Running head: INDIVIDUAL CASE STUDY PART 2: UNDER ARMOUR 1
Individual Case Study Part 2: Under Armour (Group 5)
Amber C. Taylor
Liberty University
29 September 2019
INDIVIDUAL CASE STUDY PART 2: UNDER ARMOUR 2
Individual Case Study Part 1
Executive Summary
Founded in a basement in 1996 by CEO Kevin Plank, Under Armour, a thriving and
growing newer sportswear company, is currently striving to remain one of the top retail
companies who seek to provide top notch sports apparel, footwear, and accessories. As this
corporation has experienced a great deal of growth over the past years, it anticipates further
growth that will not only occur domestically but over international boundaries as well.
This case study seeks to provide insight and strategic measures in order to aid Under
Armour in accomplishing its mission of serving and bettering athletes through innovative
techniques. Analyses are presented of specific aspects pertaining to major portions of the
corporation’s business characteristics, such as recommendations on remodeling their mission
statements, revisions to the current business model, a SWOT analysis that focuses on the
opportunities and threats that are in need of managing, as well as various financial analyses,
matrices, statements, and strategies.
In conclusion of this case study, recommendations for the main purpose of strategically
bettering Under Armour’s business are offered, suggesting that changing merchandising and
marketing strategies to ultimately reach and please a higher consumer base will create an
innovative and growing future for the long run of the firm. Having the rationale of understanding
that implementing these strategic measures that appeal to all athletes of both genders and
sporting orientation will allow the company to adapt a mindset that focuses on doing what is best
for the company and for its consumers.
Existing Mission, Objectives, and Strategies
Mission Statement
INDIVIDUAL CASE STUDY PART 2: UNDER ARMOUR 3
Under Armour is a corporation who has made a prime objective to portray its business in
a leadership manner that places focus on the sports sector and assumes responsibility in
establishing a design for improvement and evolvement in the athleticism of all individuals. Its
passion for serving its community of athletes all around the world is verbally illustrated in both
its mission and vision statements. Under Armour’s current mission statement is, “To make all
athletes better through passion, design, and the relentless pursuit of innovation” (Under Armour:
Mission Statement, 2019). From its mission statement, four important objectives can be drawn
that strategically focus on what Under Armour can do in order to faithfully accomplish achieving
its mission statement: (a) a desire to make all athletes better, (b) a focus on passion, (c) a unique
design, and (d) a relentless pursuit of innovation.
Objectives
A desire to make all athletes better. One major objective identified by Under Armour is
the corporation’s desire to ensure that no one athlete feels favored or discriminated against by
ensuring that it reaches individuals of all sporting types. As the company offers a wide variety of
categories in both its brick and mortar stores, as well as its online store, Under Armour has
distinguished itself out from all other retail sporting good stores in making its business a desired
shopping place for all athletic needs.
A focus on passion. The objective of passion found within Under Armour’s mission
statement can be derived from two different sectors: the athletes’ passion for sports and the
company’s passion towards meeting each athletes’ sporting needs. Under Armour understands
athletes’ desire to be the best and want to attribute to their dream by providing them with the best
sporting gear that is prepared at the top level and unmatched in comparison to any other
company.
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A unique design. Under Armour has distinctly designed itself and its brand in an
intelligent way that allows the company to be simply one of a kind, as opposed to a duplication
of many other retail stores that sell sporting products.
A relentless pursuit of innovation. Under Armour recognizes that its set its own
company at a high standard for other businesses to compete with, yet it consistently strives to
work to make the corporation better and improve its techniques in order to remain the best.
Strategies
A key strategy that Under Armour has posed to secure the endorsements of its products
through the different existing athletic leagues, teams, and the top ranked athletes. “It is Under
Armour’s belief that this strategy is the best possible way to advertise its products because many
fans become familiar with Under Armour’s products seeing them worn by high-performing
athletes on a year round basis” (David & David, 2017). Under Armour has used this strategy to
work for their business that has existed across the United States, and now seeks to reach
international grounds and gain international endorsements. The corporation recognizes that this
strategy has worked for them as it has existed across North America, and the desire remains that
the same momentum is brought forward and applied internationally through the direct selling of
sporting apparel, footwear, and other necessary athletic gear directly to the international teams
and individual athletes as they exist within these international markets (Under Armour, 2014).
An additional strategy that Under Armour has practiced includes using its fitness
community to its marketing advantage. MyFitnessPal, Inc., a digital nutrition and fitness
company, connected with Under Armour in 2015 for marketing purposes in hopes of expansion
to millions of additional users. Strategically connecting digitally to users and consumers will
INDIVIDUAL CASE STUDY PART 2: UNDER ARMOUR 5
allow the company to reach beyond the average retail or online shopper, and its brand
recognition will continuously reach further dimensions.
New Mission Statement
Under Armour’s mission statement should be redesigned and rewritten in a manner that
fully addresses and provides detail into the specific ways that the corporation plans to serve its
internal and external community. In rewriting its mission statement, the corporation should focus
on establishing connections to the following 9 components: (1) customers, (2) products/services,
(3) markets, (4) technology, (5) concern for growth and survival, (6) philosophy, (7) self-concept,
(8) concern for public image, and (9) concern for employees.
In order to encompass each of these components, Under Armour’s new mission statement
should be rewritten in the following manner: Our brand’s mission is to make all (1) athletes
better by providing them with the (2) highest quality athletic sporting good products. With
keeping this commitment in mind, we will reach athletes (3) across all international global
markets. We strive to (4) remain up to date with the latest technological products and updates.
We commit to (5) having a financial stability that will produce a consistency in growth, allowing
our corporation to continually exceed your expectations in going forward in our future together.
We pride ourselves in (6) the ethical values and philosophies of our firm and ensure that no
athlete is discriminated against as we aspire to serve individuals of all sporting interests. By
committing to serve all athletes, our brand has (7) the competitive advantage among all other
brands as we refuse to leave any athlete behind. Our concern is to (8) respond to the cues of our
community of consumers and ensure that their needs are consistently met, in addition to the
needs of (9) our employees, who are the most valuable asset to our team.
Analysis of Existing Business Model
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In recent years, Under Armour’s CEO, Kevin Plank, has commented on the corporation’s
business model and has identified the firm’s plan on making its profit through its product sales,
its target markets, and its anticipated expenses. Plank identified that the business has two main
duties to fulfill within its business model, to protect and perform. In order to strategically grow,
Under Armour ensures its ability to “consistently deliver what consumers, customers, and
shareholders expect from the company” (Allega & McCormick, 2018). As the market industry
continues to dynamically evolve, Under Armour seeks to perform at its highest and strongest
pace by reaching all global markets across the world and capitalizing its profits. By establishing
a business model that seeks “to elevate its investments towards the largest long-term growth
opportunities” (Allega & McCormick, 2018), Under Armour will strive to build and protect its
brand recognition internationally as its continually sells athletic products to various athletes and
perform its best with a strength growth and innovative mindset.
SWOT Analysis
While additional strengths, weaknesses, opportunities, and threats are listed in the
internal and external factor evaluation matrices, the main focuses are identified in the following
four headings.
Strengths
Brand recognition. In 2017, Under Armour was recognized as the fifth most valuable
sports business brand across the entire world (O’Connell, 2019). By having strong brand
recognition, Under Armour has gained a great deal of strength and developed authenticity and
trustworthiness from its consumers.
Adoption of digital apps. As mentioned above, Under Armour has connected
MyFitnessPal, as well as Endomondo, a fitness app maker, and has accumulated consumers
INDIVIDUAL CASE STUDY PART 2: UNDER ARMOUR 7
through the digital realm of marketing. Through the creation of its digital app, MapMyFitness,
Under Armour has enhanced its revenue potential through its gained diversity and continual
transformation and adaption techniques.
Weaknesses
Limited operating presence. As Under Armour is still considered to be a fairly new
corporation within its market industry, the brand exhibits a limited operating presence across
international markets. While the majority (83%) of its revenue has been gathered from branches
across its North American stores, it is quite necessary that the firm establish the same momentum
internationally so that the dependency on prosperity does not derive from one continent alone.
Gender differentiation sales. In opposition to all other businesses within the same
market industry, Under Armour sells more apparel to men consumers than it does to women.
Although the focus of the company does not primarily fixate towards one gender over the other,
the weakness derived creates an opposition that can be considered as a marketing norm across
the board.
Environmentally hazardous. Under Armour is known to have petroleum-based
products within their merchandise, which does not appeal to many consumers as the products are
therefore harmful to the environment. Additionally, as prices rise, these petroleum based
products will affect the firm’s profit margins.
Opportunities
International markets. While Under Armour has made a well-known standing across
the United States, one opportunity the corporation has is to additionally make a global standing
within international markets. By spreading to international borders, the corporation will generate
INDIVIDUAL CASE STUDY PART 2: UNDER ARMOUR 8
more sales and accumulate a higher profit by adding to new members to their already established
consumer base.
Appeal to women consumers. Capitalizing on the brand’s weakness of appealing more
to women consumers, Under Armour should use this opportunity to expand in their women’s
apparel business.
Innovative techniques. While the brand prides itself on innovation, an opportunity it
holds is to build upon its technological advances and uses this maximization of capability to
continuously reach and exceed the needs of all consumers.
Collaboration. In addition to well-known retailers that sell Under Armour’s brand, such
as Macy’s and Dillard, the firm collaborated with Kohl’s in 2017, creating a great deal of success
and delivered a very performance (Wilen, 2017). With this prosperous collaboration in mind,
Under Armour should use the opportunity to collaborate with other retailers, such as J. C. Penny,
who does not showcase the brand it its stores.
Threats
Increased competition. Under Armour faces a variety of brands that exist within the
same market industry that pose a potential threat on the corporation’s future abilities. Well-
performing brands, such as Nike and Adidas, are considered to be Under Armour’s biggest
competitors, as they have higher brand recognition and better operational experiences overseas
(CAO, 2015). Considering that competing companies such as Nike and Adidas have gained a
stronger customer base as their brand recognition has extended over international waters, they
have gained a stronger customer base that has the potential to threaten Under Armour’s future.
Newer brand. A common threat found within never corporations is establishing a
propounding brand name while similar strong-standing companies have existed within the
INDIVIDUAL CASE STUDY PART 2: UNDER ARMOUR 9
market industry for a longer period of time. Under Armour was founded in 1996, while one of its
competitors, Nike, has been in the industry since 1964. The fact that Under Armour is a fairly
new company is one of the first threats the corporation has experienced upon making its debut.
Political divergence. Within recent years, Under Armour has found itself engaged in
controversy with the Trump administration. Around the beginning of the new presidency, Plank
initially supported the new president, but quickly gained backlash from the corporation’s
consumes and several of its biggest star athletes (Fortune, 2017). Shortly after doing so, Plank
recanted his support, causing backlash from Trump and his administration. This controversy did
not subside for Under Armour, and the political divergence poses a threat on the brands working
ability going forward.
External Factor Evaluation Matrix
INDIVIDUAL CASE STUDY PART 2: UNDER ARMOUR 10
Internal Factor Evaluation Matrix
Key External Factors Weight Rating Weighted Score
Opportunities:
Capitalizing on the opportunity to further expand
its business in women’s products.
0.07 4 0.28
Greater benefits can derive from expanding into
international markets.
0.09 3 0.27
Innovation should continue with the incorporation
of greater technological advances geared towards
apparel and product differentiation.
0.10 3 0.30
While all athletes are a focus, expanding upon
specific sports, such as golf and tennis for further
profitable growth.
0.09 2 0.18
Expansion through collaboration with smaller retail
stores.
0.03 2 0.06
Expansion of its youth line- apparel and shoes. 0.04 4 0.16
The focus on shoes is continually growing, but
further opportunity for expansion still exists.
0.03 2 0.06
Additional retail stores can be designed and
established across all global markets.
0.06 2 0.12
Threats:
Status as a new brand in the industry is precarious. 0.07 3 0.21
Competition from strong brands such as Nike and
Adidas
0.04 2 0.08
If technological advances are not kept up to date,
the risk of not being able to catch up increases.
0.07 2 0.14
Longer standing companies, such as Nike, exist. 0.03 3 0.09
Negative impact of petroleum based products. 0.09 1 0.09
Larger sized brands, such as Nike, exist within the
same marking, posing the threat of running Under
Armour out.
0.04 2 0.08
Few barriers exist for the sports apparel industry’s
newer competition.
0.10 3 0.30
Total 1.00 2.42
INDIVIDUAL CASE STUDY PART 2: UNDER ARMOUR 11
It
can
be
concluded that Under Armour’s internal factors, including their strengths and weaknesses are
weighted at a lower number than their external factors surrounding their opportunities and
threats. Therefore, Under Armor needs to gain greater control on external factors that will
negatively affect the firm’s future business within the market industry and capitalize on its
internal factors in order to strategically align a plan for successful innovation.
Key Internal Factors Weight Rating Weighted Score
Strengths:
Sold in over 25,000 collaborative retail stores
worldwide.
0.07 3 0.21
In 2014, the firm internationally grew by 96% to
$260,000,000 (Tierney, 2015).
0.07 3 0.21
Production facilities are location in Northern
America
0.06 4 0.24
Customer loyalty produces “19 consecutive
quarters of revenue growth over 20%” (Tierney,
2015).
0.09 3 0.27
Strong brand recognition. 0.06 3 0.18
Variety of high-profile endorsement deals through
big-deal athletes such as Tom Brady and Michael
Phelps.
0.09 3 0.27
Consistent annual growth at a steady pace. 0.08 4 0.32
Weaknesses:
Not many retail stores exist. 0.06 1 0.06
Not environmentally friendly. 0.05 2 0.10
Petroleum based products affect profit margins as
prices arise.
0.04 2 0.08
Opposite of normal stores in selling of gender
apparel.
0.09 1 0.09
Higher dependency on North American market. 0.07 1 0.07
Fabric of products is not under protection of a
patent.
0.05 2 0.10
Total 1.00 2.20
INDIVIDUAL CASE STUDY PART 2: UNDER ARMOUR 12
BCG Matrix
First, Under Armour’s star products represent merchandise that demonstrates high market
share and high market growth. These products are considered as stars because they generate the
most income and should be focal points for investment opportunities. Under Armour’s products
for hot-gear, cold-gear, and wear for all seasons consists of a market share of 18% and a market
growth of 17.4%. Secondly, Under Armour’s cash cows represent its products that are its
marketplace leaders that have a high market share, yet low growth prospects. The firm’s cash
cow products are Up Move by Jawbone and the Misfit Shine Activity Tracker, generating the
market share to be 15.46% and the market growth to be 11.82%. Thirdly, Under Armour’s
question mark products have high growth prospects, but are low in market share. These products,
including the business’s running shoes, basketball shoes, and hiking boots, have a market share
value of 2% and a market growth value of 10%. Fourthly, Under Armour’s dogs consist of
products that have both a low market share and a low growth rate. Dogs typically do not bring in
a high value cash influx and are not benefitting the company as money is distributed out with
nothing in return. Under Armour produced a ball t-shirt that was designed to appeal to athletes
who played basketball and related the act to that of World War 2. This product’s market share is
0.0001% and its market growth is 0%.
MARKET SHARE
<< LOW
<< LOW
HIGH >>
Dogs
MS(%) MG(%)
Sporting Apparel 0.0001% 0%
*Includes
- Brand of Balls T-Shirt
Cash Cows
MS(%) MG(%)
Tracking Devices 15.46% 11.82%
* Includes:
-Up Move by Jawbone
-Misfit Shine Activity Tracker
MARKET GROWTH
HIGH >> Stars
MS(%) MG(%)
Apparel Merchandise 18% 17.4%
*Includes:
- Gear for hot weather
- Gear for cold weather
- Gear for all seasons
Question Marks
MS(%) MG(%)
Footwear Products 2% 10%
* Includes:
- Running shoes
- Basketball shoes
- Hiking boots
INDIVIDUAL CASE STUDY PART 2: UNDER ARMOUR 13
Competitive Forces, Profile Matrix, and Ratios
Competitive Forces Analysis
Under Armour has a variety of competitors that exist within its same market industry.
These competitive forces include, but are not limited to, Nike, Adidas, Columbia, Puma, New
Balance, Sketchers, and Fila. In comparison to Under Armour, Nike and Adidas have both
greater resources and stronger worldwide brand recognition. Additionally, Under Armour does
not have the product diversity that Nike and Adidas has. While Nike recognizes other brand
names, such as Converse and Hurley and Adidas recognize Reebok and Rockport, Under Armour
solely sells Under Armour products. Furthermore, the diversity within Nike’s products
encompass performance apparel, casual apparel, jerseys, footwear, and equipment, while Adidas
focuses on the same products with the addition of soccer kits, yet Under Armour’s product
diversity reaches the extent of performance apparel and footwear. On average, the cost of
marketing for Nike alone is roughly $7 billion and $16.04 billion for Adidas, yet only $2.33
billion for Under Armour. Nike’s global markets are vastly seen within the U.S., Europe, Middle
East, and Asia, and Adidas main regions are North America, Western Europe, Asia, and Latin
American; however, over 80% of Under Armour’s outreach is exhibited within the United States
alone.
Competitive Profile Matrix (CPM)
Under Armour Nike Adidas
Critical Success Factors Weight Rating Score
Ratin
g
Score Rating
Scor
e
Customer Loyalty 0.20 3 0.60 4 0.80 2 0.40
Sales Distribution 0.10 2 0.20 4 0.40 3 0.30
Experience/Stability 0.10 2 0.20 4 0.40 3 0.30
Advertising/Endorsements 0.15 3 0.45 4 0.60 2 0.30
Financial Position 0.20 4 0.80 3 0.60 2 0.40
Market Share 0.15 1 0.15 4 0.60 3 0.45
INDIVIDUAL CASE STUDY PART 2: UNDER ARMOUR 14
Production Capacity and
Efficiency
0.10 4 0.40 3 0.30 2 0.20
Total 1.00 2.80 3.70 2.35
Historical Financial Statements
The following information from Under Armour’s income statement, balance sheet, and
statement of cash flow were retrieved from Yahoo Finance.
Income Statement
Revenue. As results show Under Armour’s most current revenue from the most current 3
years, an increase in total revenue has gradually occurred from 2016-2018. Respectively, in
2016, the total revenue was $4,833,338, $4,989,244 in 2017, and $5,193,185, establishing an
upward trend. The gross profit also increased across this three-year time span, as it was
$2,248,614 in 2016, $2,256,491 in 2017, and $2,361,272 in 2018.
Operating expenses. The operating expenses also accumulated across this time span, as
the total operating expenses in 2016 were $4,415,867, $4,432,275 in 2017, and $5,014,252 in
2018. The deltas between 2016 and 2017 were gradual, but a much greater increase is exhibited
between 2017 and 2018.
Income from continuing operations. Continual losses are exhibited within this bracket,
as expenses grew higher as time moved forward. In 2016, the earnings before interest and taxes
were $417,471, $156,969 in 2017, and $178,933 in 2018. After all interest expenses, taxes, and
minority interests, the net income from continuing operations was $256,979 in 2016, -$48,260 in
2017, and -$46,302 in 2018.
Balance Sheet
INDIVIDUAL CASE STUDY PART 2: UNDER ARMOUR 15
Current Assets. The accumulation of cash and cash equivalents, short-term investments,
net receivables, inventory, and other current assets accrue to a current assets total of $1,965,153
in 2016, $2,337,679 in 2017, and $2,593,628 in 2018. After adding all long-term investments,
property, plant and equipment, Goodwill, intangible assets, accumulates amortization, and all
other assets and deferred long-term asset charges, the total assets in 2016 accrued to $3,644,331,
$4,006,367 in 2017, and $4,245,022 in 2018).
Current liabilities. Taking into account Under Armour’s accounts payable, short/current
long-term debt and all other current liabilities, the total current liabilities in 2016 were $685,816,
$1,060,375 in 2017, and $1,315,977 in 2018. This upward trend continued after all other
liabilities and long-term debt were taken into account, having Under Armour’s total liabilities
stand at $1,613,431 in 2016, $1,987,725 in 2017, and $2,228.151 in 2018.
Stockholders’ equity. The common stock from 2016-2018 had a slight increase across
the lines, going from 145 to 146 and ending at 148. A decrease across the board is seen within its
retained earnings, as they were $1,259,414 in 2016, $1,184,441 in 2017, and $1,139,082 in 2018.
Although both increases and decreases are exhibited across the lines of Under Armour’s treasury
stock, capital surplus, and other forms of stockholder equity, the net tangible assets create an
upward spiral from $1,402,999 in 2016, $1,415,973 in 2017, and $1,428,584 in 2018.
Statement of Cash Flows
Operating activities. While the end results of previous sections typically created an
upward or downward trend across the board, the total cash flow from operating activities exhibits
both an upward and downward trend. The cash flow decreased from 2016-2017, going from
$366,623 to $237,460. However, a great increase was seen from 2017-2018, going from
$237,460 to $628,230.
INDIVIDUAL CASE STUDY PART 2: UNDER ARMOUR 16
Investing activities. Although the results are a negative amount, an increase in deltas is
shown from 2016-2018 in concerns to the total cash flows from investing activities. In 2016, the
total was -$381,139, -$282,987 in 2017, and -$202,904 in 2018.
Financing activities. A great decrease is seen across the lines in reference to the total
cash flows from financing activities, as the cash flow in 2016 was $146,114, $106,759 in 2017,
and -$189,868 in 2018.
Ratios From Current 3 Years
Current Ratio
Under Armour’s current ratio has decreased as the three most current years have
progressed forward. The first decrease occurred between 2016 and 2017, when the corporation’s
current ratio went from 2.8654 to 2.2016. Next, a further decrease in delta occurred from 2017-
2018, as the current ratio decreased to 1.9709.
Debt-Equity Ratio
The deltas found across the lines of the debt-equity ratio illustrate both an increase and
decrease in values. From 2016 to 2017, the debt-equity ratio results increased from 0.4025 to
0.4543. However, the results decreased in 2018, when the number dropped to 0.3614.
Inventory Turnover Ratio
Here, an increase and decrease in deltas is seen again. From 2016 to 2017, the inventory
turnover ratio decreased from 2.8172 to 2.3632. The numbers had a turnaround in the following
year and increased to 2.7982.
Return on Equity
INDIVIDUAL CASE STUDY PART 2: UNDER ARMOUR 17
A dramatic decrease in Under Armour’s return on equity was exhibited between 2016 and
2017, as the firm’s results went from 12.6535 to -2.3907. A slight increase was seen in the
following year, as the results in 2018 were -2.2957.
Return on Assets
Another intense decrease was seen within the results of the return on assets between 2016
and 2017. In 2016, the return on assets was 7.0515 and -1.2046 in 2017. A slight increase
occurred within the following year, as the 2018 results indicated the return on assets ratio to be
-1.0907.
Return on Investment
Between 2016 and 2017, the results of Under Armour’s return on investment drastically
decreased from 9.1086 to -1.7337. In 2018, a very minimal increase was made, as the results
accrued to -1.7018.
Net Profit Margin
In 2016, Under Armour’s net profit margin was 4.0961. A decrease in delta was made in
the following year, as the statistics indicated results of -0.9673. A small increase was seen in the
following year, as 2018’s results were -0.8916.
Gross Margin
A steady decrease in the gross profit margin existed between 2016 and 2018. In 2016, the
gross profit margin was 46.523. In 2017, the gross profit margin decreased to 45.1254, and
further decreased to 45.0681 in 2018.
Operating Margin
INDIVIDUAL CASE STUDY PART 2: UNDER ARMOUR 18
Under Amour’s operating margin dramatically changed between 2016 and 2017, as the
results decreased from 8.6373 to 0.5581. A further decrease occurred in the following year, as the
results were -0.4817.
Alternative Strategies
The majority of Under Amour’s successful growth has derived from its marketing
strategies of using famous athletes to advertise its products. After using well-known athletes to
advertise its products, Under Armour has experienced a growth in revenue year after year. This
strategy will allow consumers to have the desire to wear the same products as their idolized
athlete wears. “The biggest growth categories for Under Armour recently have been in three
areas: golf-related items, women’s products, and basketball shoes and apparel. Not incidentally,
these correlate with the subjects of Plank’s praise: Jordan Spieth, Misty Copeland, and Stephen
Curry” (Bryan, 2015). By adding Jordan Spieth, one of the world’s most famous golfers, to
Under Armour’s marketing strategies, major attention was drawn to the firm’s brand of golfing
supplies. The same purchasing mannerisms were experienced once Copeland and Curry were
featured to market their respective sports, specifically raising the sales of basketball shoes.
“Under Armour’s revenue growth in 2Q15 accelerated to 28.5% year-over-year to $784 million.
This revenue growth was propelled by footwear products, which grew 40.2% year-over-year to
$154 million, higher than the company average” (Soni, 2015). The potential downfall alternative
to this strategy would be the possible loss of sales if the provided famous athlete does not
perform at an expectation that the world has placed on them.
Another alternative strategy for Under Armour to use is to expand its market over global
waters in order to gain the advantage of an increase in its sales and overall build a stronger brand
image. While Under Armour has done a superb job in reaching one of the highest spots offered
INDIVIDUAL CASE STUDY PART 2: UNDER ARMOUR 19
within the market among its competitors, the brand could still use the opportunity of global
expansion to attract more consumers in the form of athletes who participate in the numerous
international sports that are constantly emerging.
Thirdly, Under Armour should use the alternative strategy of reinstating its original
moniker, KP Sports, Inc. In doing so, the brand will gain advantage in having a low-cost
alternative to its already branded line of products.
Fourthly, Under Armour should alternatively seek to broaden its retail locations. As of
2018, Under Armour had 166 retail locations across the United States. Although the corporation
needs to look into establishing more locations oversees, the firm should additionally expand
upon the opportunity to open other retail locations within the country. By using this alternative
strategy, Under Armour will have the opportunity to reach more consumers who are located in
areas that are not currently being sold Under Armour’s products.
Pro-Forma Financial Statements
December 31, 2016 December 31, 2017
Assets With Strategy Without Strategy With Strategy Without Strategy
Cash and cash equivalents $ 266,312 $ 312,483 $ 192,439 $ 314,405
Accounts $ 677,050 $ 609,670 $ 744,563 $ 635,585
Inventories $ 1,286,589 $ 1,158,548 $ 1,476,695 $ 1,260.559
Prepaid expenses $ 256,978 $ 256,978 $ 294,214 $ 294,214
Deferred income taxes $ - $ - ### -
Total current assets $ 2,486,928 $ 2,337,679 $ 2,707,911 $ 2,504,763
Property and equipment, net $ 885,774 $ 885,774 $ 958,379 $ 958,379
Goodwill $ 555,674 $ 555,674 $ 555,674 $ 555,674
Intangible assets, net $ 446,995 $ 46,995 $ 46,525 $ 46,525
Deferred income taxes $ 82,801 $ 82,801 $ 82,664 $ 82,664
Other long term assets $ 97,444 $ 97,444 $ 98,836 $ 98,836
Total assets $ 4,155,616 $ 4,006,367 $ 4,449,989 $ 4,246,842
Liabilities and Stockholder’s Equity
Revolving credit facility $ 125,000 $ 125,000 $ 125,000 $ 125,000
Accounts payable $ 623,121$ 561,108 $ 758,705 $ 647,657
Accrued expenses $ 358,847 $ 296,841 $ 416,630 $ 330,724
Current maturities of long term debt 27,000 $ 27,000 $ 26,763 $ 26,763
Other current liabilities $ 50,426 $ 50,426 $ 53,547 $ 53,547
INDIVIDUAL CASE STUDY PART 2: UNDER ARMOUR 20
Total current liabilities $ 1,184,394 $ 1,060,375 $ 1,380,644 $ 1,183,690
Long term debt, net $ 769,426 $ 765,046 $ 830,538 $ 825,501
Other long term liabilities $ 162,304 $ 162,304 $ 176,204 $ 176,204
Total liabilities $ 2,116,124 $ 1,987,725 $ 2,387,386 $ 2,185,395
Commitments/contingencies
Stockholders’ equity
Additional paid-in capital $ 872,266 $ 872,266 $ 908,732 $ 908,732
Retained earnings $ 1,184,441 $ 1,184,441 $ 1,191,535 $ 1,191,535
Other comprehensive loss $ (38,211) $ (38,211) $ (38,830) $ (38,830)
Total Stockholders’ equity $ 2,018,496 $ 2,018,642 $ 2,061,437 $ 2,061,436
Total liabilities/stockholders’ eq. 4,134,620 $ 4,006,367 $ 4,448,823 $ 4,246,832
Class A Common Stock
Stockholders’ equity
Common stock, value, issued $ 61 $ 61 $ 61 $ 61
Total stockholders’ equity $ 61 $ 61 $ 61 $ 61
Class B Convertible Common Stock
Stockholders’ equity
Common stock, value, issued $ 11 $ 11 $ 12 $ 11
Total stockholders’ equity $ 11 $ 11 $ 12 $ 11
Common Class C
Stockholders’ equity
Common stock, value, issued $ 75 $ 74 $ 77 $ 75
Total stockholders’ equity $ 75 $ 74 $ 77 $ 75
December 31, 2018
Assets With Strategy Without Strategy
Cash and cash equivalents $ 295,031 $ 565,328
Accounts $ 869,570 $ 650,240
Inventories $ 1,759,564 $ 1,315,752
Prepaid expenses and other current assets $ 20,652 $ 20,652
Deferred income taxes ### -
Total current assets $ 2,944,817 $ 2,551,972
Property and equipment, net $ 1,048,569 $ 1,048,569
Goodwill $ 555,674 $ 555,674
Intangible assets, net $ 45,349 $ 45,349
Deferred income taxes $ 81,792 $ 81,792
Other long term assets $ 99,908 $ 99,908
Total assets $ 4,776,109 $ 4,383,263
Liabilities and Stockholder’s Equity
Revolving credit facility ### $ 125,000
Accounts payable $ 948,763 $ 709,458
Accrued expenses $ 496,909 $ 349,740
Current maturities of long term debt $ 26,389 $ 26,389
Other current liabilities $ 55,083 $ 55,083
Total current liabilities $ 1,652,145 $ 1,265,670
Long term debt, net of current maturities $ 851,427 $ 846,291
INDIVIDUAL CASE STUDY PART 2: UNDER ARMOUR 21
Other long term liabilities $ 184,494 $ 184,494
Total liabilities $ 2,688,065 $ 2,296,455
Commitments and contingencies
Stockholders’ equity
Additional paid-in capital $ 930,080 $ 930,080
Retained earnings $ 1,195,218 $ 1,195,218
Accumulated other comprehensive loss $ (38,491) $ (38,491)
Total Stockholders’ equity $ 2,086,807 $ 2,086,808
Total liabilities and stockholders’ equity $ 4,774,872 $ 4,383,263
Class A Common Stock
Stockholders’ equity
Common stock, value, issued ### $ 61
Total stockholders’ equity ### $ 61
Class B Convertible Common Stock
Stockholders’ equity
Common stock, value, issued $ 13 $ 11
Total stockholders’ equity $ 13 $ 11
Common Class C
Stockholders’ equity
Common stock, value, issued $ 80 $ 76
Total stockholders’ equity $ 80 $ 76
Net Present Value Analysis and EPS/EBIT Analysis
Under Armour’s EBIT for the two month period that ended on June 30, 2019 was
$0.132B, which was a 221.99% decline in year-over-year. For 2018, the company’s annual EBIT
was $-0.025B, a 189.85% decline from 2017’s EBIT of $0.028B. 2017’s EBIT was a 93.33%
decline from 2016’s EBIT of $0.417B.
Recommended Strategy and Long Term Objectives
A recommendation for strategic changes would involve a continuation in the desire to add
diversity among Under Amour’s products and its marketing strategies. One area that has been an
opportunity for Under Armour to improve concerns its line of products and the need for diversity
should be addressed by appealing more to its female consumers and even changing some of the
its merchandise to remove petroleum from their bases and eliminate that hazardous concern.
Additionally, strategic measures should be taken to incorporate new marketing strategies by
INDIVIDUAL CASE STUDY PART 2: UNDER ARMOUR 22
taking advantage of new technological mannerisms that other competitive industries are using, as
well as expand its global market and appeal to more of the corporation’s international shoppers.
Having these long-term objectives in mind will provide a positive growth mindset for the
business and the changes to occur within Under Armour’s current trends will promote continuous
success and prosperous innovation. There are a variety of essential steps that are mandatory in
the implementation of this strategy, including discovering a new design for the anticipated
products, getting approval to produce the ideas, recruiting manufacturers to create the product,
locating stores to sell the product, and training employees to appropriately market the new
fashion. Each stage of the implementation process has its own individual cost, however the
estimated total for the entire recommended strategy is a cost of $26,758,000.
Stages Task Estimate
d Time
Estimated
Cost
1 Finalize proposed strategy with appropriate departments 4 weeks $4,000
2 Seek approval from board of directors 1 week -
3 Brainstorm and create new product designs 6 weeks $1,000,000
4 Recruit the design and product design teams 12 weeks $5,000,000
5 Calibrate with third party manufacturers 12 weeks $5,000,000
6 Modify the supply chain 6 weeks $2,500,000
7 Perform market research, locate stores to display new
merchandise, sign lease agreement
8 weeks $550,000
8 Reconstruct store layout to accommodate new women’s
line of product
12 weeks $2,500,000
9 Formulate new marketing strategy 8 weeks $10,000,000
10 Recruiting and training employees in preparation of
selling new product
4 weeks $150,000
11 Grand opening for new women’s products 1 day $50,000
Total Cost $26,758,000
Proposed New Business Model
In reconstructing a new business model, it is vital that Under Armour focuses on
innovation and what changes will ultimately bring prosperity and longevity for the corporation in
INDIVIDUAL CASE STUDY PART 2: UNDER ARMOUR 23
the future. As expected changes are to come with the growing years, CEO Plank states, “As we
execute against out long-term strategy, we remain unwavering in our commitment to protecting
and growing the Under Armour brand” (). Under Armour’s proposed business model must
single-mindedly focus on innovative athletic performance products and experiences for athletes
all around the world. The company must adapt to the newest technological trends that will aid in
the connection to the consumers’ health and fitness community. In thinking long-term, as Plank
described, the company’s new business model must hold a strong focus on long-term growth
opportunities that surround proposing business internationally and expanding upon its footwear
and women’s apparel lines. Overall, it is necessary that the new business model protect Under
Armour and its brand name at all costs, focusing on what appeals to the customer, and what
benefits the business.
INDIVIDUAL CASE STUDY PART 2: UNDER ARMOUR 24
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INDIVIDUAL CASE STUDY PART 2: UNDER ARMOUR 25
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