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Under Armour Analysis
Transcript of Under Armour Analysis
Purchased old Proctor and Gamble facility for new HQ
"Protect This House" campaign created
Signed first all school deal with University of Maryland
UA Women, kids, Golf, and Outdoors all put on the market
Went public on Nov. 18, 2005 and doubled initial offering in first day
"There must be something better."
in sales the first year.
(Just hit $2 billion in November)
Under Armour's Objectives
20% yearly growth- Nike is at 8% each year
By 2020, Under Armour will be worth 10 billion dollars
Growth in other countries
-"To make all athletes better through passion, design, and the relentless pursuit of innovation"
Head of Departments
Protect This House Workshop
Goal Setting Workshop
Manager Tactical Training
Diving In- Lack in formal training
No formal diversity program
Currently working on a program
Under Armour currently uses affirmative action
Ethical/ Social Responsibility
Created first shirt, #0037, at 23
ColdGear and AllSeasons fabrics introduced
Moved into first warehouse and HQ
Kevin Plank- CEO
Kip Kulks- COO
John Rogers- SP
Training is determined by manager
401 K- 5% Match
50 % Product Discount
Offers Health, Dental, Short and Long Term Disability and Flexible Spending
80-97% of the costs associated with health care premiums
100% of the cost of wellness and preventive
100% of the cost of short/long term disability and EAP
Cash Flow Statement
Stock Purchase Program for employees
Pre-taxed and 15% discount
Director Level Employees
Offered restricted stock
4 years-1000 shares
Voluntary- Death, Disability, Life Insurance
No post retirement benefits, 403 B, SEP, or IRAs.
Considered better than Nike
RESPECT THE UGOP (UNIVERSAL GUARANTEE OF PERFORMANCE).
Build great product, tell a great story, provide great service, and build a great team.
NO ONE PERSON IS BIGGER THAN THE BRAND – TEAM.
MAKE ONE DOLLAR SPEND LIKE THREE (CREATIVITY)
WALK WITH A PURPOSE.
PROTECT THE UA CULTURE, BUT EMBRACE CHANGE.
BE HUMBLE AND STAY HUNGRY.
Depends on the financial performance of the previous year
an annual cash incentive award based primarily on the annual performance of the company
equity awards, including our annual performance based equity award with vesting tied to the
performance of the company; and
minimal benefits and perquisites.
50 cents on the dollar up to 6%
Cheer building is LEED certified and they are working towards making everything LEED certified
Largest green wall in America
Use water bottles to make clothes (Website and Dick's Sporting Goods Exclusive)- 4 bottles to 1 shirt
In 2010, Under Amour helped create the east coast’s first LEED certified habitat for humanity house in West Baltimore
Very laid back, casual environment
Demographics-60% men, 31-average age, and majority are previous athletes
Nike is very similar
The Company views its commitment to ethical business conduct very seriously.
The Company will take disciplinary action against those who violate these Company policies and procedures, up to and including immediate termination.
Harassment or victimization of the complainant will not be tolerated.
Every effort will be made to protect the complainant's identity.
Commited to fair treatment of employees and providing a safe working enviornment
Mentors of students in the Baltimore area with Big Brothers Big Sisters of Central Maryland and the Maryland Mentoring Partnership
Other charities include Power of Pink, Ronald McDonald House, UA Freedom, The V Foundation, Habitat For Humanity, The Boomer Esiason Foundation, and much more
Sits on Board of Trustees for:
University of Maryland
Start Up America
National Football Foundation
the Board of John Hopkins Medicine
the Greater Baltimore Committee
All UA products in Any Given Sunday
$750,000 increase in sales
Began partnerships with NHL, MLB, and Baltimore Marathon
Click-Clack campaign launched first footwear
Signed Ray Lewis, Lindsey Vonn, and Brandon Jennings
Signed Michael Phelps and Tom Brady
First year with $1 billion in revenue
Created first trainers and entered shoe market
Opened first retail store in China
Official technical partner to the Tottenham Hotspurs
$2 billion in revenue reached
Acquired MapMyFitness as of November 14, 2013
Where it's Traded &
Location, Location, Location
Tax breaks, family, and University of Maryland.
Original #0039 Compression Shirt & Original ColdGear Mock
Team USA Bobsled Speed Suit; UA Coreshorts with X Band Technology
Armour39 Compression Shirt; Charged Cotton; Charged Cotton Storm; coldblack
Armour Bra; UA HIGHLIGHT Cleat
UA Spine Venom Running Shoe; Team Canada Winter Olympics
*Warrior Sport takes Under Armour to court for trying to use its plans when a former Warrior Sports employee brought their plans/blueprints with them to their new job at UA (2012).
*Under Armour sues Nike over use of “I Will” slogan, saying it infringes on their trademark rights (2013).
Global vs. Domestic
Sales and Marketing
As of November 14, 2013, Under Armour has officially acquired MapMyFitness, their first acquisition ever.
Development and entrance into the footwear market
Signing big names, i.e. Michael Phelps, Lindsey Vonn, and newest addition, golfer Jordan Spieth
Reaching $2 billion in revenue
Signing Tottenham Hotspurs (biggest deal to date)
Under Armour Board Of Directors
CEO and Chairman of the Board
Douglas E. Coltharp:
Executive Vice President and Chief Financial Officer of HealthSouth Coporation
Byron K. Adams, Jr:
Chief Performance Officer
Former Chief Executive Officer and Chairman of Alex.Brown, Inc.
Anthony W. Deering:
Former Chief Executive Officer and Chairman of The Rouse Company
William R. McDermott:
Co-Chief Executive Officer and Executive Board Member of SAP AG
Eric T. Olson:
US Navy (Retired) and Former Commander of the US Special Operations Command
Thomas J. Sippel:
Partner at Gill, Sippel, and Gallagher
Harvey L. Sanders:
Former Chief Executive Officer and Chairman of Nautica Enterprises, Inc.
long time heritage and brand value
sponsors major events (Olympics)
strong and innovative marketing
Professional and College endorsements
First Mover Status
Linked to some of the best atheletes
Long time heritage
High brand switching
*Figures from income statements (yahoofinance)
*Figures from balance sheets (yahoofinance)
Price to Earnings Growth Ratio
Return on Assets
Return on Equity
Long Term Debt
Under Armour has agreements with various lenders to finance the acquisition and/or lease of qualifying capital investments.
Limit: $40 Million additional financing
2012- $11.9 million
2011- $14.5 million
Outstanding Loan Balance
Recent Loan Agreements
July 2011- $38.6 million loan secured by mortgage in connection with the acquisition of the new corporate headquarters
December 2012- Repaid balance of previous loan ($37.7 million) & secured a new $50 million loan collateralized by land, buildings and tenant improvements
Under Armour funds its working capital through cash flows from operating activities, cash & cash equivalents on hand and borrowings available
Under Armour's working capital generally reflects seasonality and growth in business; as it recognizes a majority of its revenues in the back half of the year
10-K Annual Report 2/25/13
10-Q Quarterly Report 5/1, 8/6, 11/5/13
8-K Results of Operations 10/24/13
and Financial Condition
8-K Change in Directors 10/8/13
or Principal Officers
105.63 Million Shares Outstanding
94.5% held by institutions
5.39% held by insiders
889.56 Million shares outstanding
83.6% held by institutions
0.24% held by insiders
418.43 Million shares outstanding
Insider/ institution information unavailable
Under Armour's stock is trading at about 58 times its earnings
Initial Public Offering
July 9, 2012
Under Armour completes a 2-for-1 stock split of its outstanding common stock. The split occured in the form of a dividend of one share of Class A common stock for each share of Class A common stock outstanding; and the same for Class B common stock.
*Under Armour does not distribute dividends
Stewardship of the Stock
T.Rowe Price Growth Stock
Fidelity Advisor New Insights
Baron Growth Retail
Wells Fargo Advantage Growth Inv
Would You Own the Stock?
Under Armour's stock price has been consistently increasing since its initial offering in 2005 and is up 70% in 2013
Under Armour has a major opportunity to expand globally & company leadership plans to continue to build a global presence
Under Armour's earnings and profits have increased consistently on a year-to-year basis.
Under Armour is well known for its innovative products along multiple lines making it a great LONG-TERM BUY & HOLD
Amy Adams, Alexandra Djokovich, Sam Morice, and Dave Zelvis
2010- $406.7 Million
2011- $506.1 Million
2012- $651.4 Million
Timeline of Stock
Bill Bowerman and Phil Knight
University of Oregon track and field coach and middle distance runner at the University of Oregon
Knight wrote a proposal for better running shoes and Bowerman partnered with him and shared his designs with Knight
"TO BRING INSPIRATION AND INNOVATION TO EVERY ATHLETE* IN THE WORLD"
*-Anyone with a body is an athlete
Seeking growth in things that are sustainable, profitable, capital efficient and brand enhancing
become greener by achieving 20% reduction in CO2 emissions per unit
Make today better by taking account of our impacts and redefining business performance for the better
Design the future by unleashing innovation, embedding sustainability into our approaches to product and manufacturing
"The Adidas Group strives to be the global leader in the sporting goods industry with brands built on a passion for sports and a sporting lifestyle. We are committed to continuously strengthening our brands and products to improve our competitive position"
“Route 2015”- the plan aims at growing the business of the entire adidas Group compared to the expected 2010 results by 45% to 50% to € 17 billion in 2015.
"One Team, one goal: pushing boundaries through innovation and achievements"
Nike offers different diversity networks for their employees, including the Asia Pacific Employee Network, the Latino Employee Network and more.
Does not use affirmative action
Adidas offers diversity day, which celebrates the cultures of the company
Does not use affirmative action
"Our culture is continuously shaped by the past and the present, as well as our aspirations for the future. We foster a corporate culture of performance, passion, integrity, and diversity by creating a work environment that stimulates innovation, team spirit, and achievement based on strong leadership and employee engagement"
Mainly Athletes Work There
"Our Green Company vision is to become a zero-emission company by:Embedding environmental best practice in everything we do, maximising environmental efficiency gains, and supporting and harnessing our people’s passion for a greener planet"
Green Energy Fund
Started in a small town in Bavaria, Germany in 1924 when Dassler registered his "Gebrüder Dassler Schuhfabrik".
Uses green materials in their shoes
Environmental Apparel Design Tool
Material Analysis Tool (MAT)
Not as green as the other companies
His own brother formed Puma after some disagreements and World War II.
Employee Stock Purchase Plan (Pre-Taxed/ 15% discount)
Same as Under Armour
Executives are offered stock as part as their compensation plan
Does not offer information about stock options
Health, Dental, Vision insurance
Life & Accident insurance
Long/short Disability insurance
401 K Plan-matches a portion
Paid vacations and holidays
Onsite fitness center/fitness discounts
-1924: Adi Dassler made his first sport shoe in his mother’s laundry room.
-First two gold medals in Amsterdamn and Berlin Olympics in 1928 and 1936.
-1967: The Franz Beckenbaur Tracksuit is introduced (first piece of clothing)
-1970: Became the OFFICIAL BALL TO EVERY WORLD CUP
-1972: Adidas symbol is born
-1986: Run DMC releases “my adidas” and non-athletic promotions took off
-1993: “WE KNEW IT THEN, WE KNOW IT NOW”
-1996: adidas goes public
-1997: adidas acquires Saloman group
-2006: Reebok is acquired
-2011: Acquired FiveTen, outdoor specialists and TaylorMade became the leading golf equipment company in the world
-1958: Bowerman and Knight become partners after meeting a University of Oregon
-1965: Jeff Johnson was brought onboard
-1972: Debuted Nike footwear at U.S. Track and Field Trials
-1973: Partnered with Prefontaine
- 1985: Michael Jordan is signed
-1987: Nike Air Max introduced
-1989: Nike reclaims it’s spot as Number One
-1995: Nike signs entire Brazilian National soccer team
-1996: Nike signs US Men and Women’s soccer teams
-1997: Tiger Woods wins Masters and Nike becomes a golf industry leader
-2002: “Secret Tournament” campaign
-2012: Official sponsor of the NFL
''At Nike, we want an open and creative culture that harnesses diversity and inclusion to inspire ideas and ignite innovation. To achieve this, our diversity and inclusion strategy focuses on three foundational priorities. We’ve worked with more than 5,000 employees who now have new and creative ways to leverage their teams’ diversity as they approach their work."
"100 BEST COMPANIES TO WORK FOR"
Similar to Under Armour
Location, Location, Location
Bring it back to the roots, tax breaks.
*Brett Gaudreau sues Nike over injuring knee while wearing Nike Shox Devlier shoes
*Race Discrimination Lawsuit
Acquired Converse in 2003 for $305 million
Acquired Hurley, LLC in 2002 for undisclosed amount
Introduction of Air Max
Signed Michael Jordan and Tiger Woods
Signed deal with NFL to be sole sponsor as of 2012
Location, Location, Location
Adi Dassler's hometown, where they started.
1924: Gebrüder Dassler Schuhfabrik
1949: 3 Stripe Sneaker
1954: Screw- In Pin Cleats
1967: Franz Beckenbauer tracksuit
1970: TELSTAR soccer ball
1994: Predator football boot
2013: Energy Boost
* Lightweight basketball sneaker causes ligament issues
* ADD A ZERO vs. ADIZERO
* University of Wisconsin lawsuit for lack of severance pay to Indonesian workers
* Adidas vs. Walmart for 3 stripe infringement
Acquired Saloman group in 1997, including Saloman, TaylorMade, and Mavic & Bonfire
Acquired Reebok in 2006 and Saloman leaves (except TaylorMade)
Acquired FiveTen in 2011
Acquired Adams Golf in 2012
Huge deal with CROSSFIT
First two gold medals
Official FIFA Ball
Run DMC "my adidas"
Health Insurance (Medical, Dental, Vision & Prescription Drugs)
Retirement Plans (Pension/401K)
Supplemental Insurance (Disability/Life/Accident)
Vacation & FlexiTime programs
Free language courses
Daycare in selected locations
Bicycle share programs
"To reach their personal best, our Group employees are offered a wide variety of training and development opportunities, building on their strengths, improving their skills and overcoming their own challenges"
"We provide extensive safety training to employees based on the type of job they do and the level of risk associated with that job"
9 day program
Videos about history
1959: First 300 shoes distributed
1972: Original Nike footwear introduced with "waffle" technology
1985: Air Jordan
1987: Air Max
1989: Cross Trainers
1996: Nike Golf
2000: Nike Shox
Nike Board Of Directors
Adidas Board of Directors
Phillip H. Knight:
Mark G. Parker:
President and CEO
Elizabeth J. Comstock:
Senior Vice President and CMO of GE
John G. Connors:
Partner in Ignition Partners, LLC
CEO of Apple
Alan B. Graf:
Executive Vice President and CFO of FedEx Corporation
Douglas G. Houser:
Partner in Bullivet, Houser, and Baily
John C. Lechleiter:
President, CEO, and Chairman of the Board for Eli Lilly and Company
President and CEO of TV One, LLC (retired 2011)
Orin C. Smith:
Director of Board at Walt Disney; President and CEO of Starbucks (2000-2005)
John R. Thompson:
1988 US Olympic Basketball Team Coach
Phyllis M. Wise:
Vice President and Chancellor of University of Illinois
Varied reputation (sweat shop links)
Percieved as expensive
Customers Narrow Focus
Generate over 60 new foot friendly designs each year
More stylish designs and cuts
Brand building through sports academies
NIKE’s good name and reputation result in large part from our collective actions. That means the work-related activities of every employee must reflect standards of honesty, loyalty, trustworthiness, fairness, concern for others and accountability.
NIKE will comply with all applicable laws regarding campaign contributions, lobbying, and ethics
standards that apply to dealings with public
officials and government employees.
All employees are responsible for creating and maintaining a work environment free from harassment or other inappropriate behavior.
The Nike Foundations- working to end poverty
Consumer lifestyle improvement
Focusing on all sports
License technology to other companies
Male dominant focus
Nike/Adidas have longer history
Currency Exposure Risk (T); Comeptitive International Market (T)
Increase in shipping cost (T); Performance shoe industry growth (O); Brand Equity (O); Overseas Manufacturing and Outsourcing (T)
Quality over price (O); Health conscious (O); Sports particiation (O)
Electronic commerce (O); Mobile commerce (O); Social media marketing (O)
Green technologies for products (O); Marketability of being green (O)
FDI policies (T)
"Accordingly, all employees are expected to act with fairness and responsibility as well as in compliance with the laws and regulations while carrying out their tasks"
It is our responsibility as a member of each community to act as a true corporate citizen and we are committed to doing this through a range of programmes and activities including corporate giving, volunteer work and community relations programmes.
Soles4Souls- donates shoes to countries that need them
Research and Development
It Is Our Nature To Innovate
Nike Is A Company
Nike Is A Brand
Simplify And Go
The Consumer Decides
Be A Sponge
Do The Right Thing
Master The Fundamentals
We Are On The Offense. Always
Remember The Man
Adidas is the first genuine sports brand. We were founded by a true athlete whose one guiding principle was to make equipment that makes athletes better.
Passion is at the heart of sport and of every true athlete.
There is continuous innovation in every area of our business
Being inspirational helps build and maintain relationships with the athletes we support.
Our commitment to our athletes and sport is uncompromising, unwavering and forever.
At all times and in all relationships, adidas is genuine, ethical and fair.
Under Armour: Has not participated in buying back shares
Nike: 2013, Nike repurchased 4.9 million shares for $253 million as part of its new four year long $8 billion share repurchase program. At this rate, the company continues to retire approximately 2% of its shares outstanding per year.
Adidas: Between January 30 and October 22, 2008, adidas AG (European Traded) repurchased a total of 10,182,248 shares at an average price of € 40.21. This represents 5% of the stock capital at the time the program started.
Gross to Net Comparison
Special Product Display Rooms for Wholesale Buyers and Big Accounts
Our Mission is clear: Make All Athletes Better. If you're not 100% satisfied with your gear, exchange or return it for a full refund. Anytime. Any reason. Guaranteed.
Adidas Group is committed to delivering outstanding customer service, providing their retail partners with the support and tools to establish and maintain a mutually successful business relationship. Customer relationship management is not only a key activity for their sales force but also of highest importance to the Group’s top executives and second – line management.
Nike wants to represent the highest service standard within and beyond their industry, building loyal consumer relationships around the world.
No Customer Problem is Too Small to Address
Nike Logistics Y.K.
In House IT Logistics
Enterprise Management (ERP)
Past ERP Problems
Deputy Chairman of the Works Council
Dr. Wolfgang Jaeger:
Mananging Director of Hans-Blockler-Stiftung
Dr. Stefan Jentzsch:
Partner, Perella Weingber Partners UK LLP
Trade Union Official, IG BCE
Chairman, RFSO "Lokomotiv"
Sales Director Custome Service, adidas
Member of the Central Works Council
Former Member of Executive Board, adidas
First Mover Status
Differentiators & Competitive Advantage
NSRL: Nike Sport Research Lab
Lab scientists focus on physiology, biomechanics, perception and athlete performance to inform product development.
Creating innovative products to meet the needs of both professional and everyday atheletes by focusing on customisation, digital sports technologies, and sustainable product innovation
Opened new research center at the headquarters in early 2013 called the Innovation Lab
*First company to produce sweat wicking fabric in a tight fitting tshirt for athletes
*First (US) company to specialize in sneakers made especially for track runners
*First company to create soccer cleats with screw in pins
*First company with signature mark (3 Stripes)
*Under Armour was the first company to create original sweat wicking fabric and has kept creating more innovative fabrics and accessories (i.e. ColdGear, ColdGear infared gear, HeatGear)
*The oldest in the business and, one of the only companies run out of another country.
*To put it simply, the quality and brand loyalty is like no other.
Effectively manage and maintain inventory and internal reports
Ship products to customers and invoice them on a timely basis
Corporate services costs increased $15.7 million to $114.3 million, 2013
Servers, Storage, Network, End User Computing, Mobile Devices
Global IT Center of Excellence Infrastructure
95/98% of product is built outside the US
No child labor or other factory issues
All production is outsourced
Huge unique strategic manufacturing outsourcing structure
Faced harsh criticism in early 90s for their factory conditions
Established a department to improve the lives of factory laborers
Outsource almost 100% of production to independent third party suppliers
Primarily in Asia
Have faced criticism as well
Utilizes advertising, direct marketing, sales promotions, and public relations
Primary target market is football players
Advertises on their official web site and in sporting goods catalogs
Same Advertising methods as competitors
Commercials with professional athletes
Run-DMC made a song called "My Adidas"
Rewards and Incentives Programs
Primarily for Corporate Sales Teams
Long Term Incentive Plan
Recognize and reward on a long-term basis selected employees of the Company and its subsidiaries for their contributions to the overall profitability and performance of the Company; and qualify compensation under the Plan as “performance-based compensation”
Long Term Incentives Plan
In order to allow our employees to participate in the Group’s success, and to reward them for their target achievement, we have implemented a Global Bonus Programme. This programme combines individual performance and corporate performance
Social Media: Twitter Facebook
Core target audience of 13 to 24 year-olds and enlist companies to participate (and talk about) the UA brand
“Ultimate Intern Program”
Previously outsourced social media department
Now have an In House team
Reduced spend on television and print advertisements by 40 per cent over the last three years
Nike Plus and third party platforms
Have social media guidelines for all employees to follow
Television and print ads are becoming less and less of ad campaigns
12% of Net Revenue
Majority has shifted to internet
Radical shift in allocating the company’s marketing budget, 13%
- Compression wear, Under Armour, Skins, dry fit.
Shanghai Lita Import&Export Co.,Ltd (China) -
sports wear, apparel, garment, clothes,
Lita Co.,Ltd. (USA), Wuxi Centeral (Zhenxin) Textile Co.,Ltd (China) -
stretchable fabric, swimfabric, lingerie fabric, satin, mesh, suede
NIKE24K TRADE Co.,LTD, Joyline Trade CO.,LTD., Ardike International Trade Co.,Ltd
Ulysse Trading (UAE), Yongchuang Trade, Primashoes Industrial Co., Ltd, Fly-trade.Co.Ltd
European Headquarters: Amsterdam Olympic stadium
Additiona Offices: Hong Kong, China
Argentina, Australia, Austria, Belgium, Bermuda, Brazil, Canada, Chile, Croatia, Cyprus, the Czech Republic, Denmark, Finland, France, Germany, Greece, Hong Kong, Hungary, Indonesia, India, Ireland, Israel, Italy, Japan, Korea, Lebanon, Macau, Malaysia, Mexico, New Zealand, the Netherlands, Norway, the People’s Republic of China, the Philippines, Poland, Portugal, Russia, Singapore, Slovakia, Slovenia, South Africa, Spain, Sri Lanka, Sweden, Switzerland, Taiwan, Thailand, Turkey, the United Arab Emirates, the United Kingdom, Uruguay and Vietnam.
• Canada (EN)
• Canada (FR)
• United States
• Hong Kong
• New Zealand
• Czech Republic
80 factory houses
5 specialty stores
U.S. Retail Stores
NIKE factory stores (which carry primarily overstock and close-out merchandise)
NIKE stores (including one NIKE Women store)
NIKETOWNs (designed to showcase NIKE products)
NIKE employee-only stores
Cole Haan stores (including factory stores)
Converse factory stores
Hurley stores (including factory and employee stores)
ALL 50 States
Young men & women
Play sports, workout, extreme sports
Under Armour: directly to consumer through website and wholesale to sporting goods stores (Dick's, Eastbay, Sports Authority). 90.5% of revenue from wholesale
Nike: 4 distribution centers in U.S. 7 international
Adidas: largest distribution center was in South Carolina until one was recently built in Germany