UNDER ARMOUR.pdf - CASE 05 Under Armours Strategy in 2014 Potent Enough to Win Market Share from Nike and Adidas Arthur A Thompson The University of

UNDER ARMOUR.pdf - CASE 05 Under Armours Strategy in 2014...

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fiscal 2013, Nike had U.S. sales of $11.3 billion and global sales of $25.3 billion, and it dominated both the U.S. and global markets for athletic footwear. In the United States, Nike’s share of athletic footwear sales approached 60 percent (counting its Nike-branded footwear and sales of its Jordan and Con-verse brands) versus Under Armour’s 2.25 percent share. Nike’s 2013 global sales of athletic footwear totaled almost $16 billion (over 1 million pairs per day), dwarfing Under Armour’s 2013 footwear sales of $299 million. The adidas Group—the industry’s second-ranking company—had 2013 global sales of €14.5 billion (including €6.9 billion in athletic foot-wear and €5.8 billion in sports apparel) and 2013 North American sales of €3.4 billion. But Under Armour was gaining ground. From 2008 through 2013, Under Armour’s sales revenues grew at a com-pound annual rate of 26.3 percent. Nike’s revenues during its most recent five fiscal years (July 1, 2008, to June 30, 2013) grew at only a 6.3 percent com-pound rate; the revenues of The adidas Group—the second-largest company in the global sporting goods industry—grew at a compound rate of 6.3 percent during 2008–2013. Founder and CEO Kevin Plank believed Under Armour’s potential for long-term growth was excep-tional for three reasons: (1) The company had built an incredibly powerful and authentic brand in a rela-tively short time, (2) there were significant oppor-tunities to expand the company’s narrow product Under Armour’s Strategy in 2014: Potent Enough to Win Market Share from Nike and Adidas? Arthur A. Thompson The University of Alabama Founded in 1996 by former University of Maryland football player Kevin Plank, Under Armour (UA) was the originator of perfor-mance sports apparel—gear engineered to keep athletes cool, dry, and light throughout the course of a game, practice, or workout. It started with a simple plan to make a T-shirt that provided compres-sion and wicked perspiration off the wearer’s skin, thereby regulating body temperature and avoiding the discomfort of sweat-absorbed apparel. Under Armour’s innovative synthetic performance-fabric T-shirts were an instant hit. Seventeen years later, with 2013 revenues of $2.3 billion, Under Armour had a growing brand presence in the roughly $63 billion multisegment retail market for sports apparel, active wear, and ath-letic footwear in the United States. Its interlocking “U” and “A” logo had become almost as familiar and well-known as industry-leader Nike’s swoosh. In 2013, Under Armour had a 14.7 percent share of the U.S. market for sports apparel (up from 12.7 percent in 2012 and 11.1 percent in 2011), which compared quite favorably with Nike’s 27 percent market share and adidas’s 7.4 percent market share. 1In the synthetic performance-apparel segment—a market niche with estimated sales of $3 to $4 bil-lion in 2013—Under Armour had an approximate 60 percent market share.
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