ACCT 6015 Project 1 S

Kevin Plank, the founder of Under Armour sports apparel line is a brilliant businessman. This former college football player started making work-out T-shirts from his grandmother’s basement; seventeen years later, the company is generating billions of dollars in revenue. Kevin Plank has created a brand that is more than just a fancy success story. The Under Armour’s mission in the sporting goods industry is to “make all athletes better through passion, design, and the relentless pursuit of innovation (Thompson, 2014, C-53).” This company is more than just a fancy success story. VIRO Analysis reported, Under Armour has been growing its revenue at a rate of +20% for 5 consecutive years, which is extremely impressive. The company’s financial

Under Armour’s success transcends to its financial stability. Based Under Armour’s fourth quarter report, the apparel company expects 2016 net revenues of approximately $4.95 billion, representing growth of 25% over 2015 and 2016

Under Armour is a growing company with many strengths, weaknesses and opportunities. Many of these qualities will be discussed throughout the paper, but a SWOT analysis is the perfect way to become familiar with the company and it’s economic attributes.

There were some significant differences in the two company’s statements. For example, Nike incurred a net loss of $60.6 million from their operating activities where as Under Armour experienced a $69.52 million gain. Another significant figure is the difference in the total cash dividends paid. Over the course of the year, Nike paid $412.9 million in cash dividends where as Under Armour paid no cash dividends during the year. However, when it came to the cash balance differences between 2008 and 2007, Nike increased its cash by $277.2 million where as Under Armour only increased its cash by $61.45 million.

Competitors in the industry can wreak havoc on the bottom line for a company. With rivals, a price competition usually ensues, which benefits the customers but hurts the competing businesses that share a common strategy. In reviewing rival sellers, many competitors exist within the sports apparel and footwear industry, but most of them are unable to compete with the industry giants, Nike and Adidas. They are well seated in the industry and their sales reveal this ultimate strength, however, Under Armour is putting pressure on these mammoths. In 2015, global sales of sports clothing and footwear equated to $250 billion, of which Nike grabbed $30.6 billion, Adidas held in its grasp $18.8 billion and Under Armour had a much smaller piece of the pie, at $3.9 billion globally. In reviewing these numbers, it looks like Under Armour is really subpar to the industry giants, but this is not exactly the case. Under Armour in the past couple of

Like any other company Under Armour needs to keep track of its finance’s. This is an Internal environmental factor for the company. Financially, Under Armour is consistently growing. Consumers propelled revenue growth from $5.3 million in 2000 to $263.4 million in 2005, which is an annual growth rate of 127% (Thompson, 2013,pg.250). Overall, from 2008 to 2012 they’ve seen an increase each year in cash and cash equivalents, working capital, total assets and total stockholders’ equity, as well as net

Other clothing brands have the ability to start manufacturing athletic apparel to take away market share and diversify their portfolio. Thus, existing apparel companies could enter the performance apparel market if they decide to invest capital for advertising and building product demand. Under Armour has weak patent protection over its product; hence, there is a threat of different unexpected entrants who want to reiterate on their proven formula. Overall, the threat is less imperative to their continued success since other issues are more pertinent and likely.

To accurately assess the risks involved with a possible investment in Under Armour, an in-depth research process into the company was completed. This research involved the following areas:

Despite Nike playing on the large stage of sport apparel and shoes, another company is rising to the occasion, Under Armour. With growing interest and production, Under Armour is taking the fast track to becoming a big rival to the other sports companies. This group has chosen to research and analyze the stock for Under Armour. Under Armour was chosen as this group’s investment because it had high PE ratio compared to the other companies researched. Research began on October 5th 2015, with a closing price of $101.86. This group invested $10,000 at $101.86 per share, which are approximately 98 shares.

I believe that bargaining power of customers and threat of new entrants are the three main key forces that have the potential to impact negatively Under Armour’s growth stability. Under Armour relies mainly on Dick’s Sporting Goods and The Sports Authority for more than 20% of its revenues and problems at these retailers could affect its growth pace. While Under Armour faces rigid competition from Adidas and Nike, they could also see the competition go up from other companies as it does not hold process or fabric patents. Furthermore, Under Armour’s hard core competitors, Nike and Adidas Group, are continuously coming up with new ideas in order to fight for that number one spot and to earn the customers’ loyalty to their brand.

Under Armour Inc. is a relatively new competitor in providing high quality and functional sporting goods. Under Armour Inc. encompasses footwear, apparel, and accessories for all types of sport enthusiasts. The company currently provides jobs to about 10,700 employees. However, they are still up and coming and are expected to create new opportunities and work for many others. Their main headquarter is located in Maryland, Baltimore. Though they operate all over North America, Asia, and certain countries of Europe. Throughout all their operations they mostly sell through retailers and whole sale. In addition, they do have factory outlets and their own “direct to consumer” channels located in North America. Under Armour has really been on the

We decided to do our project on Under Armour Inc., an American manufacturer of footwear, sports and casual apparel. We chose Under Armour because they have been a fluctuating company that seemed to be on the rise less than 3 years ago, but inversely has been in a steady decline. There have been numerous stories in the news about their questionable business strategy. Whether it is political endorsements, insufficient profit margins or their declining stock price, Under Armour is an excellent example of a company that could be in a more favorable situation if better strategic moves were made by the leading management. We believe that we will be able to analyze Under Armour’s short history and provide the best course of action.

It is a newer company to a highly competitive industry like Nike and Adidas. Under Armour was founded in 1996 and started to offer footwear in 2006. Therefore, the company only has a limited market share in the market According to Trefis Team (2015), “In U.S., from where the company earns nearly 90% of its revenues, the Under Armour brand only has a 2.5% share of the market. Compared to this, Nike has nearly 25% of the global sports footwear market and 60% of the U.S. sports footwear market including the Jordan and Converse brands”. From the rate, we can know that the market share for Under Armour is very little compare to Nike. Some consumer might don’t even know this brand. However, there is high brand recognition for their competitors such as Adidas and Nike. Market share is crucial factor that impact to the business profitability. With a large portion of market share, the company can lead to greater business

The company is leading the industry of sporting accessories and clothing. Under Armour products have been winning the market over it’s competitors products.

Since the day Under Armour went public on November 18, 2005 with an initial public offering of $13 a share, which happened to be at a higher rate the company was anticipating. Under Armour has experienced great growth in the stock market when compared to the S&P 500, Dow Jones Industrial Average(DJIA) and its major competitor Nike. As of November 3, 2015 Under Armour’s stock closed at $96.40. Over the last year from November 4, 2013 – November 3, 2015 the stock has shown at 47% increase, compared to S&P 500 at