News Feature | October 22, 2013

Under Armour Continues International Expansion

Source: Innovative Retail Technologies
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By Bob Johns

Under Armour

The athletic apparel company is building its brand internationally by opening more stores in China.

At the Goldman Sachs Global Retailing Conference in September of this year, Under Armour CEO Kevin Plank said that his company is a $10 billion company at a $2 billion level right now. In order to achieve his goal of becoming that $10 billion company, global expansion is key. “We recognize that we have this very strong North American business. It’s actually more than 90% of our total revenues. We understand that gives us great runway and great opportunity because our idea, our opportunity, is to be a global brand, which we define as where more than half of our revenues will come from outside of our home country. We haven’t put a timeline on that, but we believe it’s a great opportunity,” says Plank. To that end, the company currently operates its brand in China, Hong Kong (through a partnership), and Taiwan.

This past week Under Armour opened its first store in Shanghai, China. The location is a concept store focusing on immersive multimedia to convey the stories of how Under Armour is making athletes better through innovation. One of the key components of the experience is a 270-degree screen showing short films detailing athlete’s stories.  Plank explains, "Wherever we go around the globe, we will lead first with our Story and bring the people into the best Under Armour experience possible before we ask them to try our performance apparel and footwear. We believe in the power of storytelling and our ability to tell provocative and relevant stories will serve as a catalyst for our international growth. For many athletes in China this will be their introduction to our brand. By offering this exclusive experience and bringing to life what it means to be an athlete, this is our way to give back to athletes in China and build meaningful relationships that will last for years to come." The film, like Under Armour’s signature advertising campaigns, feature athletes like Michael Phelps and Brandon Jennings.

Under Armour is focusing on the customer experience in the stores to build brand awareness and loyalty, and it seems to be working. The company recently reported its 13th consecutive quarter of 20 percent or better top line growth, which is nearly unheard of in retail right now. In order to maintain this growth, CFO Brad Dickerson notes, “The reality is to maintain the balance of the need to invest in places like our women’s brand, in footwear, in international, in specialty retail. There is a lot of opportunity out there for us, so we need to continue to invest in those areas. So, whether it be opportunities that we have from a top-line perspective to grow our business in the near term or mid-term, whether it would be opportunities that may exist in gross margin expansion in the near-term, mid-term, we would take a lot of those benefits and really look to reinvest in to our business to continue to drive our business from a top-line perspective or give us much more insurance or assurance around the ability to launch things like Brazil and Chile and so forth.”

Direct to consumer has become a large part of the business, with the company now operating 105 outlet stores. This side of the business now accounts for nearly 30 percent of revenues, and the plan is to keep expanding. At the company’s investor’s day, they announced plans to double the square footage of retail space through new stores and expansions of existing locations. Additionally, the e-commerce space is growing at a 30 percent annual clip. The company is currently working to increase synergies between the online and offline channels to create an omni0channel brand experience.

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