14 May Under Armour looks to women, running to propel brand in race with rivals
Under Armour CEO Kevin Plank is far from alone in believing the relatively young Baltimore-based company has a shot at becoming the world’s biggest sports brand.
Among nearly 200 shareholders who crowded into the company’s Locust Point headquarters for its annual meeting Tuesday were more than a few who shared the founder’s enthusiasm.
“The important thing about this company is one word: ‘innovative,'” said Frank Altoz, a shareholder from Catonsville. “As long as they keep doing that, the stock will be going up.”
Shares of Under Armour have soared 65 percent in the past year. (The stock price did slip 85 cents Tuesday to $48.10.)
The less than 2-decade-old sports apparel company is looking to take market share from bigger rivals such as Nike and Adidas by targeting the women’s sports apparel and footwear markets, opening dozens of its own retail outlets and spreading its brand slowly but surely around the globe, Plank said during the presentation. Sales in Europe, Asia and Latin America accounted for less than 10 percent of Under Armour’s revenue of $2.3 billion in 2013.
After 16 consecutive quarters of sales gains of 20 percent or more, Under Armour anticipates nearly $3 billion in sales for 2014.
But the company, which has its roots in a compression T-shirt that wicks away sweat, has yet to develop its “defining product as a brand,” Plank said.
“From the beginning, Under Armour has always focused on making athletes better,” whether they aspire to play college sports or just lose 15 pounds, Plank said. “The relentless pursuit of innovation is something that differentiates our company today.”
The company envisions sales to women, now a $500 million segment, surpassing the $1 billion men’s category someday. This summer, it will kick off a marketing campaign to female consumers that features American Ballet Theatre soloist Misty Copeland, who signed a marketing deal with Under Armour in January.
“We are investing heavily in the women’s business because we believe we can win,” Plank said.
Another growth area is footwear, which Under Armour has sold for eight years, starting with football and baseball cleats and expanding into training and running, which is seen as one of the biggest opportunities. The brand expects to build on sales of footwear within existing sports, strongholds such as football, basketball, running and training, he said.
Shareholders at Tuesday’s meeting applauded the goals, while offering suggestions for improving the brand.
“I like the philosophy and I like supporting companies that are longer-term” growth prospects, “with products I use myself,” said Satoshi Muso, a business consultant from Los Angeles.
But he suggested that Plank make the company’s website a smoother experience for shoppers. As a consumer, he said he would buy even more Under Armour shirts and leggings for running and spinning classes but has difficulty finding them in stores and finds the online experience confusing.
“The naming [of apparel and footwear] is confusing,” he told Plank during a question-and-answer period. “I want the product and want more of it, but the online experience is the problem I have.”
Another shareholder, Rhonda Overby, president and CEO of the Glyndon marketing firm Camera Ready, said one of her biggest regrets as an investor was deciding against making a bigger investment in Under Armour several years ago.
“The stock has performed in a stellar fashion,” she said. “The numbers speak for themselves.”
Since late last year, the company has signed deals to become exclusive supplier to sports teams at Notre Dame and the U.S. Naval Academy, expanded into Brazil, opened an Under Armour Experience store in Shanghai, China, and a Brand House in New York City’s Soho, and made inroads into footwear sales with products such as the new Speedform Apollo, touted in a company marketing campaign last winter that shows an athlete sprinting across a desert amid images of jets and rockets.
The company found itself mired in controversy in February over high-tech speedskating suits for the U.S. Olympic team that initially were blamed for the team’s disappointing performance in Sochi, Russia, but later were cleared by U.S. Speedskating. Shareholders were shown images of the skaters and of news accounts as part of a video highlighting the past six months.
“What did Under Armour do wrong?” an announcer said in the video, which also showed Plank’s response: “There’s no greater story than the comeback.”
Plank, who was joined at the meeting by Under Armour athlete and Baltimore Raven Haloti Ngata, announced that the company will invest in a new lighted turf football field at Latrobe Park in Locust Point, to be called Banner Field, which will be the home field for Digital Harbor High School. The company also plans to outfit girls’ varsity basketball teams in city schools.