Under Armour- Final

Hanna Cohen, Megan
Findakly, Steven
Zeigler, and Ayomide
Oluleye

Financial Analysis
Revenue Net Income
Financial performance is STRONG
Net revenue has increased 172.43% from 2009 through
2013
Net income has increased 246.93% from 2009 through 2013
Earnings per share (EPS) has increased 226% from 2009

3C’s Business Model
Customer – Young urban
professional affluent
consumer
Company- Kevin Plank, 43, is
Founder and CEO of
performance apparel maker
Competitors – Nike, Adidas,
Reebok, and Puma

Why India?
Election of Prime Minister Narendra Modi in 2014
Recent Changes to Foreign Direct Investment (FDI)
Competitors

Method of Entry
Entry into India will be accomplished by establishing:
Under Armour IndiaUnder Armour India
A wholly-owned subsidiary of Under Armour:
Strategic control and independence
Does not want to repeat competitors’ mistakes
Changing political/regulatory climate
Branding

Under Armour India – Supply Chain
• Immediate/Short-term – Exporting
– Goal: Enter India as quickly as possible while
keeping initial investment low
– Solution: Exporting from Asia and Mexico
• Exporting
• Free Trade Warehousing Zones (FTWZ)
• FTWZ  Stores  Customers
– Costs:
• Container: $1,800 to $2,500 per TEU from Mexico to
Mumbai, India
– Capacity: 15,000 packaged shirts or 8,500 footwear
– Cost: $0.12-0.17/shirt or $0.21-.029/footwear
• Import duty – 18%/CIF and Warehousing – Rs. 92/cf

Distribution - Retail Stores
• Establish retail stores in shopping malls
– Mumbai – High Street Phoenix
– New Delhi – Select CityWalk
– Bangalore – Mantri Square
• 5,000-8,000 sq. ft. (North America average is 6,000 sq. ft.)
• Labor sourced locally with training provided by U.S. team

Distribution - Retail Stores
• Retailing Costs:
– Retail rent: R150-R180/sq. ft. per month. For 6,000 sq. ft. – 9 Lakh
or $13,200 per month, per store.
– Salaries: R110-450/hour, depending on position, 24 FTE person
workforce. Total: 2.69 Lakh/week or $4,000 per week, per store.
– Inventory Cost: $21,050 per store (as of Dec. 31, 2014)
• Marketing Costs:
– $3,808,000 per year, 52 commercials, 1 team, 6 celebrities and 12
sports players sponsorships

Financial Analysis – India Expansion
Year 1 Year 2 Year 3 Year 4 Year 5
Stores & Inventory $1,815,321 $1,815,321 $1,815,321 $1,815,321 $1,815,321
Marketing $3,808,000 $3,808,000 $3,808,000 $3,808,000 $3,808,000
Build out/Training/Misc. $618,800 $339,600 $339,600 $339,600 $339,600
Total Costs: $6,242,121 $5,962,921 $5,962,921 $5,962,921 $5,962,921
# of Customers – B/E 64,219 61,347 61,347 61,347 61,347
Market Share – B/E 3.61% 3.45% 3.45% 3.45% 3.45%
# of Customers – 5.8% 67,950 64,911 64,911 64,911 64,911
Market Share – 5.8% 3.82% 3.65% 3.65% 3.65% 3.65%
Avg. Revenue per Customer: $97.20
Under Armour Profit Margin (avg.): 5.8%
Active Apparel Profit Margin (avg.): 8%
Total Market in India: 1,780,000 people
Notes:

• Assuming a modest 3.6% market share in Year 1 and 0.1%
gains for Years 2 through 5:
Financial Analysis – India Expansion

Market
Share
Customers
Revenue/
Customer
Total Revenue
Profit
Margin
Year 1 3.6% 64,219 $97.20 $6,242,086 0.00%
Year 2 3.7% 65,860 $97.20 $6,401,592 7.36%
Year 3 3.8% 67,640 $97.20 $6,574,608 10.26%
Year 4 3.9% 69,420 $97.20 $6,747,624 13.16%
Year 5 4.0% 71,200 $97.20 $6,920,640 16.06%
Breakeven

SWOT Analysis
CEO Kevin Plank
R&D and product
innovation
Excellent marketing
abilities
S
Limited wholesale distributors
Unfamiliar to the Indian
sportswear market
W
Heighted competition
Nike and cricket strong
relationship
T
Global market expansion
Expansion into other sports
accessories
Growing urbanization
Sponsorship opportunities
Lack of Brand Loyalty
O

Risk Analysis
High Risk:
Demand
Government
Regulation
Medium Risk
Supply
Intellectual
Property
Low Risk
Political Instability
Theft
Counterfeiting
PotentialImpact
Probability
Severe
HighMinimal
DemandSupply
Political
Instability
Theft/
Shrinkage
Intellectual
Property
Counter-
feiting
Government
Regulation

Strategic Plan:
Differentiation

4 Ps of Marketing
Promo
Product Price
Place

Mumbai,
Maharashtra
New Delhi, Delhi
Bangalore,
Karnataka
Place
4 Ps of Marketing

4 Ps of Marketing
TECHNOLOGY
HeatGear
ColdGear
Storm
Product

4 Ps of Marketing
Price
Mercurial Superfly FG CR7
$30
0
$40
0

4 Ps of Marketing
Promo
Government
Cricket Players/ Clubs
Bollywood Actors
Football Player/ Clubs
Hockey India League
Sohail Khan
Shah Rukh Khan Juhi Chawla

Company Background
Founded in 1996 by Kevin
Plank
Headquarters – Baltimore,
Maryland
Public offering – November
18, 2005, now: NYSE as UA
Worldwide, $2.32 billion
revenue, 7,800 employees
Competitors – Nike, Adidas,
Columbia Sportswear

Company Background
To empower athletes everywhere
To make all athletes better through
passion, design, and relentless
pursuit of innovation
To compete with the best
Innovation
International expansion
Direct-to-consumer sales
Vision
Missio
n
Aim
Strategy
Tactics
Expand women’s footwear,
international and direct-to-
consumer business
Diversify brand (golf,
fishing, & hunting)

1999 20051996
Timeline and Management
Founded by
Kevin Plank,
incorporated
in Maryland
Global
expansion
into Asia
market
Global
expansion
into Europe
market
Went public
on NASDAQ
Under Armour
played a
supporting
role in Any
Given Sunday

2007 20092006
Traded on
NYSE as UA
Opened
European HQ
in Amsterdam
2009 –
Formed
alliance with
Ripken
Baseball
Opened first
direct to
consumer
store in
Annapolis,
MD

2012 20142010
Under Armour
surpassed $1
bn in annual
revenue
Deal with
Univ. of Notre
Dame to
provide
uniforms and
athletic
equipment
Michael
Phelps won 7
medals at the
Olympics,
cementing
the Under
Armour name

Comprehensive SWOT Analysis
CEO Kevin
Plank/Management Team
R&D and product
innovation
Product performance
Brand cache
Continues growth
Excellent marketing
abilities
S
Limited wholesale distributors
Limited Global brand
recognition
Limited patents – easily
replicable apparel technology
Late player in the Indian
sportswear market
W
Consumer price sensitivity
Increased cost of raw
materials
Heighted competition
Global expansion
Strong relationship of
competitors with local
retailers
T
Increased desire for product
Expansion of direct-to-
consume
Global market expansion
Expansion/creation into
other sports accessories
Middle class emerge
Sponsorship opportunities in
different sports teams)
O

State Income per capita
(2013) (Rs.)
% change in Per
Capita Income over
previous year
Delhi 219,979 14.22%
Karnataka 84,709 10.62%
Maharashtra 114,392 10.00%
Population in the 15-24 (for Urban Areas)
State Total Male Female
Delhi 3,3 M 1,8 M 1,5 M
Karnataka
4,6 M 2,3 M 2,3 M
Maharashtra 9,9 M 5,32 M 4,6 M
Place
4 Ps of Marketing

Appendix - Financials
Year 1 Year 2 Year 3 Year 4 Year 5
Cost Analysis:
Rentals $ 475,200.00 $ 475,200.00 $ 475,200.00 $ 475,200.00 $ 475,200.00
Labor Costs $ 624,000.00 $ 624,000.00 $ 624,000.00 $ 624,000.00 $ 624,000.00
Inventory $ 511,515.00 $ 511,515.00 $ 511,515.00 $ 511,515.00 $ 511,515.00
Shipping Fees (19%) $ 97,187.85 $ 97,187.85 $ 97,187.85 $ 97,187.85 $ 97,187.85
Import Fees (18%) $ 92,072.70 $ 92,072.70 $ 92,072.70 $ 92,072.70 $ 92,072.70
Warehousing Fees (3%) $ 15,345.45 $ 15,345.45 $ 15,345.45 $ 15,345.45 $ 15,345.45
Marketing $ 3,808,000.00 $ 3,808,000.00 $ 3,808,000.00 $ 3,808,000.00 $ 3,808,000.00
Total Variable Costs: $ 5,623,321.00 $ 5,623,321.00 $ 5,623,321.00 $ 5,623,321.00 $ 5,623,321.00
Store Buildout/Upkeep (3 stores) $ 118,800.00 $ 39,600.00 $ 39,600.00 $ 39,600.00 $ 39,600.00
Training $ 300,000.00 $ 100,000.00 $ 100,000.00 $ 100,000.00 $ 100,000.00
Miscellaneous $ 200,000.00 $ 200,000.00 $ 200,000.00 $ 200,000.00 $ 200,000.00
Total Fixed Costs $ 618,800.00 $ 339,600.00 $ 339,600.00 $ 339,600.00 $ 339,600.00
Total Costs: $ 6,242,121.00 $ 5,962,921.00 $ 5,962,921.00 $ 5,962,921.00 $ 5,962,921.00

Appendix - Financials
Revenue Generation:
Average Revenue per Customer $ 97.20 $ 97.20 $ 97.20 $ 97.20 $ 97.20
# Customers at: 0% profit 64,219 61,347 61,347 61,347 61,347
4% profit 66,788 63,801 63,801 63,801 63,801
Under Armour Avg. - 5.81% profit 67,950 64,911 64,911 64,911 64,911
8% profit 69,357 66,255 66,255 66,255 66,255
52 commercials @ $15,000 $ 780,000.00
1 teams @ $1,000,000 $ 1,000,000.00
6 celebrities @ $55,000 $ 330,000.00
12 sports players @ $141,500 $ 1,698,000.00
Base Inventory (3 stores) $ 63,150.00
Inventory Turnover Ratio 2.7
Average Profit 8.0%
Under Armour Avg. Profit 5.81%
Current Indian Target Market 1,780,000 1,780,000 1,780,000 1,780,000 1,780,000
Market Share at: 0% profit 3.61% 3.45% 3.45% 3.45% 3.45%
4% profit 3.75% 3.58% 3.58% 3.58% 3.58%
Under Armour Avg. - 5.81% profit 3.82% 3.65% 3.65% 3.65% 3.65%
8% profit 3.90% 3.72% 3.72% 3.72% 3.72%

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