Stock Price 9/24/09

Stock opened at $28.69 and closed at $28.13 which is $.35 down from Wednesday's close price. Overall the past month or so this stock has not seen any large increases or decreases from day-to-day. In the past month it has been steadily increasing from under $23, peaking at $30.50 and steadily leveling off around $28.

Mission Statement

Under Armour’s mission as stated on their website is, “To make all athletes better through passion, science, and the relentless pursuit of innovation”.
http://www.uabiz.com/company/mission.cfm
Under Armour takes pride in their performance apparel that is designed to keep athletes cool, dry and light throughout the course of a game, practice or workout. It touts that the technology behind their product assortment is complex but the program for reaping the benefits is simple: wear HeatGear® when it’s hot, ColdGear® when it’s cold, and AllSeasonGear® between the extremes. Their goal is to replace basic cotton products with their innovative merchandise.
Under Armour's mission statement contains the following effective elements:
Graphic, Flexible, Easy to communicate, Focused, and Desirable
It has the following shortcomings:
Too broad, Slightly vague

Marketing Strategy

UA has limited marketing dollars in comparison to their competitors. These dollars must be used strategically in order to achieve advancement in the market. Under Armour’s mission as stated on their website is, “To make all athletes better through passion, science, and the relentless pursuit of innovation”. The company utilizes a two-part marketing and branding strategy. The first part is selling its products to high profile athletes and teams. The other part involves using product placements and sponsorships. Since its inception the company has relied on positive word of mouth customer satisfaction. As detailed in the most recent Annual Report, Under Armour “seeks to drive consumer demand for products by building brand equity and awareness as a leading performance athletic brand”. Advertising campaigns, promotions, and marketing are all internally produced in order to keep key control over the brand image. Selling products to professional and collegiate athletes and teams allows Under Armour to create an ongoing marketing scheme that also increases its brand authenticity among potential consumers. These athletes and teams wear their Under Armour during the game and at practices. An ongoing marketing scheme is created by the various types of media that could capture the team or athlete performing while wearing Under Armour. For instance, Devin Hester is a wide receiver for the Chicago Bears football team. He also has a sponsorship agreement with Under Armour. Fans at the Sunday night football game will see him sporting the Under Armour gear as well as fans watching the game on television or even streaming it live online. Assume that he catches the winning touchdown in this game and his picture ends up on the front page of the Chicago Tribune or even in an article in the ESPN Magazine, yet another set of consumers are exposed to the image of this professional athlete performing while wearing Under Armour. All of these images reach different consumers. They all see a professional athlete using Under Armour. They also see it working for the athlete. This repetitive image invokes authenticity into the brand image. While Under Armour seeks established athletes, their main goal is to catch the new and upcoming sports stars. This strategy falls in line with their on the edge of technology, innovative reputation and it is also less expensive. Under Armour has used product placements as a main market strategy to increase consumer awareness. Any Given Sunday was Under Armour’s first break at product placement in a blockbuster movie. These strategies along with their fierce and passionate commercials create a brand that is viewed as a force to be reckoned with.

An External Environment Analysis

UA achieved early success in the compression performance niche industry. This success allowed them opportunities to expand into other sub-markets of the sports apparel industry and to experience large growth rates in an otherwise saturated market. Sustainability and continued growth are their main goals. UA wants sustain their competive advantages and continue to experience record growth rates. Competitors like NIKE and adidas are very large, established corporations in comparison to Under Armour. Both NIKE and adidas have created their own competitive compression performance lines which means that Under Armour's first mover advantages will be diminishing. Both of these industry giants have a much larger marketing budget than that of Under Armour. The economies of scale that NIKE and adidas possess could make it hard for Under Armour to continue diversification of products. The state of the current economy has triggered a decrease in consumer spending which could have continued effects on sales numbers in the months to come. (As shown in earlier post Under Armour has posted earnings and growth as recent as the second quarter 2009.) Brand image and strategic use of limited marketing dollars will be key in Under Armour's continued success.

Stock Price

Today UA opened at $23.23 and closed at $25.41, up $2.18.
This about the median in a 52 week range from $11.94 to $43.52.
Major competitor, NIKE, Inc closed at $55.35 today with a 52 week range from $38.24 to $68.00.

Earnings Up, but so are Concerns

In the midst of one of the worst economic downturns in the history of the United States, Under Armour posts a second quarter increase in net revenues overall, apparel net revenues, and net income.
Kevin Plank (the founder, Chairman, and CEO) noted, "We have a powerful brand that resonates with consumers, a growth platform with enormous long-term opportunity, and a strengthening balance sheet. In 2009, we will continue to make key investments in our growth drivers, increase the level of expertise of our team, and become better operators. An incredible path lies ahead for our brand, and through innovation and execution we will deliver our message of performance to athletes across the globe."
Click on the link to read the news release: http://www.uabiz.com/news/releasedetail.cfm?ReleaseID=399345
Although overall this is great news for investors of UA. There is one underlying potential cause for concern. UA introduced a new addition to their footwear division in January 2009. Footwear sales have substantially decreased in comparison to the second quarter of 2008. In the news release the company states that this was predicted. UA is finding that this market is unlike others in which it operates. Although it sees the same competitors as in the apparel industry the footwear industry is severely oversaturated and there might not be enough market share to cover the costs of this division. To remain on the cutting edge it is important for UA to remain deft and able to take advantage of other first mover advantages in the sporting goods industry. UA's footwear offers nothing new and innovative to the footwear industry which may be the downfall for this diversification.