Under Armour: repositioning for the

global stage

Constance R. James and Keith Whitney

Constance R. James is a Introduction

Professor at the Department of
In 2016, Kevin Plank, the Founder and Chief Executive Officer of Under Armour (UA), noted that
Business Administration,
Pepperdine University, Malibu,
the Greater China market remained “[…] the bigger growth story for our international business.”
California, USA. With its successful launch of the Curry 2 basketball shoe line in Beijing, China, Plank noted that
Keith Whitney is based at the FY16Q3 sales in China were more than its FY16 Q1 and Q2 sales combined.
Department of Business While talking to a reporter, at the Curry 2 launch in Beijing, he said, “Our goal is to be a global
Administration, Pepperdine brand (Bloomberg.com, 2017). The company had placed heavy bets on China for its global
University, Malibu,
launch with having manufacturing in China for more than 15 years, opening its first China store in
California, USA.
2010, and now launching the Curry 2 line of basketball shoes in Beijing. Plank was making his
triumphal announcement of the Curry 2 shoe along with MVP and world champion, Steph Curry,
to signal UA’s desire to conquer the sports apparel and footwear world.
Plank did not seem to be concerned about the slowdown in the Chinese economy nor the
decrease in China’s discretionary spending. In general, he was not concerned about
macro-environmental forces. Plank explained, “I spent a lot of time in 2007 […] [reflecting on
the global recession]. We coined a term ‘no loser talk,’ and so I don’t care what is happening
on a macro-economic basis. The opportunity for Under Armour, whether the market is
shrinking or expanding, really has no consequence on us.” He continued, “If the market
is shrinking, we really see ourselves […] building new markets. And where we’re not, we have
no problem taking share from our competitors” (Bloomberg.com, 2017).
So far, UA had built a unique set of core competencies based on the authenticity of its brand to
capture market share even during a global slowdown. Still, signs of the economy affecting its
competencies in its distribution system had caused UA to lower its future guidance. With the
2016 closure of Sports Authority, one of its main distributors, UA had been forced to report lower
than expected future sales (Nasdaq.com, 2016). How had UA developed core competencies to
surpass Adidas in its North American market and would these competencies be enough
to launch UA into a leadership role in the worldwide sports apparel and footwear industry?

Background
UA was founded by Kevin Plank in 1996 in his grandmother’s basement (Fundable, 2016).
He was 23 years old and fresh out of college (Plank, 2012). After frustration with athletic wear that
did not keep an athlete cool or dry, Plank researched fabrics and developed the first UA
HeatGear T-shirt (Under Armour, Inc., 2016b). The moisture-wicking fabric allowed athletes to
stay cool and dry in brutally hot weather. Plank’s insight was to provide “under armour” by using
compression wear often found in shorts and putting this material in UA’s T-shirts, adding
Disclaimer. This case is written
solely for educational purposes compression to moisture wear fabrics (Salter, 2016). By the end of the year, he had his first team
and is not intended to represent sale to Georgia Tech for about $17,000 (Fundable, 2016). Shortly thereafter, UA had sales to
successful or unsuccessful
managerial decision making. The two-dozen NFL teams. At the end of its second year, UA had sales of over $100,000 and moved
authors may have disguised to its current headquarters in Baltimore, Maryland (Fundable, 2016). In 1999, the company
names; financial, and other
recognizable information to protect
outfitted the actors in Warner Bros’s show Any Given Sunday, and sales grew exponentially.
confidentiality. UA then released its first print ad in ESPN Magazine (Harrison, 2014). UA further increased its

PAGE 164 j THE CASE JOURNAL j VOL. 14 NO. 2 2018, pp. 164-193, © Emerald Publishing Limited, ISSN 1544-9106 DOI 10.1108/TCJ-06-2017-0055
presence in 2003 with its first television commercial entitled “Protect This House” (Nevin, 2014).
This saying had become a rallying cry for athletes and something of a manifesto at UA
(Under Armour, Inc., 2016b).
With $750,000 in sales and continued growth, Plank finally put himself on the payroll in 2003
(Nevin, 2014). During that same year, UA also released its first women’s line (Under Armour, Inc.,
2016b). Though the initial strategy of “shrink it and pink it” was not successful, it later expanded to
a more customer-centric line. Also, the following year it released a children’s line, and by the end
of the year, UA’s year-end sales totalled a record $200 million. In 2005, UA went public. The next
year, it added shoes to its sales of athletic wear with its “Click-Clack” line of football cleats and
running shoes.
Overall the company had experienced furious growth, averaging well over 20 per cent per year.
UA surpassed Adidas in 2014 to become the second-largest sports apparel brand in the USA
(Mirabella, 2014). While UA remained no. 2 in North America in 2016, there were signs that its
growth was slowing and that environmental forces were impacting industry sales, especially in
North America. Forces such as the rise in e-commerce sales, for example, were partly to blame
for the closure of Sports Authority. This company had also allowed UA to sell its products with
higher gross margins than through discounted retail channels.

Mission, vision, and values

UA’s mission was to “make all athletes better through passion, design and the relentless pursuit
of innovation.” Its vision was to “empower athletes everywhere.” It built on four “Pillars of
Greatness – Make great products, tell a great story, provide great service, and build a great team”
(Under Armour, Inc., 2016c).
UA, with its approximately 6,800 full-time employees (Mergent Online, 2016) employed a Code of
Conduct that it instilled in these “teammates” (Under Armours, Inc., 2016d). This code began with
the motto “Make the Right Call,” which inspired its employees to do what was both legal and
ethical when faced with any decision, no matter how large or small. Each employee acted as a
brand ambassador, with a set of directives, or what UA called “Wills,” to do the following (Under
Armours, Inc., 2016d):
Act like a global citizen: Cross time zones, and encourage the diverse multi-cultural energy and global
ambition of Our Brand. Regardless of where you work or how much you travel, take action with an
international mindset and a passion for bringing our message to all athletes everywhere.

Think like an entrepreneur: You’re an OWNER of this Brand. Be accountable. We’re the underdog
whose successes and failures rest fully on our own shoulders and are not separated by organizational
charts or office locations. Nothing’s done until it’s DONE, DONE, DONE. And always, always, always
Be Humble & Stay Hungry.

Create like [an] innovator: Taking risks and failing is a part of striving for greatness and will truly lead us
to making our defining product one day. But at every level and across every business, be ready to
adjust and drive change, while maintaining the core attributes that define our Brand’s Culture.

Perform like a teammate: UA is special […] which means it’s not for everyone. The fast pace of the
Brand demands our respect, integrity, and transparency. And our ambitious goals require that we
empower, support, challenge, and inspire our Teammates to be great.

Board of directors and executives (Morningstar, 2017)

As UA shifted its strategy, it slowly began to make necessary changes to its board, expanding
from the previous emphasis in private equity, finance, and government to include technology,
global markets, and upscale apparel. In 2016, the company’s 11-member board of directors
included one female and few millenials (Morningstar, 2017).
In 2016, UA’s board was led by its Chief Executive Officer, Kevin Plank, age 44, who maintained
control of nearly all voting stock in a strong founder-driven company. Three board members had
experience in finance and investments (Anthony Deering, Byron Adams, and Douglas Coltharp),
and two had ties to the US Government (Eric Olsen and A.B. Krongard, as a retired Navy Seal and

VOL. 14 NO. 2 2018 j THE CASE JOURNAL j PAGE 165

 a former Executive Director of the CIA, respectively). There also were board members with
extensive experience in global apparel, which included the only female on the board, Karen Katz
(President, CEO, and a member of the Board of Directors at Neiman Marcus) and Harvey
Sanders (CEO and Chairman of the Board of Nautica). As an addition to the board to match the
company’s new technology strategy, UA added a global technology expert, William McDermott
(former Xerox Executive and CEO of SAP, a global software services firm) (Morningstar, 2017).
Bringing to the UA board experience in sports entertainment, George Bodenheimer served as
President of ESPN and ABC Sports. The final member of the UA 2016 board was its Chief
Financial Officer, Lawrence Molloy.
While some senior executives rose through the ranks at UA, most were brought in from the
outside. Colin Browne, UA’s President of Global Sourcing, had considerable supply chain
management experience, serving as Vice President and Managing Director of VF Corporation.
Kerry Chandler, the only female among the senior executives and UA’s Chief Human Resources
Officer, served as EVP of the NBA and as an Executive in HR at The Walt Disney Corporation
and ESPN. Paul Fipps, UA’s Chief Information Officer and EVP of Global Operations, served in a
similar capacity at The Charmer Sunbelt Group. Jason LaRose, UA’s President of North
America, was the SVP of Global E-Commerce at Express, Inc. Michael Lee, UA’s Chief Digital
Officer, was the co-founder of MyFitnessPal, purchased by UA in 2015. Finally, Karl-Heinz
Maurath, UA’s Chief Revenue Officer, held Senior Executive positions at Adidas, Reebok, and
Taylor Made.

Endorsements
In its early years, UA had limited financial resources to compete directly for endorsements with
giants such as Nike (see Exhibits 1 and 2 for comparisons of UA to its major rivals). Since 1984
with the release of Jordan basketball shoes, Nike had dominated the sneaker market. Nike had
also received endorsements from a majority of top NBA players, such as Michael Jordan, and
prominent female athletes, such as Serena Williams.
However, Nike’s success bred complacency, and it mishandled its Stephen Curry endorsement
(Straus, 2016). Curry, an understated athlete, did not fit Nike’s approach to using athletes who
were considered to be “cool” with highly distinctive profiles, like Michael Jordan. Moreover, Nike
did not seem to take seriously the recruitment of Stephen Curry. In 2013, it failed to provide him
with equal treatment (not hosting Steph Curry basketball camps) as it had LeBron James. It made
further mistakes by presenting Curry with a half-hearted sales pitch that included the misspelling
and mispronunciation of his name (“Stephan” with emphasis on “an” instead of “Stephen”
pronounced “Steph-in” with emphasis on “Steph”). To make matters worse, it reused slides
without editing out Kevin Durant’s name. With Steph’s father’s advice, “Don’t be afraid to try
something new,” Steph reconsidered his options. This caused Curry to consider other brands
that would treat him with the level of respect and importance he deserved, leaving the door wide
open for UA, which had been pursuing him.
UA took a different approach to gain endorsements from athletes. In its early years, it did not
spend money on endorsements, in part because it emphasised teams and not individual athletes
(Plank, 2012). The athletes wore its products because they liked them, helping UA’s image as an
“authentic” brand. Kevin Plank initially was not willing to give free products for endorsement and
brand exposure. However, the first endorsement was a small one with Barry Bonds, and it
rewarded him with $5,000 of merchandise. As the company grew, endorsements and their
importance to the authenticity of the UA brand increased.
Given that the UA products were designed for elite athletes, endorsements became more and
more essential to its brand image. It analysed several endorsement models before selecting a
different approach. When it signed an agreement with Tom Brady, New England Patriot
Quarterback and Superbowl Champion, UA made him an equity partner rather than treating him
as just an asset (Plank, 2012). This model included equity ownership in the company and ensured
that these partner athletes would be on UA’s team. Plank stated, “A successful endorsement
should facilitate a conversation between the brand and the athlete and between the athlete and
the consumer” (Plank, 2012).

PAGE 166 j THE CASE JOURNAL j VOL. 14 NO. 2 2018

Conversely, instead of undervaluing Curry, UA went into high gear to sign him. It took UA over a year
to convince him, but the company eventually won Curry over with its approach, sincerity,
and dedication (Straus, 2016). In 2013, UA finally signed Curry and created a Stephen Curry
basketball shoe line. Within three years, its US sales of the Steph Curry basketball shoe line
exceeded those of other basketball shoe lines for LeBron, Kobe, and every other NBA player, except
for Michael Jordan (Bain, 2016). As Curry became the first unanimous league MVP and the leader of
the 2015 World Champion Golden State Warriors, Curry basketball shoes flew off the shelves.
UA’s FY16 revenues increased 22 per cent over the previous year (Under Armour, Inc., 2016a)
(see Exhibits 3 and 4 for a summary of UA’s financial statements and ratios). Furthermore, as
Stephen Curry’s popularity increased in 2016, its basketball shoe sales grew at an astounding
rate of just over 330 per cent (Straus, 2016). He set the record for the most three-pointers made
in a season. He also led the Warriors to break the 95-96 Chicago Bulls record with Michael
Jordan for the most number of wins during an NBA season. With the Golden State Warriors
winning another NBA title in 2016, the Curry basketball shoe sales continued to flourish.
UA was able to exploit a market trend away from athletes that were out-of-reach to athletes that
were more like every man and woman. The market had shifted away from athletes who seemed
to have extraordinary athletic abilities and moved instead towards those who had managed to
fight for their place in this world. Curry’s relatability, both on and off the court, made him very
popular with this market (Bain, 2016). Curry portrayed himself as a strong family man, a good
spouse, and a Christian, pointing to God after making difficult shots.
UA started to land major endorsements in 2010, starting with football player Tom Brady.
From then to the present, it had signed many other notable athletes and teams, including
Lindsey Vonn, Michael Phelps, Jordan Speith, and more recently Misty Copeland (Under Armour,
Inc., 2016b). UA also sponsored several international teams and athletes, with its most high
profile team deal in the UK with the London Soccer Team Tottenham Hotspur (O’Reilly, 2015).
UA had a strong group of male athletic endorsements. The male endorsement line-up on its
website included many marquee athletes, such as Tom Brady (NFL quarterback, MVP and
Superbowl champion), Cam Newton (NFL quarterback), Stephen Curry (basketball all-star, MVP
and NBA champion), Jordan Speith (Pro-golfer and champion), Andy Murray (UK tennis
champion), Michael Phelps (Swimmer and all-time record holder for most Olympic gold medals),
Memphis Depay (soccer star), and Clayton Kershaw (baseball MVP) (Under Armour, Inc., 2016b).
The company lacked endorsements from marquee female athletes in major sports, including the
WNBA. Its signature Chicago store featured Misty Copeland, a premiere ballerina for the American
Ballet, and Gisele Bundchen, a super model who was also Tom Brady’s wife, with product lines for
working out, but not for any particular sport. For example, in 2016 it did not have any prominently
displayed female athletes in its Chicago brand store as it did for male athletes. Entering the golf
department, Jordan Speith was prominently displayed, but no female golfers were visible. In 2017
it added female golf clothes in its Chicago store in response to requests from female customers.
Despite the popularity of the male athletes, UA did have a few endorsements from some
prominent female athletes, including Lindsey Vonn (Olympic skier), Natasha Hastings (Sprinter),
Gisele Bundchen (Super Model), Kelly O’Hara (Soccer and US Olympic gold medallist), Sloane
Stephens (Tennis Player), Brianna Cope (Surfer), and Alison Lee (Golfer) (Under Armour, Inc.,
2016b). At the 2015 Rio Olympics, it also managed to sponsor the popular and decorated US
Women’s Gymnastics Team.
UA compensated its ambassadors with an equity position in a somewhat complicated and at
times baffling three-tiered system of common stock (Under Armour, Inc., 2016a). The three
classes of UA Common Stock were A, B, and C, of which Common Stock A and B were the only
voting stocks. UA used non-voting Common Stock Class C for funding employee equity incentive
programmes and for giving ambassadors an equity stake in the firm. Common Stock Class B had
ten votes per share and was convertible into Common Stock Class A. Kevin Plank owned most
of Common Stock Class A and all outstanding shares of Common Stock Class B; the latter would
convert to Common Stock Class A if he owned less than 15 per cent of the voting shares of
Common Stock Classes A and B combined.

VOL. 14 NO. 2 2018 j THE CASE JOURNAL j PAGE 167

 Marketing and sales
Product authenticity
UA products and services were known for improving a person’s comfort and performance.
The company provided a wide range of products and services that catered to different sports and
individuals. Its products included apparel, footwear, and accessories for men, women, and
children. It offered apparel in a variety of styles, prices, and sizes, with comfort and mobility as a
distinctive feature of its products. Regardless of weather conditions, its apparel was engineered
with technology that helped to regulate body temperature. For example, HEATGEAR®
cooled the body when the climate was hot, COLDGEAR® helped to keep the body warm
when the climate was cold, and ALLSEASONGEAR® worked well in between these extremes
(Under Armour, Inc., 2016a). UA had revolutionized cotton athletic wear that did not perform well
under different conditions. UA extended its innovative technology from apparel to footwear and
accessories, which reflected its commitment to produce products that maximised an athlete’s
comfort and control. It added 3D soles and Armour fleece® for sleeping.

Under Amour footwear, apparel, and accessory sales

UA’s FY16 earnings were up by 10.5 per cent over FY15 due primarily to an increase in footwear
sales. FY16 net income of $257.0 million, was up from FY15 net income of $233.0 million,
and revenue was up by 21.8 per cent to $4.83 billion in FY16 from $3.96 billion in FY15
(Sports Business Daily, 2016) (see Exhibit 5 for a comparison of FY15 to FY16 revenue by
operating segment). FY16 footwear revenue was up by 49.1 per cent from FY15 to $1.0 billion,
primarily reflecting the popularity of the Curry basketball shoe line. By comparison, FY16 revenue
for apparel and accessories increased 15.3 and 17.2 per cent, respectively, from FY15 levels.
In FY16, UA lost market share to Nike in its women’s apparel line in spite of a multi-million dollar
campaign and increased industry sales to women (Gensler, 2016). In 2016, UA experienced a
decrease in sales of women’s apparel, including a 7 per cent drop in first quarter wholesale
revenue (Sozzi, 2016).
Still, UA’s overall revenue had risen faster than the broader apparel market, stimulated by
innovation in high-performance clothing and underlying strength in the activewear category.
UA’s sales increased more than 20 per cent every quarter since March 2010 (Team, 2015).
UA also earned revenue through its in-house digital fitness platform licences and subscriptions,
together with digital advertising through frequently visited sites such as MapMyFitness,
MyFitnessPal, Endomondo, and UA Record Applications (Team, 2015). The company’s
Connected Fitness database had approximately 90 million unique users in the USA alone and
more than 120 million worldwide. “Before Connected Fitness, we only had retail transaction
information for less than ten million people, that is stores and e-commerce combined,” Plank told
analysts. “Now, we have daily activity data from our community members who logged nearly
8 billion foods and 2 billion activities from last year alone” (Lindner, 2016). In addition, UA had
launched into an alliance with IBM to utilise its artificial intelligence platform, Watson, in UA
products. UA had also started to sell its own Healthbox and fitness bands along with purchasing
MyFitnessPal to promote healthier living. UA had added the founder of MyFitnessPal, Michael
Lee, to its senior executive ranks, putting him in charge of its digital strategy.
Online sales represented another growth opportunity for UA. Its direct-to-consumer sales growth
through its websites played an important role in UA’s online sales growth in the USA. Mobile
shoppers accounted for nearly half of all visits to its websites and 23 per cent of online sales
(Team, 2015). UA sales increased in all major channels for wholesale, company-owned stores,
and online (direct to consumer) sales (Under Armour, Inc., 2016a).

Supply chain (Under Armour, Inc., 2016a)

UA leveraged partnerships with schools and athletes to enhance its on-field authenticity and
market products to consumers. Building brand equity through product association, it offered
and sold its products to high-performing athletes and teams at the high school, collegiate,

PAGE 168 j THE CASE JOURNAL j VOL. 14 NO. 2 2018

and professional levels. Products were also directly sold and given to team equipment
managers and individual athletes so that they could be showcased on the field, on the internet, in
television and magazines, and at live sporting events. Licensing arrangements to develop UA products
included involving marketing and sales teams in all stages of design to ensure brand consistency.
On-field authenticity was a large part of UA’s strategy and brand message. It provided and
hosted events for young athletes to experience sponsored sporting events on a grassroots level.
It hosted combines, camps, and clinics for seasoned athletes to help young ones, improving
young athletes’ training methods and overall performance. These strategies created on-field
authenticity and brand exposure. On a global scale, it utilised a similar strategy of sponsoring and
selling products to several European and Latin American soccer and rugby teams.

Sourcing and Manufacturing

Third-party licensees, as actively managed by Under Amour, developed the majority of UA’s
specialty fabrics and other raw materials used in its apparel, equipment, and accessories.
In 2016, ten manufacturers, out of 39 primary ones, produced 57 per cent of UA’s apparel and
accessories products and three manufacturers produced 70 per cent of its footwear line. Of UA’s
apparel manufacturers, 60 per cent were located in Jordan, Vietnam, China, and Malaysia
(Under Armour, Inc., 2016a, p. 6).
UA’s fabrics used by its suppliers and manufacturers were primary synthetic fabrics and involved
raw materials, including petroleum-based products. Cotton was also used in the products, as
blended fabric and also in UA’s CHARGED COTTON® line. UA footwear used raw materials that
were sourced from a diverse set of third-party suppliers. Also, all of UA’s manufacturers were
evaluated for quality systems, social compliance, and financial strength by its quality assurance
team before UA selected the manufacturers.

Distribution channels
UA followed a multi-channel distribution strategy. It utilised key retail marketing tactics to gain
brand floor space for UA’s products, including product launches, segmentation, and channel
negotiation. Designing and funding of UA concept shops and creating the right ambience were
key initiatives that helped to gain higher brand visibility for customers to experience its products.
UA’s direct-to-consumer sales were generated through its brand and factory house stores, along
with online sales through its website. As of December 31, 2016, UA had 151 factory house stores
(up from 143 at year-end 2015) and 18 brand house stores (up from ten at year-end 2015) in
North America (Under Armour, Inc., 2016a, p. 4). UA shipped the majority of its products from
distribution facilities in Canada, New Jersey, and Florida to its North American wholesale
customers and brand and factory house stores. To maintain quality and performance, UA
pre-approved all products manufactured and sold by its licensees while its quality assurance
team strove to ensure that the products met the quality and compliance standards. The firm also
held a number of patents not only on its products, but also on its operating process innovations.
UA generated most of its sales through thousands of distribution points, including retailers,
online sales, factory brand stores, and brand houses in North America. Among the retail
distributors, its largest, Dick’s Sporting Goods was the only customer that accounted for more than
10.0 per cent of UA’s net revenues (Under Armour, Inc., 2016a). UA reduced its full-year 2016
revenue guidance due to the closing of Sports Authority, the fourth largest sporting goods retailer in
the USA, citing over $100 million in lost revenue due to the liquidation of Sports Authority.

Industry and competition

UA operated mainly within the athletic and sporting goods manufacturing and wholesale
segments of the global apparel and textile industry (MarketLine, 2016). The global apparel and
textile retail industry had total revenues of $842.7 billion (in USD) in 2016, with a compound
annual growth rate (CAGR) of 5.2 per cent between 2012 and 2016, and an anticipated CAGR of
3.6 per cent from 2016 to 2021 (MarketLine, 2016, p. 7). The US and Asia-Pacific segments grew

VOL. 14 NO. 2 2018 j THE CASE JOURNAL j PAGE 169

 faster at a CAGR of 2.6 and 6.3 per cent, respectively. The women’s wear segment was
56.4 per cent, followed by menswear at 21.4 per cent, and children’s wear at 14.9 per cent, and
clothing accessories and other apparel (hats, scarves, etc.) covering the remainder.
The US participation rate in sports was projected to increase by CAGR of 0.9 per cent from 2015
to 2020 (IBISWorld, 2016). The growing popularity of “athleisure” was another one of the top
reasons to buy fitness clothing, according to 38 per cent of surveyed customers who wore it
casually. On top of this, gym, health, and fitness clubs were expected to grow at an annualised
rate of 3.0 per cent through 2021 (Turk, 2016).
The global apparel and textile industry was highly competitive with low capital requirements
resulting in relatively low barriers to entry for small-scale entry. However, barriers were higher for
large-scale entry due to specialized manufacturing equipment, skilled workers, and complex
global supply chains (Under Armour, Inc., 2016a). Suppliers tended to be small and fragmented
with limited power to forward vertically integrate. A few suppliers of specialty fabrics had some
degree of market power.
Buyers, on the other hand, who were distributors, such as Dicks Sporting Goods and Foot
Locker, had some degree of power, and low switching costs added to buyer power for the
average consumer. Still, most consumers could not backward integrate, and apparel was not a
large amount of their total costs, so they tended not to be too price sensitive. There were no close
substitutes for athletic apparel except for counterfeit brands, which were starting to threaten the
industry (Marketline, 2016).
The global apparel and textile industry was highly fragmented, with few incumbents holding a
significant market share, and the average manufacturer holding less than 0.5 per cent global
market share (Marketline, 2016, p. 22). Competition was affected by low switching costs and
relatively low product differentiation, increasing rivalry. There was little regulation, although
competition was heavily affected by tariffs and trade pacts, including NAFTA.
UA had positioned itself as a premium performance brand, whereas other premium brands, such
as Nike and Adidas, also capitalised on fashion and performance. Most companies that sold
athletic apparel were undifferentiated in a highly competitive industry and, therefore, could not
command a premium price. The companies that were differentiated tended to pay more to
suppliers for higher quality fabrics; however, for the most part, suppliers were numerous,
undifferentiated, and had little power.
Key rivals in the industry included Nike, Adidas, and UA. Based on comparisons of company
2016 financial statements (Mergent Online, 2016), UA had a lower global market share than Nike,
but it enjoyed a larger revenue FY15 to FY16 year-over-year growth of 21.9 per cent compared to
Adidas’s 14.0 per cent and Nike’s 7.7 per cent. Also, UA had a higher gross profit margin than
Adidas and Nike, though UA’s margins had eroded with the increase in footwear and technology
sales that typically had lower gross margins. UA also had a high current ratio compared to its
competitors and its quick ratio was among the same levels as its competitors, suggesting that UA
was effective at managing working capital. However, according to the American Customer
Satisfaction Index, Nike, Adidas, and UA all had similar ratings of 77-78 per cent. Also, using
revenue and employee headcount figures from company financial statements, Nike had the
largest number of employees, as well as the highest level of sales per employee in 2016 out of all
of its major competitors.
UA had only 1 per cent of its revenues from its technological innovations, leaving room for growth
in the fitness technology and wearable tech industry. The wearable tech industry was expected to
grow from $14 billion in 2016 to $34 billion in 2020 (Lamkin, 2016). The degree of technological
innovation in this industry was high. In 2013 and 2015, UA entered the tech industry with its
$710 million acquisitions of MapMyFitness, Endomondo, and MyFitnessPal and then released its
own fitness app called Record, which reportedly had more than 120 million users across its app
network in 2016 (Consumer Reports, 2016). UA recognised the importance and value of having a
consumer-facing software layer that allows the company to “meet consumers where they are
(Nasdaq.com, 2016). According to Brandranking.com, UA’s brand ranked seventh for its digital
IQ[1] in sportswear far behind Nike and Adidas, which ranked first and third, respectively
(Tank, 2016). With the recent acquisition of MyFitnessPal and Endomono, UA had expanded its

PAGE 170 j THE CASE JOURNAL j VOL. 14 NO. 2 2018

business into the wearable technology industry and could improve its digital strategy even further.
With these acquisitions, UA was now the largest connected fitness platform with over 120 million
users (Low, 2016).

Global positioning
UA utilises an international strategy with limited, but increasing sales outside of North America
with an expanding global manufacturing and supply chain. As it expanded its international sales,
it operated offices in a number of countries across the globe (Under Armour, Inc., 2016b). Its main
location was Baltimore, Maryland where it was investing billions in its Harbor East headquarters.
It also had corporate offices in Toronto, Canada; Denver, Colorado; Portland, Oregon; New York,
New York; and Houston, Texas. Brand distribution centres were located in Nashville, Tennessee
and Rialto, California, with a new “Distribution House,” located in Swan Creek, Maryland.
Distribution centres operated shipping and receiving, and they guaranteed UA’s “Universal
Guarantee of Performance.”
As UA moved onto the global stage, it had to be more than just globally efficient, but also to
explore business models that were more locally responsive and aid its worldwide learning as Nike
and Adidas did. In Latin America, Panama City, Panama was the home of its International
Headquarters (Under Armour, Inc., 2016b). There were also corporate offices in Sao Paulo,
Brazil; Santiago, Chile; and Mexico City, Mexico. It had a number of partnerships, including
ones with Gisele Bündchen-Brazilian super model, Colo-Colothe Chilean football club,
Cruz Azul-Mexico football club, and Canelo Alvarez-Mexican boxer.
Its European headquarters were located in the Netherlands capital city, Amsterdam
(Under Armour, Inc., 2016b). The headquarters were located in Amsterdam’s Olympic
Stadium (host to the historic 1928 Summer Olympics). It also had offices in France, Germany, and
the UK. It had world-class partnerships with Tottenham Hotspur-English football and Andy
Murray-Scottish tennis world champion.
Its Asian operations were anchored in Shanghai, China with additional offices in Guangzhou and
Hong Kong, China, as well as in Indonesia and Vietnam (Under Armour, Inc., 2016b). Asia was at
the heart of its footwear and accessories business, where UA engaged in significant product
development, sourcing, manufacturing, and delivery. In Shanghai, UA launched its first retail
theatre specialty store, with storytelling and multi-dimensional short films that emphasised
“making athletes better through passion and innovation” at its centre. Finally, UA also had an
office in Sydney, Australia.
With this base, UA had an opportunity to establish a significant global footprint. Its non-North
America 2016 sales accounted for only 17 per cent (Under Armour, Inc., 2016a, p. 33) of its
revenues, compared to Nike’s 57 per cent and approximately 90 per cent for Adidas (Kish, 2017;
Chen, 2016). As UA sought to expand its presence internationally, it planned to sell its products
to athletic teams and individuals in global markets, providing them sufficient product exposure to
broad audiences of potential consumers. It then planned to use this increased awareness
to licence and sell its products directly to consumers and through distributors. UA also planned to
add 200 stores in FY16 in mostly Greater China and Southeast Asia (Sozzi, 2016).
UA’s sales growth in international markets was above 50 per cent as brand acceptance
increased (McNew, 2016). UA international sales increased from $507 to $820 million from FY
2015 to FY 2016, an increase of 61.7 per cent (Under Armour, Inc., 2016a, p. 33) (see Exhibits 6
and 7 for a comparison of UA sales and operating profit by region from FY15 to FY16).
Its international sales were projected to grow from $270 million in sales in 2014 to $1.35 billion by
2018, a fivefold increase (Soni, 2015). Overall international sales were projected to increase from
9 per cent of sales in 2014 to 18 per cent by 2018 (McNew, 2016).
UA planned to have operations in over 40 countries by 2018, with a total of over 800 international
locations (Soni, 2015). By the end of 2018, 80 per cent of its global physical locations were
projected to be outside of the USA. It planned to add many of these new locations through
partnerships with distributors primarily in China, Japan, and South Korea. It projected that
approximately 30 per cent of 300 worldwide locations would be operated and owned by UA.

VOL. 14 NO. 2 2018 j THE CASE JOURNAL j PAGE 171

 In addition, UA expected to have 2,000 UA stores-within-a-store, as it did at Dicks Sporting
Goods and other large distributors (Soni, 2015). It was also expanding in Europe with
partnerships including one with the SportScheck, Germany’s largest sporting goods distributor.
Its international strategy, according to Charlie Maurath, UA’s Chief Revenue Officer, was to have a
premium position strategy for each of its overseas markets (Soni, 2015). This included
both company-owned stores, partnerships, and wholesalers. It also planned to have
30 country-specific e-commerce sites (Soni, 2015). It added sponsorship deals in Europe and
Latin America, including deals in São Paulo, Brazil, the Welsh Rugby Union, German football club
FC St Pauli, Austria Ski Team, and the Tottenham Hotspurs (Soni, 2015). With additional
international athlete endorsements, including the Manchester United’s Memphis Depay, skiing
stars in the Austria Ski Team, and Andy Murray, a Scottish tennis pro, UA increased its visibility,
authenticity, and brand awareness throughout the world.

Timeline of core competence building

UA has been adding core competencies over time as highlighted below (Under Armour, Inc., 2016b):
■ 1996, Kevin Plank’s starts UA in grandmother’s basement;
■ 1996, Kevin Plank develops Heatgear®, UA’s first performance, moisture-wicking fabric for
sports apparel;
■ 1996, UA makes first sale to Georgia Tech’s football team;
■ 1998, UA builds up a reputation with key NFL teams before adding other sports;
■ 1999, UA apparel featured in movie, Any Given Sunday;
■ Early 2000s, UA develops a unique celebrity endorsements model with non-voting equity
positions and opens up manufacturing in China;
■ 2003, UA launches “Protect This House” campaign;
■ 2003, UA launches its women’s line;
■ 2004, UA launches a children’s line;
■ 2005, UA goes public;
■ 2006, UA adds footwear, football cleats;
■ 2007, UA develops an emphasis on “No Loser Talk” in its team-based culture;
■ 2010, UA signs Tom Brady, MVP and Quarterback of the New England Patriots;
■ 2014, UA launches the Curry 2 basketball shoe line in Beijing, China;
■ 2014, UA notes its intention to become the global leader in sports apparel and footwear
manufacturing with a goal of 50 per cent non-North American sales by 2020;
■ 2014, UA surpasses Adidas as the no. 2 sports apparel and footwear manufacturer in
North America;
■ 2015, UA purchases MyFitnessPal and enters the fitness technology industry; and
■ 2013-2015, UA signs Michael Phelps, Stephen Curry, Misty Copeland, Lindsay Vonn,
Andy Murray (Scotland), and Jordan Speith.

Looking forward
UA built a strong authentic and performance brand that led to innovations in fabric, comfort, and
performance. It also utilised its strong culture and unique endorsement strategy of giving star
athletes equity in UA to build a powerful group of sports ambassadors, including Steph Curry and
Tom Brady. Extending its reach into basketball shoes, it was able to launch successfully into China.
Will this be enough to give it a strong footing in the global sports apparel and footwear industry?

PAGE 172 j THE CASE JOURNAL j VOL. 14 NO. 2 2018

As UA continues to open stores in China and Southeast Asia, it stands to increase significantly its
global market share, but challenges persist. While its footwear has driven increases in sales in
China and Southeast Asia, it may force the company to rely on a few capabilities (Curry’s
popularity and basketball shoes) that may or may not sustain it if consumer preferences or other
factors in the macro-environment shift. Moreover, it may lose its focus on its North American
market, where it has surpassed Adidas in sales to become the number two sports apparel and
footwear firm.
It faces exposure in North America with women, who purchase the largest share of sports apparel
and related products, and who are trending towards more fashion and athleisure brands.
UA’s competencies in performance and authenticity, as well as its focus on team sports and male
endorsements, have not resonated well with the North American women’s sports apparel market
where it has lost sales from FY15 to FY16.
Moreover, Plank’s denial of the importance of macro-environmental forces may reflect
his blind side. The loss of Sports Authority has many macro implications. As a distributor that
allowed UA to maintain high prices that covered the costs of UA’s research and development for
innovative performance products, it may not be that easy to replace Sports Authority.
Plank’s overconfidence and “no loser talk” may blindside him to the larger macro-environmental
implications of this loss, including shifting consumer tastes, buying habits, and a slow
growing economy.
On the other hand, UA has built new competencies with its Connected Fitness line that has
attracted millions of users. This has given it a powerful database and new business opportunities
to exploit that might offset the intensely competitive fields in which it operates, both in apparel and
fitness technology.
Will UA’s leadership and “Will” be enough to overcome the macro forces in the global economy or
trends that address comfort and fashion? Will UA’s core competencies be enough to launch its
plans for global leadership in sports apparel, footwear, accessories, and technology? As Kevin
Plank has shown a strong will that has allowed UA to triumph over Adidas in the USA, he faces
global forces that may not bend so easily to UA’s “Will.” If UA focuses on global expansion, will it
become too distracted to “Protect This House” in North America, or can UA build an equally
powerful global house?

Note
1. Tank (2016), digital IQ as measured in this study includes a weighted average of the effectiveness of a
firm’s e-commerce site (40 per cent), digital marketing efforts (30 per cent), social media brand presence
(10 per cent), and mobile apps smart phone platforms (20 per cent).

References
Bain, M. (2016), “Will Stephen Curry sell more sneakers than Lebron James this year?”, available at: http://qz.
com/631465/will-stephen-curry-sell-more-sneakers-than-lebron-james-this-year/ (accessed 20 June 2017).

Bloomberg.com (2017), “Under Armour has big plans for the Chinese Market”, Bloomberg.com, 6 September
2015, available at: www.bloomberg.com/news/videos/2015-09-07/under-armour-has-big-plans-for-the-
chinese-market (accessed 20 June 2017).

Chen, G. (2016), “BI Primer: ‘Sneakers Stoke Under Armour growth, pressure margins’”,
Bloomberg Intelligence.

Consumer Reports (2016), “Fitness tracker ratings”, available at: www.consumerreports.org/cro/electronics-

computers/phones-mobile-devices/fitness-trackers/fitness-tracker-ratings/ratings-overview.htm (accessed
16 July 2016).

Fundable (2016), “Under Armour, Inc. – startup story – how founder Kevin Plank Built Under Armour”,
available at: www.fundable.com/learn/startup-stories/under-armour (accessed 20 June 2017).

Gensler, E. (2016), “Is Under Armour losing favor with women?”, forbes.com, available at: www.forbes.com/
sites/laurengensler/2016/01/11/under-armour-women-sales/-37fac4dd482d (accessed 20 June 2017).

VOL. 14 NO. 2 2018 j THE CASE JOURNAL j PAGE 173

 Harrison, J.D. (2014), “When we were small: Under Armour”, Washington Post, 12 November, available at:
www.washingtonpost.com/business/on-small-business/when-we-were-small-under-armour/2014/11/11/
f61e8876-69ce-11e4-b053-65cea7903f2e_story.html?utm_term=.8f953797060c (accessed June 2017).
IBISWorld (2016), “Participation in sports”, IBISWorld, available at: http://clients1.ibisworld.com.lib.
pepperdine.edu/reports/us/bed/default.aspx?entid=51 (accessed 31 March 2016).
Kish, M. (2017), “Adidas sets 47 percent North America sales goal”, Portland Business Journal, 14 March,
available at: www.bizjournals.com/portland/news/2017/03/14/adidas-sets-47-percent-north-american-
sales-goal.html (accessed June 2017).
Lamkin, P. (2016), “Wearable tech market to be worth $34 billion by 2020”, forbes.com, available at:
www.forbes.com/sites/paullamkin/2016/02/17/wearable-tech-market-to-be-worth-34-billion-by-2020/-
439b82a83fe3 (accessed 31 March 2017).
Lindner, M. (2016), “Mobile accounts for 23% of Under Armour’s online sales”, Internet Retailer, 29 January,
available at: www.internetretailer.com/2016/01/29/mobile-accounts-23-under-armours-online-sales (accessed
20 June 2017).
Low, F. (2016), “Under Armour CEO: we’re adding 1 million app users every 8 days”, Investors Business Daily,
14 March, available at: www.investors.com/news/under-armour-ceo-were-adding-1-million-app-users-
every-8-days/ (accessed 20 June 2017).
McNew, S. (2016), “The importance of Under Armour’s international growth”, Motley Fool, 4 December,
available at: www.fool.com/investing/2016/12/04/why-the-olympics-were-great-for-under-armours-futu.
aspx?source=isesitlnk0000001&mrr=1.00 (accessed 20 June 2017).
MarketLine (2016), “Global apparel & non-apparel manufacturing”, Marketline.com. via Business
Source Premier, p. 22, available at: http://content.ebscohost.com/ContentServer.asp?T=P&P=AN&K=12
1614639&S=R&D=buh&EbscoContent=dGJyMNHr7ESeprY4zdnyOLCmr0%2Bep7ZSs6m4Ta6WxWXS&
ContentCustomer=dGJyMPGuslCuqLFQuePfgeyx44Dt6fIA (accessed 31 October 2017).
Mergent Online (2016), “Under Armour, Inc”, available at: www.mergentonline.com.lib.pepperdine.edu/
companydetail.php?compnumber=112493&pagetype=synopsis (accessed 16 July 2016).
Mirabella, L. (2014), “Under Armour Surpasses Adidas to become no. 2 sports Brand: Baltimore-based
Company has been taking market share from German Rival”, The Baltimore Sun, 8 September, available at:
http://articles.baltimoresun.com/2014-09-08/business/bs-bz-under-armour-beats-adidas-20140908_1_
armour-ceo-kevin-plank-market-leader-nike (accessed 20 July 2016).
Morningstar (2017), “Under Armour Inc. C UA – insiders”, MorningstarAdvisor, available at: http://quicktake.
morningstar.com/advisor/stock/insiders/board-of-directors?country=USA&t=UA (accessed 20 June 2017).
Nasdaq.com (2016), “Under Armour Q1 2016 earnings call”, Nasdaq,com, 21 April, available at:
www.nasdaq.com/aspx/call-transcript.aspx?StoryId=3967077&Title=under-armour-ua-kevin-a-plank-on-
q1-2016-results-earnings-call-transcript (accessed 20 June 2017).
Nevin, J. (2014), “Under Armour”, Prezi.com, available at: https://prezi.com/dfz6y8ontgey/under-armour/
(accessed 20 June 2017).
O’Reilly, L. (2015), “15 surprising facts about Under Armour”, Business Insider, 19 November.
Plank, K. (2012), “Under Armour’s founder on learning to leverage celebrity endorsements”, Harvard Business
Review, Vol. 5 No. 2012, pp. 2-5.
Salter, C. (2016), “Protect this house”, Fast Company, Inc., available at: www.fastcompany.com/53752/
protect-house (accessed 20 June 2017).
Soni, P. (2015), “Why Under Armour unveiled a blue print for international expansion”, Market Realist,
29 September, available at: http://marketrealist.com/2015/09/armour-unveils-blueprint-international-ex
pansion/?utm_source=yahoo&utm_medium=feed&utm_content=graph-1&utm_campaign=
armour-unveils-blueprint-international-expansion-689806 (accessed 31 July 2017).
Sozzi, B. (2016), “Under Armour moves to control own future by opening 200 new stores in 2016”, The Street,
26 January, available at: www.thestreet.com/story/13435993/1/under-armour-moves-to-control-own-
future-by-opening-200-new-stores-in-2016.html (accessed 20 June 2017).

Sports Business Daily (2016), “Footwear sales, spurred by Curry’s shoe, help Under Armour to 20% rise in Q4”,
Sports Business Daily, 28 January, available at: www.sportsbusinessdaily.com/Daily/Issues/2016/01/28/
Finance/Under-Armour.aspx (accessed 20 June 2017).

PAGE 174 j THE CASE JOURNAL j VOL. 14 NO. 2 2018

Straus, E.S. (2016), “You won’t believe how Nike Lost Steph to Under Armour”, ESPN.GO.COM, available at:
http://espn.go.com/nba/story/_/id/15047018/how-nike-lost-stephen-curry-armour (accessed 20 June 2017).

Tank, L.T. (2016), “Sportwear brands digital IQ score: 2016”, Ranking the Brands, available at:
www.rankingthebrands.com/The-Brand-Rankings.aspx?rankingID=272&year=915 (accessed 20 June 2017).

Team, T. (2015), “Earnings review: Under Armour continues its strong growth story with another big quarter”,
forbes.com, available at: http://espn.go.com/nba/story/_/id/15047018/how-nike-lost-stephen-curry-armour
(accessed 20 June 2017).
Turk, S. (2016), “Gym, health & fitness clubs in the US”, IBISWorld, available at: http://clients1.ibisworld.com.
lib.pepperdine.edu/reports/us/industry/default.aspx?entid=1655 (accessed 31 March 2016).
Under Armour, Inc. (2016a), Form 10-K, 31 December pp. 19-23.
Under Armour, Inc. (2016b), “Under Armour, Inc., – History”, available at: www.uabiz.com/company/history.cfm
(accessed 20 June 2017).
Under Armour, Inc. (2016c), “Under Armour, Inc., – Why Choose Us?”, available at: www.underarmour.jobs/
why-choose-us/mission-values/ (accessed 20 June 2017).
Under Armours, Inc. (2016d), “Under armours code of conduct” available at: http://files.shareholder.com/
downloads/UARM/0x0x873823/38F030C7-5348-4CC6-B8CD-81D68B2F496C/Code_of_Conduct_2016.pdf
(accessed 20 June 2017).

VOL. 14 NO. 2 2018 j THE CASE JOURNAL j PAGE 175

 Exhibit 1

Table AI Selected competitors descriptions in USD

2016 sales
Company Description ($ in billions)a

Under Armour Under Armour designs, develops, markets, and distributes apparel, footwear, and accessory products for men, $4.8
women, and children
Nike Nike, Inc. designs, develops, and markets athletic footwear, apparel, equipment, and accessory products for men, $32.4
women and children
Adidas AG Adidas designs, develops, produces and markets sportswear and sporting goods, including sports shoes and $19.3
sports equipment
Puma AG Puma AG designs, manufactures and markets sporting goods, footwear and sports apparel. The company $3.7
produces running, tennis, training, and basketball shoes and other products
Lululemon Lululemon Athletica Inc. designs and retails athletic clothing. The company produces, retails and markets fitness $2.1
Athletica pants, shorts, tops and jackets for yoga, dance, running, and general fitness
Gap The Gap, Inc. is an international specialty retailer operating retail and outlet stores for The Gap, Banana Republic and $15.8
Old Navy stores. The company sells casual apparel, accessories and personal care products for men, women and
children. It also sells Athleta, a line of affordable athletic and athleisure apparel
L Brands L Brands, Inc. sells women’s apparel and beauty products through retail outlets such as Victoria’s Secret and Bath $12.2
and Body Works. The company offers various products including women’s apparel, women’s lingerie, beauty and
person care products, home fragrances, and other related products and accessories
Columbia Columbia Sportswear designs, sources, markets and distributes outdoor apparel, footwear, accessories and $2.4
Sportswear equipment for a variety of outdoor activities
Note: aAll data found from Mergent Online
Source: Mergent Online (2016) Company Details for Nike, Adidas, Under Armour, Lululemon Athletica, L-Brands, Gap, and Columbia Sportswear

PAGE 176 j THE CASE JOURNAL j VOL. 14 NO. 2 2018

Exhibit 2

Table AII Adidas, Nike and Under Armour financial ratios (annualised data based on the fiscal year end for each company)

Under Armour NIKE Adidas

FY16 FY15 FY16 FY15 FY16 FY15

Profitability ratiosa
ROA % (Net) 7.87 9.37 18.99 17.44 7.11 4.92
ROE % (Net) 13.86 15.41 34.38 30.04 16.71 11.23
ROI % (Operating) 16.06 20.57 32.4 32.74 18.53 14.13
EBITDA margin % 11.3 12.32 16.45 16.34 6.28 4.88
Calculated tax rate % 33.82 39.85 13.22 18.67 29.48 33.97
Revenue per employee 511,931 295,770 461,694 456,684 332,405 304,473

Liquidity ratiosa
Quick ratio 1.26 1.16 1.8 1.62 0.7 0.76
Current ratio 2.87 3.13 2.93 2.8 1.31 1.4
Net current assets % TA 35.1 35.55 45.52 45.18 13.98 15.99

Debt managementa
LT debt to equity 0.39 0.38 0.28 0.16 0.15 0.26
Total debt to equity 0.4 0.4 0.31 0.17 0.25 0.32
Interest coverage 15.79 27.93 83.81 244.32 29.55 23.53

Asset managementa
Total asset turnover 1.48 1.6 1.54 1.5 1.35 1.31
Receivables turnover 9.11 11.11 9.93 9.79 8.03 7.93
Inventory turnover 3.04 3.12 3.85 3.79 2.88 3.1

Per sharea
Cash flow per share 1.39 −0.1 2.2 1.82 6.72 5.41
Book value per share 4.63 3.86 7.55 7.29 32.12 28.3
Market Capb $12.84B $17.75B $87.36B $92.88B $20.01B $14.41B
Notes: aAll data for ratios are taken from Mergent Online based on annualised fiscal year end; ball data for Market Cap are taken from Y! Charts (Yahoo
Finance) at fiscal year end

VOL. 14 NO. 2 2018 j THE CASE JOURNAL j PAGE 177

 Exhibit 3

Table AIII Under armour summary of historical accounting statements (as of 31 December)

Report date 2016 2015 2014 2013 2012

Balance sheet ($ in millions)

Cash and cash equivalents 250.5 129.9 593.2 347.5 341.8
Accounts receivable, gross 634.0 439.5 283.5 212.9 178.8
Less: allowance for doubtful accounts 11.3 5.9 3.7 2.9 3.3
Accounts receivable, net 622.7 433.6 279.8 210.0 175.5
Inventories 917.5 783.0 536.7 469.0 319.3
Prepaid expenses and other current assets 174.5 152.2 87.2 64.0 43.9
Deferred income taxes – – 52.5 38.4 23.1
Total current assets 1,965.2 1,498.8 1,549.4 1,128.8 903.6
Property and equipment, net 804.2 538.5 305.6 224.0 180.9
Goodwill 563.6 585.2 123.3 122.2 –
Intangible assets, net 64.3 75.7 26.2 24.1 4.5
Deferred income taxes 136.9 92.2 33.6 31.1 22.6
Other long-term assets 110.2 78.6 57.1 47.5 45.5
Total assets 3,644.3 2,868.9 2,095.1 1,577.7 1,157.1
Revolving credit facility – – – 100.0 –
Accounts payable 409.7 200.5 210.4 165.5 143.7
Accrued expenses 208.8 192.9 147.7 133.7 85.1
Current maturities of long-term debt 27.0 42.0 29.0 5.0 9.1
Other current liabilities 40.4 43.4 34.6 22.5 14.3
Total current liabilities 685.8 478.8 421.6 426.6 252.2
Long-term debt, net of current maturities 790.4 352.0 255.3 48.0 52.8
Revolving credit facility, long term – 275.0 – – –
Other long-term liabilities 137.2 94.9 67.9 49.8 35.2
Total liabilities 1,613.4 1,200.7 744.8 524.4 340.2
Class A common stock 0.1 0.1 0.1 0.0 0.0
Class B convertible common stock 0.0 0.0 0.0 0.0 0.0
Class C common stock 0.1 – – – –
Additional paid-in capital 823.5 636.6 508.4 397.3 321.3
Retained earnings 1,259.4 1,076.5 856.7 653.8 493.2
Accumulated other comprehensive income (loss) −52.1 −45.0 −14.8 2.2 2.4
Total stockholders’ equity (deficit) 2,030.9 1,668.2 1,350.3 1,053.4 816.9
Annual income statement ($ in millions)
Net sales – 3,825.7 2,997.9 2,277.1 1,790.1
Licence revenues – 84.2 – 55.0 44.8
Licensing and other revenues – – 86.4 – –
Connected Fitness revenues – 53.4 – – –
Net revenues 4,825.3 3,963.3 3,084.4 2,332.1 1,834.9
Cost of goods sold 2,584.7 2,057.8 1,572.2 1,195.4 955.6
Gross profit 2,240.6 1,905.5 1,512.2 1,136.7 879.3
Selling, general and administrative expenses 1,823.1 1,497.0 1,158.3 871.6 670.6
Income (loss) from operations 417.5 408.5 354.0 265.1 208.7
Interest income (expense), net −26.4 −14.6 −5.3 −2.9 −5.2
Other income (expense), net −2.8 −7.2 −6.4 −1.2 −0.1
Provision for income taxes 131.3 154.1 134.2 98.7 74.7
Net income 257.0 232.6 208.0 162.3 128.8
Year-end common shares outstanding 438.4 432.2 427.8 423.3 419.0
Number of full-time employees 6,500.0 5,800.0 4,300.0 3,300.0 1,900.0
Number of part time employees 2,900.0 7,600.0 6,400.0 4,500.0 4,000.0
Total number of employees 9,400.0 13,400.0 10,700.0 7,800.0 5,900.0
Selected annual cash flow ($ in Millions)
Net income 257.0 232.6 208.0 162.3 128.8
Depreciation and amortisation 144.8 100.9 72.1 50.5 43.1
Net cash flows from operating activities 304.5 −44.1 219.0 120.1 199.8
Purchases of property and equipment −316.5 −298.9 −140.5 −87.8 −50.7

(continued)

PAGE 178 j THE CASE JOURNAL j VOL. 14 NO. 2 2018

Table AIII
Report date 2016 2015 2014 2013 2012

Purchases of property and equipment (related parties) −70.3 – – – –

Net cash flows from investing activities −381.1 −847.5 −152.3 −238.1 −46.9
Net cash flows from financing activities 206.0 440.1 182.3 126.8 12.3
Effect of exchange rate changes on cash and cash equivalents −8.7 −11.8 −3.3 −3.1 1.3
Net increase (decrease) in cash and cash equivalents 120.6 −463.3 245.7 5.6 166.5
Cash and cash equivalents, beginning of period 129.9 593.2 347.5 341.8 175.4
Cash and cash equivalents, end of period 250.5 129.9 593.2 347.5 341.8
Cash paid for income taxes 136.0 99.7 103.3 85.6 57.7
Cash paid for interest, net of capitalised interest 21.4 11.2 4.1 1.5 3.3
Source: Mergent Online (2017), accessed 10 October 2017

Exhibit 4

Table AIV Under Armour, Inc. historical financial ratios (annualised as of 31 December)
2016 2015 2014 2013 2012

Profitability ratios
ROA % (Net) 7.87 9.37 11.33 11.87 12.37
ROE % (Net) 13.86 15.41 17.31 17.36 17.67
ROI % (Operating) 16.06 20.57 24.92 25.43 26.13
EBITDA margin % 11.30 12.32 13.33 13.39 13.54
Calculated tax rate % 33.82 39.85 39.21 37.8 36.7
Revenue per employee $511,931 $295,770 $288,259 $298,981 $310,154
Liquidity ratios
Quick ratio 1.26 1.16 2.05 1.29 2.02
Current ratio 2.87 3.13 3.67 2.65 3.58
Net current assets % TA 35.1 35.55 53.83 44.51 56.29
Debt management
LT debt to equity 0.39 0.38 0.19 0.05 0.06
Total debt to equity 0.40 0.40 0.21 0.15 0.08
Interest coverage 15.79 27.93 66.35 90.38 40.27

Asset management
Total asset turnover 1.48 1.6 1.68 1.71 1.76
Receivables turnover 9.11 11.11 12.59 12.1 11.82
Inventory turnover 3.04 3.12 3.13 3.03 2.97
Accounts payable turnover 15.77 19.29 16.41 15.09 14.99
Accrued Expenses turnover 23.96 23.27 21.92 21.32 23.71
Property plant and equip turnover 7.17 9.39 11.65 11.52 10.76
Cash and equivalents turnover 25.31 10.96 6.56 6.77 7.08
Per share
Cash flow per share 1.39 −0.1 0.51 0.28 0.48
Book value per share 4.63 3.86 3.16 2.49 1.95
Source: Mergent Online (2017) accessed 10 October 2017

VOL. 14 NO. 2 2018 j THE CASE JOURNAL j PAGE 179

 Exhibit 5

Table AV Yearly revenue by operating segment ($s in 000s)

2015 2016 Inc/(Dec) % change

Apparel $2,801,062 $3,229,142 $428,080 15.3

Footwear 677,744 1,010,693 332,949 49.1
Accessories 346,885 406,614 59,729 17.2
Total net sales 3,825,691 4,646,449 820,758 21.5
Licence 84,207 99,849 15,642 18.6
Connected Fitness 53,415 80,447 27,032 50.6
Intersegment eliminations −1,410 −1,410 NA
Total net revenues $3,963,313 $4,825,335 $862,022 21.8
Source: Under Armour, Inc. (2016a, p. 30)

Exhibit 6

Table AVI Under Armour sales by region ($ in 000s)

2015 2016 Inc/(Dec) % change

North America $3,455,737 $4,005,314 $549,577 15.9

EMEA 203,109 330,584 127,475 62.8
Asia-Pacific 144,877 268,607 123,730 85.4
Latin America 106,175 141,793 35,618 33.5
Connected Fitness 53,415 80,447 27,032 50.6
Intersegment eliminations −1,410 NM NM
Total net revenues $3,963,313 $4,825,335 $862,022 21.8
Note: EMEA stands for Europe, Middle East, and Africa
Source: Under Armour, Inc. (2016a, p. 33)

Exhibit 7

Table AVII Under Armour operating income by regiona ($s in 000s)

2015 2016 Inc/(Dec) % Change

North America $460,961 $408,424 −$52,537 −11.4

EMEA 3,122 11,420 8,298 265.8
Asia-Pacific 36,358 68,338 31,980 88
Latin America −30,593 −33,891 3,298 −10.8
Connected Fitness −61,301 −36,820 24,481 −39.9
Total operating income $408,547 $417,471 $8,924 2.2
Note: aUnder Armour, Inc. (2016a, p. 33)

Corresponding author
Constance R. James can be contacted at: [email protected]

PAGE 180 j THE CASE JOURNAL j VOL. 14 NO. 2 2018