In this Under Armour swot analysis we will discuss its Strengths, Weaknesses, Opportunities and Threats. Under Armour was founded in 1996 by Kevin Plan headquartered in Baltimore, Maryland, United States. UA manufactures sports and casual clothing footwear and other accessories. Under Armour vision is to inspire its customers with performance solutions. Under Armour stock is the fastest growing stock of this decade and its brand value is appreciated ten times.
Under Armour target market is higher income men and women who want to improve the sports performance. Their main focus is on athletes to help them to increase their performance by providing comfortable and quality gear.
Though Under Armour has achieve a lot of success in the past 10 years but still has facing stiff competition in the footwear and apparel industry. The top competitors of Under Armour are Nike, Adidas, PUMA and Lululemon Athletica. Here we will discuss Under Armour SWOT analysis in detail.
Table of Contents
Under Armour Strengths
Key strength of Under Armour is the great success in the past decade. Back in 2007 the company revenue was only $606 million and was not in the list of competition with Nike and Adidas. But over the years Under Armour showed great commitment and became a major player in the apparel and footwear industry. The company is gradually growing and achieved the mark of $5 billion.
In the FY 2017, Under Armour sales of apparel, footwear and accessories was 66%, 21% and 9% respectively, and remaining 4% from connecting fitness.
To compete with the top brands Nike, Adidas and Lululemon Under Armour’s athlete endorsements will help the company to market its product line. The Golden State Warriors Stephen Curry is the face of brand Under Armour, who is an important part of Under Armour credibility. Dwayne Johnson “The Rock” is another great endorsement of the company who is a part of major advertising campaigns and projects like Rock 1 sneakers and many more.
Such advertisements, social media and digital campaigns help Under Armour to portray its “cool” factor that can influence the young generation. It will also help the UA brand to diversify its product portfolio which will help the company to compete with Nike and other players.
In the past few years, Under Armour spent almost $700 million on acquisitions of connected fitness companies like MapMyFitnes and Endomondo for $475 million and $150 million respectively. CEO Kevin Plan is very serious about Connected Fitness, according to him it will “fundamentally affect global health”. According him by 2020 there will almost 50 billion retail item integrated with connected chip.
Under Armour Weaknesses
One of the key weaknesses of Under Armour is implementing a restructuring plan which will cost almost $220 million. This restructuring will help the organization to improve business performance and simplify business operations, cost efficiencies. UA is looking for reduction its workforce by 3% and $70 million cash related cost for employees’ termination and severance cost. This will affect the liquidity of the company to meet capital expenditures.
Though Under Armour revenue was 3% up in the FY 2017. But North America that comprises United States and Canada revenue was 5% down which is one the strong markets of Adidas.
Though the company has proved its success by rising revenue upto 3% it still facing the inventory management problem where the inventory level increased by 11% to $1.3 billion
According Jefferies Analyst Randal Konik, the company the overhaul its wholesales model which is one of the majors issues affecting the Under Armour North America’s sales.
Under Armour Opportunities
Under Armour started its footwear segment in 2006-2007. Merely in 11 years of span UA was able to generate 21% of its revenue from footwear units. Under Armour still need to better understand the footwear segment because it has only 2.5% market share in footwear industry. Under Armour footwear sale grew by 49% from 2016.
International growth is another opportunity for Under Armour brand. When the company went public it was generating 2% to its revenue from outside North America which is now grew to 21.7%. The company has reshuffled the international teams and hired the consultants in the international market. Investors are confident that UA has the potential to grow its market share in international market.
Most of the sports footwear and apparel brands sell its products to men. Every footwear and apparel brand tries to extend the demographics and include women and children. Few Under Armour endorsements like NBA League, Stephen Curry, The Rock and famous Brazilian model Gisele Bundchen will create an opportunity to increase its brand visibility among women and children.
E commerce is another great opportunity for Under Armour. According to Statista, in the United States the retail ecommerce sales is expected to exceed $736 billion by 2023. Under Armour has already invested in various ecommerce site and fitness Apps that can be served to collect user data.
Under Armour Threats
Under Armour is facing stiff competition especially in the North American market segment where Nike and Adidas both giants in the sports footwear and apparel industry are stealing market share from UA and other brands.
Under Armour is not about selling only ColdGear and Heated Gear T-shirts but a huge variety of products that can dilute its brand image. No doubt that these sports products contribute a huge chunk to its revenue and this could diminish the performance oriented reputation.
To conclude Under Armour swot analysis topic, the company has a compelling story over the years. UA can easily overcome its threats and weaknesses with its strengths and opportunities. It is currently restructuring to improve processes and diversify its products. The company management is trying hard to engage potential markets and categories to fuel the brand in the race of global market share.
