Industry Position (IP)
Market Share -5 Growth Potential 5
Product Quality -2 Financial Stability 4
Customer Loyalty -2 Ease of Entry into Market 2
Technological know-how -2 Substitute Products 2
Control over Suppliers and Distributors -5 Profit Potential 3
Competitive Position (CP) Average -3.2 Industry Position (IP) Average 3.2

UA’s position lies on the Y-axis between the Aggressive and Conservative Quadrants, implying that UA should
more aggressively compete head-to-head with Nike and Adidas outside the USA – and in gaining customer loyalty
from female athletes.

H. Grand Strategy Matrix

Rapid Market Growth

Quadrant II Quadrant I

Weak Strong
Competitive Competitive
Position Position

Quadrant III Quadrant IV

Slow Market Growth

Industry sales are growing rapidly globally, and UA has a great product, so adding UA stores globally is
one way to capitalize on global demand.
I. The Internal-External (IE) Matrix
The Total IFE Weighted Scores
Strong Average Weak
4.0 to 3.0 2.99 to 2.0 1.99 to 1.0
4.0 I II III

High

3.0 IV V VI

The
EFE
Total Medium Footwear
Weighted
Scores
Apparel

Accessories

2.0 VII VIII IX

Low

1.0

Segment Total Sales (in millions)

Apparel $1,385,350
Footwear 238,955
Accessories 15,835
Total 1,790,140

Apparel continues to dominate UA’s product line, accounting for 77% of 2012 revenues. Not shown in the
IE above, North American revenues accounted for 94% of UA’s 2012 sales and 95% of all profits. UA
does not provide profit data for product segments.
J. QSPM

Spend $100
Million to
Build 20 New
Target the
Stores in
Female and
Europe
Children's
Market
Opportunities Weight AS TAS AS TAS
1. Women’s sales in the apparel industry account for 55% of sales,
with men around 28% and children accounting for 17% of sales. 0.04 4 0.16 2 0.08

2. Since the middle of 2011 to the end of 2013, the specialty retail
0.06 2 0.12 3 0.18
index has risen 70%.
3. The top 10 national brands only account for 16 percent of
0.04 0 0.00 0 0.00
wholesale apparel sales.
4. Sports footwear is expected to be on of the most significant
0.05 0 0.00 0 0.00
areas of growth moving forward in the footwear industry.
5. People are becoming more health conscious and exercising
0.03 3 0.09 4 0.12
increasingly more worldwide.
6. Latin America, Eastern Europe, China, and India are all emerging
0.06 2 0.12 4 0.24
markets with large population bases.
7. US cotton active wear market is a $12 billion industry, four times
the size of the performance wear market that UA was limited to 0.05 0 0.00 0 0.00
with its synthetic only line
8. Expiring apparel contracts with existing major college and
0.04 0 0.00 0 0.00
professional sports teams.
9. Children are more easily persuaded about products and account
0.04 4 0.16 2 0.08
for 17% of industry wide apparel sales.
10. Customers are increasingly shopping at outlet stores. 0.02 2 0.04 4 0.08

Threats Weight AS TAS AS TAS

1. Nike and Adidas were quick to copy UA’s fabric technology. 0.07 0 0.00 0 0.00
2. Fabrics UA uses are not unique to them, and UA does not
0.07 0 0.00 0 0.00
control any patents on fabrics or processes.
3. Based on total revenues, Nike and Adidas both are around 10
0.08 1 0.08 2 0.16
times the size of UA.
4. Apparel industry has a mediocre outlook where consumers are
0.04 0 0.00 0 0.00
faced with less discretionary income for higher end items.
5. Cotton and other commodities’ prices used in the production of
0.05 0 0.00 0 0.00
apparel can be quite volatile in nature.
6. Apparel industry is extremely fragmented with many firms
0.04 2 0.08 3 0.12
competing for the same customers.
7. High product substitution in the market (Ex. Starter’s brand at
0.07 0 0.00 0 0.00
Walmart).
8. Adidas based in Germany has a large presence in Europe 0.05 1 0.05 4 0.20
9. Footwear industry is growing at a much slower rate than apparel. 0.05 0 0.00 0 0.00
10. Increasing downward pressure on prices. 0.05 0 0.00 0 0.00
 Spend $100
Million to
Build 20 New
Target the
Stores in
Female and
Europe
Children's
Market
Strengths Weight AS TAS AS TAS
1. UA products are worn by some of the largest American college
football and European soccer teams and are worn by mega stars
0.04 0 0.00 0 0.00
such as Tom Brady, Cam Newton, Bryce Harper, Michael Phelps,
and many more.
2. UA products are sold in major retailers, online, and in outlet
0.06 2 0.12 4 0.24
stores worldwide.
3. UA's moisture-wicking fabrications are designed to wear in
nearly every climate to provide a performance alternative to 0.04 0 0.00 0 0.00
traditional products.
4. By hosting camps, clinics, and other activities for young
athletes, they are able to gain a first hand appreciation for UA’s 0.03 4 0.12 1 0.03
product quality and brand equity.
5. UA's bold logo and brash and edgy marketing campaigns
inspire movement and physical fitness, positioning the company 0.04 0 0.00 0 0.00
very well within the healthier lifestyle megatrend.
6. European products are distributed out of the Netherlands and
0.04 1 0.04 4 0.16
products sold in Japan are distributed out of Japan.
7. Many items are produced in Mexico, providing better quality
0.06 0 0.00 0 0.00
control and reduced shipping costs.
8. CEO Plank’s vision is for women’s products to outpace men’s in
revenues, and for the international revenues to be larger than 0.08 4 0.32 3 0.24
USA revenues.
9. 5 year annual sales growth rate is 25% compared to Nike’s 6%. 0.10 0 0.00 0 0.00
10. UA compression products have great brand recognition. 0.04 0 0.00 0 0.00
 Weaknesses Weight AS TAS AS TAS
1. With no long-term debt, UA is not utilizing cheap financing as
0.05 0 0.00 0 0.00
well as they could.
2. Inventory turnover is 2.3 compared to 4.3 for Nike. 0.05 0 0.00 0 0.00
3. Footwear and accessories only account for 20% of total revenue. 0.05 0 0.00 0 0.00
4. Only 6% of 2012 revenues were derived from outside of North
0.07 1 0.07 4 0.28
America.
5. Latin American products are distributed out of the USA. 0.04 0 0.00 0 0.00
6. Majority of UA apparel is high priced. The average price for
clothing apparel for UA is $29.99, for Nike is $19.99 & for Adidas 0.05 0 0.00 0 0.00
is $15.00.
7. High majority of UA apparel and stores are male focused. 0.04 4 0.16 1 0.04
8. UA hasn’t patented their “sweat-wicking” material and
0.04 0 0.00 0 0.00
technology.
9. UA hasn’t made much progress in athletic shoes outside of
0.04 0 0.00 0 0.00
cleats.
10. Currently, no one endorses a particular shoe from UA in a
0.04 0 0.00 0 0.00
manner similar to Nike producing the Air Jordan’s.
TOTALS 1.73 2.25

According to the QSPM, it is more feasible at this time to focus on European expansion. However, with
growing women’s rights around the world, more and more female athletes globally, and an increasing
culture of fitness among women, both strategies should be pursued.

K. Recommendations
1. Develop a line of jogging shoes for $20 million.
2. Sign contracts with 10 major sports teams for $100 million per year.
3. Build 20 new outlet stores in the USA over 3 years at $1 million each.
4. Build 20 new Under Armour stores in Eastern Europe over 3 years at $500k each.
5. Spend $100 million to market and develop products to women.
6. Sign a shoe contract deal with Tom Brady and Bryce Harper for $20 million each.
7. Spend $100 million in extra advertising to promote to kids and young adults.
8. Move all production and distribution to Mexico for all North and South American sale.
9. File for patent protection on the process in which UA products are produced.

L. EPS/EBIT Analysis (in millions expect for EPS and Share Price)
Amount Needed: $ 400
Stock Price: $78.83
Shares Outstanding: 105
Interest Rate: 4%
Tax Rate: 36%
 Common Stock Financing Debt Financing
Recession Normal Boom Recession Normal Boom
EBIT $150 $250 $350 $150 $250 $350
Interest 0 0 0 16 16 16
EBT 150 250 350 134 234 334
Taxes 54 90 126 48 84 120
EAT 96 160 224 86 150 214
# Shares 110 110 110 105 105 105
EPS 0.87 1.45 2.03 0.82 1.43 2.04

10 Percent Stock 90 Percent Stock

Recession Normal Boom Recession Normal Boom
EBIT $150 $250 $350 $150 $250 $350
Interest 14 14 14 2 2 2
EBT 136 236 336 148 248 348
Taxes 49 85 121 53 89 125
EAT 87 151 215 95 159 223
# Shares 106 106 106 110 110 110
EPS 0.82 1.43 2.04 0.87 1.45 2.04

Common stock financing is the best alternative for maximizing EPS until projected EBIT approaches $350
million. It is not unreasonable with the recommendations above for EBIT to exceed $350 million. In
addition, with no long term debt (and cheap interest rates), debt is the best option for financing.

M. Epilogue
Under Armour (UA) in mid-2013 released Armour39 to compete against Nike’s Fuelband that was released
in early 2012. Amrour39 is a device that monitors calories, steps taken, and every heartbeat. It represents a
diversification strategic move by Under Armour. Armour39 is the “first of its kind performance
monitoring system for athletes.” The device is strapped to your chest, and is currently priced at $149.99.
An additional display watch can be purchased for around $200. Nike has done really well with Fuelband, a
device that tracks steps, calories, and physical activity. Even though Armour39 trails Fuelband in sales,
Armour39 can become a successful product in the growing athletic tracking market, which in turn can
boost sales of other UA products.

Also in mid-2013, UA opened new stores for women, thus taking on Lululemon. UA’s Brand House is the
first stand-alone UA store to open since 2008 in the USA. The store, in Baltimore, is testing a new store
layout that caters more to women than before. UA has abandoned its typical locker room men’s
performance clothing design. The new Brand House has lighter colors, more open space, and has ten times
the number of mannequins in a typical store. The store heavily promotes the company’s Studio and
ArmourBra, two recent offerings in the women’s clothing segment. Studio is UA’s new yoga apparel,
which directly competes with Lululemon. ArmourBra is the company’s expansion past the sports bra into
everyday clothing. The new Brand House store(s) will also offer promotions like “Workout Wednesdays.”
A new UA line of women’s clothing will not only be available in Dick’s Sporting Goods and Sports
Authority, two retailers where men typically shop – but also in stores like Macy’s and Nordstrom. A quick
visit to Macy’s website reveals 257 UA items, of which 60 are in the women’s category.
 In April 2013, UA and Steele Fitness partnered whereby the regional fitness chain will open a UA store in
all six of its fitness center locations. The stores now offer UA workout apparel, yoga pants, jackets, and
sneakers. UA desires to take away some market share from yoga pants leader Lululemon which recently
reported a 37% revenue increase to $1.4 billion. Lululemon has 218 stores and opened 37 new locations in
fiscal 2012. UA’s growth in women’s products and new stores can eat away at the market share dominance
Lululemon enjoys. UA believes there is plenty of room for multiple players in the yoga apparel market and
aims to take market share away from Lululemon.

In Q1 of 2013, UA reported a 23 percent revenue rise to $472 million. Apparel sales ($346 million) made
up the majority of this number and 80 percent of fiscal 2012 sales. The increase in women’s apparel might
keep that number high, but it could also be lowered by strong sales of women’s shoes or the new
Armour39. Analysts expect UA’s revenue to increase 25 percent in fiscal 2013. An increase in key
demographics of international markets, and women will greatly aid the company.

UA is on a mission to boost sales outside the USA since for 2012 only 6 percent of its revenue was
generated outside of North America, compared to Nike’s 59 percent. Germany-based Adidas generates 60
percent of its revenue outside its home market, Europe. UA recently introduced several running and
basketball shoes such as the Spine running shoe.

By October 2013, and UA had posted double-digit sales growth the past 16 quarters and seen its stock price
increase 70 percent year-to-date. A good trend for UA is that activewear is hot in the retail space, with
department stores making more room for such merchandise. Macy's plans to double its square footage
dedicated to activewear by the end of October 2013, with the key beneficiaries being Nike, UA, and VF
Corp.'s North Face. Other department stores including Kohl's and Nordstrom are also expanding their
activewear space.

Chapter 16: Under Armour

10 Basic Questions

1: C

2: B

3 B

4: A

5: B

6: D

7: C

8: D

9: A
10: C

15 Applied Questions

Boston Consulting Group (BCG) and Internal-External (IE) Matrices

1: A

2: A

3: B

4: D

5: B

Organizational Structure

1: D

2: B

3: B

4: C

5: A

Porter’s Five Forces Model

1: A

2: B

3: D

4: B

5: A