1. Under Armour’s Growth Bubble - Highly Competitive Market – Overestimated Expansion Potential - Valuation
Under Armour Valuation Project
Mia Seder, Julia Blanco, Ted Nehrbas, Claudia Esteva, Ryan Buzzell & Bobby Weaver
July 10, 2015
Tuck Bridge Summer Program 2015
2. Under Armour is overvaluedby the market at
$84 per share; wevalue UA at $68 pershare
•UA’s revenue rates are expected to exceed the average
market revenue growth rates in the short-term
•UA is a strong competitor, but lacks consumer ratings
Under Armour’s
Growth Bubble
•UA’s brand continues to develop through originality,
athletic performance and innovative enhancements
•UA has created a revolutionary fitness community to
gain a competitive edge
Highly Competitive
Market
•UA’s growth is currently driven by its women’s
apparel, footwear, and international development
•UA faces associated risks from these opportunities
Overestimated
Expansion Potential
•UA is overvalued
•Increasing revenue growth rates is unsustainable in
their competitive market
Valuation
Under Armour’s Growth Bubble - Highly Competitive Market – Overestimated Expansion Potential - Valuation2
3. Under Armour is overvaluedby the market at
$84 per share; wevalue UA at $68 pershare
•UA’s revenue rates are expected to exceed the average
market revenue growth rates in the short-term
•UA is a strong competitor, but lacks consumer ratings
Under Armour’s
Growth Bubble
•UA’s brand continues to develop through originality,
athletic performance and innovative enhancements
•UA has created a revolutionary fitness community to
gain a competitive edge
Highly Competitive
Market
•UA’s growth is currently driven by its women’s
apparel, footwear, and international development
•UA faces associated risks from these opportunities
Overestimated
Expansion Potential
•UA is overvalued
•Increasing revenue growth rates is unsustainable in
their competitive market
Valuation
3 Under Armour’s Growth Bubble - Highly Competitive Market – Overestimated Expansion Potential - Valuation
4. The global sportsapparelmarket is expectedto
increasefrom 3.4% to 4.0% starting 2015
0
20
40
60
80
100
120
140
160
180
2011 2012 2013 2014 2015E 2016E 2017E 2018E
$ Billion
4.0% CAGR
3.4% CAGR
Total Global Sport Apparel Market Sales and Projections
Source: Statista
132
B
135
B
141
B
146
B
152
B
158
B
165
B
171
B
4 Under Armour’s Growth Bubble - Highly Competitive Market – Overestimated Expansion Potential - Valuation
5. Under Armour 28.0%
UA constitutesa fraction of total market revenue
but maintains the highest growthrate at 28%
Source: Market Realist
0%
20%
40%
60%
80%
100%
Total revenue breakdown
CAGR (2010-2014)
Lululemon 26.0%
Adidas 4.9%
Nike 10.0%
Other
Market%
Global Sports Apparel Market
5
3.4%
Under Armour’s Growth Bubble - Highly Competitive Market – Overestimated Expansion Potential - Valuation
6. Consumerperspectiveson athletic apparel
brands’ strengths and weaknesses
Under Armour Nike Adidas Lululemon
Price
Technology
Development
Consumer
Preference
Quality
Total 63/100 75/100 50/100 31/100
6
Least appealing to
consumer
Most appealing to
consumer
Under Armour’s Growth Bubble - Highly Competitive Market – Overestimated Expansion Potential - Valuation
7. Under Armour is overvaluedby the market at
$84 per share; wevalue UA at $68 pershare
•UA’s revenue rates are expected to exceed the average
market revenue growth rates in the short-term
•UA is a strong competitor, but lacks consumer ratings
Under Armour’s
Growth Bubble
•UA’s brand continues to develop through originality,
athletic performance and innovative enhancements
•UA has created a revolutionary fitness community to
gain a competitive edge
Highly Competitive
Market
•UA’s growth is currently driven by its women’s
apparel, footwear, and international development
•UA faces associated risks from these opportunities
Overestimated
Expansion Potential
•UA is overvalued
•Increasing revenue growth rates is unsustainable in
their competitive market
Valuation
7 Under Armour’s Growth Bubble - Highly Competitive Market – Overestimated Expansion Potential - Valuation
8. UA’s original apparel innovation has provided the
foundation for 20 years of high performance
products
1996
Compression
T-shirt
1998
ColdGear
Mock
2006
Click-Clack
2011
Charged
Cotton
2012
Armour Bra
2015
UA Record
8
Adidas Clima-chill Nike Cold Tech. Fitbit Fitness Band
Product Equivalents
Under Armour’s Growth Bubble - Highly Competitive Market – Overestimated Expansion Potential - Valuation
9. Strategic sponsorshipshelp pushUnderArmour’s
brand forward, but market remains competitive
9
41% increase
in footwear
sales
Increased fan
base
Women’s
apparel
reaches 30%
Source: Nasdaq, USAToday
2x
sponsorships
6/10 top
endorsements
in 2014
Dominant
sponsor in all
5 big sports
Under Armour’s Growth Bubble - Highly Competitive Market – Overestimated Expansion Potential - Valuation
10. UA creates the Recordappto reach new
customers
Synthesized fitness
platform
Connected fitness
community
120 million users
Mapmyfitness
20 million users
Diverse suite of programs
under it’s brand
MyFitnessPal
80 million users
Leading fitness tracking
application
Endomondo
20 million users
80% of users outside U.S.
HTC Grip
Wearable device
10
}
$571 M
acquisition fee
Generates $8.4
M in tangible
Potential
valuation of
$5-10B
Garmin
application
VS.
Under Armour’s Growth Bubble - Highly Competitive Market – Overestimated Expansion Potential - Valuation
11. Under Armour is overvaluedby the market at
$84 per share; wevalue UA at $68 pershare
•UA’s revenue rates are expected to exceed the average
market revenue growth rates in the short-term
•UA is a strong competitor, but lacks consumer ratings
Under Armour’s
Growth Bubble
•UA’s brand continues to develop through originality,
athletic performance and innovative enhancements
•UA has created a revolutionary fitness community to
gain a competitive edge
Highly Competitive
Market
•UA’s growth is currently driven by its women’s
apparel, footwear, and international development
•UA faces associated risks from these opportunities
Overestimated
Expansion Potential
•UA is overvalued
•Increasing revenue growth rates is unsustainable in
their competitive market
Valuation
11 Under Armour’s Growth Bubble - Highly Competitive Market – Overestimated Expansion Potential - Valuation
13. Women’s apparelis UA’s fastest growing
segment, outcompetingthe market nine times
32
33
34
35
36
37
2013 2014 2015E
Athleisure Market
13
8% CAGR
4.1% CAGR
0
500
1000
1500
2013 2014 2015E 2016E
UA’s Female Market
Revenue
650 M
1 B
$ Billions
$ Millions
35.7% CAGR
400 M
500 M
33.7 B
35.1 B
36.5 B
Source: Company Reports, Analyst Projections, NPD Reports
Under Armour’s Growth Bubble - Highly Competitive Market – Overestimated Expansion Potential - Valuation
14. 44.2% increasein UA footwearrevenues from
2013to 2014withnew footwear
0
200
400
600
800
2011 2012 2013 2014 2015E 2016E
Footwear revenues$ millions
14
Source: Forbes, UA
Under Armour’s Growth Bubble - Highly Competitive Market – Overestimated Expansion Potential - Valuation
15. Between 2016 and 2020, international
revenuesprojectedto grow from 12% to 30%
0.00%
5.00%
10.00%
15.00%
20.00%
25.00%
30.00%
35.00%
2010 2012 2014 2016E 2018E 2020E
International Revenue as a Percentage of Total
Revenue
$655 Million
$4 Billion
Source: Company Reports
15 Under Armour’s Growth Bubble - Highly Competitive Market – Overestimated Expansion Potential - Valuation
16. ExistingUA storelocations worldwideas of 2015
Market Position - Highly Competitive Market - Growth Opportunities/ Associated Risks - Valuation16
Source: Company Reports
18. Under Armour faces fourmajor limitationsto
future revenue growth
Limitations
Competitors
Limited
international
brand recognition
Acquisition of
fitness community
Third-party
manufacturers
and suppliers
Middle
East
15%
CaSA
14% Asia
66%
18 Under Armour’s Growth Bubble - Highly Competitive Market – Overestimated Expansion Potential - Valuation
19. Under Armour is overvaluedby the market at
$84 per share; wevalue UA at $68 pershare
•UA’s revenue rates are expected to exceed the average
market revenue growth rates in the short-term
•UA is a strong competitor, but lacks consumer ratings
Under Armour’s
Growth Bubble
•UA’s brand continues to develop through originality,
athletic performance and innovative enhancements
•UA has created a revolutionary fitness community to
gain a competitive edge
Highly Competitive
Market
•UA’s growth is currently driven by its women’s
apparel, footwear, and international development
•UA faces associated risks from these opportunities
Overestimated
Expansion Potential
•UA is overvalued
•Increasing revenue growth rates is unsustainable in
their competitive market
Valuation
19 Under Armour’s Growth Bubble - Highly Competitive Market – Overestimated Expansion Potential - Valuation
20. Under Armour is overvaluedby the market at
$84 per share; wevalue UA at $68 pershare
20
Beta:
.739
WACC:
6.4%
Terminal Growth
Rate: 3.0%
Current Share
Price:
$85
Estimated Share
Value: $68
Year 2015E 2016E 2017E 2018E 2019E Terminal
($ in thousands)
Total Revenue 4,102,212 5,455,942 7,256,403 9,651,016 12,835,851 13,220,927
Operating Cost 3,729,131 4,959,745 6,596,460 8,773,292 11,668,479 12,018,533
EBIT 373,081 496,197 659,943 877,724 1,167,373 1,202,394
After-tax Income 226,833 301,688 401,245 533,656 709,763 731,055
(+) Depreciation 95,582 127,123 169,074 224,869 299,075 308,048
(-) Change in NWC 66,124 83,580 89,782 93,967 94,645 97,484
(-) CAPX 610,000 158,904 211,343 281,086 373,844 308,048
Free Cash Flow (353,709) 186,327 269,195 383,472 540,349 633,571
Under Armour’s Growth Bubble - Highly Competitive Market – Overestimated Expansion Potential - Valuation
21. Assumptionsare conservativebasedon
historicalaverages
21
2012 25%
2013 27%
2014 32%
2015E – 2019E 33%
Terminal Growth
Rate
3.0%
COGS 51% of revenue
SG&A 37% of revenue
Depreciation 2.3% of revenue
Tax Rate 39.2%
Working Capital See appendix
CapEx See appendix
Revenue Growth Other Rates
Under Armour’s Growth Bubble - Highly Competitive Market – Overestimated Expansion Potential - Valuation
22. UA priceper share is most dependenton its COGS
and SG&A expenses
22
Price Per Share ($)
COGS
SG&A
Revenue Growth
Terminal Growth
2012 2013 2014 Average
COGS 52.1% 51.3% 51.0% 51.4%
SG&A 36.5% 37.4% 37.6% 37.2%
20 30 40 50 60 70 80 90 100 110
Under Armour’s Growth Bubble - Highly Competitive Market – Overestimated Expansion Potential - Valuation
23. Pessimistic,base, and optimisticrevenue
growthrate outlooks
Most
Pessimistic
Somewhat
Pessimistic
Base Case
Somewhat
Optimistic
Most
Optimistic
Revenue
Growth
Rate
27% 30% 33% 36% 39%
COGS
(% of rev)
51% 51% 51% 51% 51%
SG&A
(% of rev)
37% 37% 37% 37% 37%
Terminal
Growth
Rate
3.0% 3.0% 3.0% 3.0% 3.0%
Stock Price $46 $56 $68 $80 $94
23 Under Armour’s Growth Bubble - Highly Competitive Market – Overestimated Expansion Potential - Valuation
24. Under Armour is overvaluedby the market at
$84 per share; wevalue UA at $68 pershare
•UA’s revenue rates are expected to exceed the average
market revenue growth rates in the short-term
•UA is a strong competitor, but lacks consumer ratings
Under Armour’s
Growth Bubble
•UA’s brand continues to develop through originality,
athletic performance and innovative enhancements
•UA has created a revolutionary fitness community to
gain a competitive edge
Highly Competitive
Market
•UA’s growth is currently driven by its women’s
apparel, footwear, and international development
•UA faces associated risks from these opportunities
Overestimated
Expansion Potential
•UA is overvalued
•Increasing revenue growth rates is unsustainable in
their competitive market
Valuation
24 Under Armour’s Growth Bubble - Highly Competitive Market – Overestimated Expansion Potential - Valuation
25. Appendix
1. Intro Slide
2. Executive Summary
3. Market position exec summary
4. Global sports apparel market growth
5. Market revenue breakdown and competitor
growth rates
6. Consumer perspectives
7. Highly competitive market exec summary
8. Apparel innovation timeline
9. Strategic Sponsorships
10. Record application
11. Expansion Opportunities / Associated Risks exec
summary
12. Key growth drivers
13. Women’s apparel
14. Footwear revenue increase
15. International revenue growth
16. UA map
17. Nike map
18. Risks
19. Valuation exec summary
20. Revenue breakdown/ Free cashflows
21. Revenue growth forecasts
22. Sensitivity analysis
23. Bear, base, bull cases
24. Final exec summary
25. Appendix
26. UA sales growth
27. Stock prices
28. Total revenue breakdown by product
29. Huge growth opportunities in the consumer
health industry
30. If UA can monetize Record, potential value
creation
31. Growth of the consumer health market creates a
shift in health consumer needs
32. International revenue growth comparison to Nike
33. Perceptual map
34. Athletic clothing preferences
35. What is athleisure wear?
36. Number of mobile devices with health apps
37. Increase in UA owned stores
38. What is Under Armour?
39. Coldgear/ Hotgear tech slide
40. UA Map
41. WACC Calculation
42. Equity Value per Share Calculation
25 Under Armour’s Growth Bubble - Highly Competitive Market – Overestimated Expansion Potential - Valuation
26. UA’s sales havegrownat a rate of 28% and are
projectedto grow at 33% in the future
0
2
4
6
8
10
12
14
2011 2012 2013 2014 2015E 2016E 2017E 2018E 2019E
$ Billions
Total Under Armour Sales and Projections
28.0% CAGR
33.0% CAGR
Source: Analyst Projections
1.47 B
1.83 B
2.33 B
3.08 B
7.26 B
9.65 B
12.84 B
4.10 B
5.45 B
26 Under Armour’s Growth Bubble - Highly Competitive Market – Overestimated Expansion Potential - Valuation
28. With three differentlines of performanceand
climate specificgear, apparelconstitutes75%
of total revenue
Under Armour Revenue Breakdown
2014
0%
20%
40%
60%
80%
100%
13% Footwear
9% Accessories
75%
Apparel
3% Licensing
28 Under Armour’s Growth Bubble - Highly Competitive Market – Overestimated Expansion Potential - Valuation
29. UA recognizesthe huge growthopportunities
in the consumerhealth industry
0
5,000
10,000
15,000
20,000
25,000
30,000
2013 2014 2015E 2016E 2017E
Global mHealth app market
revenue
Global Sahipments of wearble
fitness devices
Projections for wearable fitness device
sales of 1.8B by end of 2015
(USD $ millions)
Year
Revenues for global mHealth
app’s projected $26.6 B in 2017
29 Under Armour’s Growth Bubble - Highly Competitive Market – Overestimated Expansion Potential - Valuation
30. If UA can monetize Record, potential value
creation is $5-10B
Ticker “Year
1”Sales
(#M)
“Year 5”
Sales (M$)
4-yr sales
CAGR
Year 5 EOY
market cap
($M)
Price-to-
Sales Ratio
FB 272 5089 108% $63,142 12x
LNKD 79 972 87% $12,593 13x
TWTR 28 1403 165% $22,760 16x
YELP 48 378 68% $3,969 11x
GRPN 31 2574 203% $7,860 3x
ZNGA 19 1281 185% $1,839 1x
Average 79 1949 123% $18,694 10x
UA bull case 55 750 92% $7,192 10x
Bull Case for UA
Source: Bloomberg: Analyst Report
30 Under Armour’s Growth Bubble - Highly Competitive Market – Overestimated Expansion Potential - Valuation
31. Projected~50%growthofthe$502Bconsumerhealth
marketby2017createsashiftinhealthconsumerneeds
$502B
$737 B
Health Consciousness
In-home Diagnostics
Mobile Health Apps
Mobile health
apps help
consumers
achieve these
preventative
actions.
In home
diagnostic testing
market is $15
billion, growing at
~5% per year.
-Increased awareness of consumers regarding
preventative methods of health care
- New “health-oriented” consumer
increasingly pursues preventative measures
that allow them to take control to improve
their health outcomes.
Projected
Consumer Health
Market
31 Under Armour’s Growth Bubble - Highly Competitive Market – Overestimated Expansion Potential - Valuation
33. How does UA appeal to customers
Enhances athletic
performance
Aesthetically sharp
and distinctive
Affordable/practical
Appeals to
conservative tastes
Highest quality/price
Comfortable for
everyday wear
33 Under Armour’s Growth Bubble - Highly Competitive Market – Overestimated Expansion Potential - Valuation
34. Under Armour evolves to satisfy
changing consumer preferences
Comfort
Fit
Moisture Wicking
Flexibility
Breathability
0% 10% 20% 30% 40% 50%
Athletic Clothing Preferences
34 Under Armour’s Growth Bubble - Highly Competitive Market – Overestimated Expansion Potential - Valuation
37. Increase in UA owned stores from
134 in 2014 to 153 in 2015
0
20
40
60
80
100
120
140
160
2014 2015
Factory House Stores
Brand House Stores
NumberofUAstores
37 Under Armour’s Growth Bubble - Highly Competitive Market – Overestimated Expansion Potential - Valuation
38. Foundedby a former football player,UA caters
to the specializedneeds of athletes
38
• Started 1996
• Founder: Kevin Plank
• Specialized
performance apparel
• Sports footwear and
accessories
Under Armour’s Growth Bubble - Highly Competitive Market – Overestimated Expansion Potential - Valuation
39. Keepingwiththeir mission,UA strivesto provide
the consumerwith high quality, innovativegear
39
"To make all athletes better through passion, science, and the relentless pursuit of
innovation"
Revolutionary Moisture
Transport System
Under Armour’s Growth Bubble - Highly Competitive Market – Overestimated Expansion Potential - Valuation
40. Openingof UA new internationalbrand house
stores and officesduring 2015
Sao Paolo, Brazil
Abu Dhabi, UAE
China
Germany
40
Source: Company Reports
Under Armour’s Growth Bubble - Highly Competitive Market – Overestimated Expansion Potential - Valuation
41. WACC calculation
Risk-free rate 2.40%
Beta 7.39
Expected Return 7.94%
Market risk premium 5.54%
Cost of equity 6.49%
Average cost of debt 3.10%
Debt/Total Value 1.53%
Equity/Total Value 98.47%
WACC 6.42%
41 Under Armour’s Growth Bubble - Highly Competitive Market – Overestimated Expansion Potential - Valuation
42. Equity value per share calculation
Estimated Long-term revenue growth rate 3.00%
Terminal Value 18,506,288
Enterprise Value 14,306,209
Cash & Cash Equivalents 593,175
Debt 284,201
Equity Value 14,615,182.92
Shares outstanding 215,537
Equity Value per Share 67.81
42 Under Armour’s Growth Bubble - Highly Competitive Market – Overestimated Expansion Potential - Valuation
Editor's Notes
----- Meeting Notes (7/6/15 21:52) -----
Put date, group # Fancify
----- Meeting Notes (7/8/15 11:51) -----
Make UA more pronounced
After completing our research, we concluded that Under armour is overvalued by the market at 68$ per share for four central reasons.
-The first driver of our valuation regards Under Armours position within the sportswear apparal market, how does Under Armour differentiate itself from their competitors and gain market share within the sports apparel and equipment industry?
-The second driver of our valuation growth examines how Under armour leads innovation in their industry.
-The third driver assesses opportunities of growth for Under Armour as they expand abroad, enter new markets, and the potential risks associated with these strategies. their creation of new products, strategies for expanding internationally, and the efforts to capture the growing market of athletic leisure apparal for women.
For these three reasons, we recognize that Under Armour would need to sustain, what we believe is an unsustainable long term growth rate, thus making their stock currently over valued.
Next, Julia will expand on Under Armours role within their market.
After completing our research, we concluded that Under armour is overvalued by the market at 68$ per share for four central reasons.
-The first driver of our valuation regards Under Armours position within the sportswear apparal market, how does Under Armour differentiate itself from their competitors and gain market share within the sports apparel and equipment industry?
-The second driver of our valuation growth examines how Under armour leads innovation in their industry.
-The third driver assesses opportunities of growth for Under Armour as they expand abroad, enter new markets, and the potential risks associated with these strategies. their creation of new products, strategies for expanding internationally, and the efforts to capture the growing market of athletic leisure apparal for women.
For these three reasons, we recognize that Under Armour would need to sustain, what we believe is an unsustainable long term growth rate, thus making their stock currently over valued.
Next, Julia will expand on Under Armours role within their market.
----- Meeting Notes (7/7/15 21:17) -----
Source on the left
Make a bottom bar: where are we?
----- Meeting Notes (7/7/15 23:20) -----
Showing that the market is strong and is expected to grow in the future at an even higher rate
----- Meeting Notes (7/8/15 11:51) -----
has been growing at 3.42 and is expected to continue growing to 4.0%
fix tracker
----- Meeting Notes (7/8/15 15:42) -----
In the last four years***
Has grown at*
bold tracker
UA’s growth record since its inception in 1996 has been exemplary. Revenue has grown to $3.1 billion in 2014. The company has been able to grow revenue at 20%+ growth rates for 19 consecutive quarters.
In contrast, peers Nike, Lululemon Athletica (LULU), and Adidas (ADDYY) have exhibited more modest growth. NKE, LULU, and ADDYY grew sales at a CAGR of 10%, 26%, and 4.9%, respectively, over their respective five-year fiscal periods.
----- Meeting Notes (7/6/15 21:52) -----
Separate CAGR from name (leave name on right)
First slide should be sports apparel
----- Meeting Notes (7/7/15 21:17) -----
Move Lululemon to the right, show growth of sports apparel market in its spot, and find CAGR projection
Numbers in the title
----- Meeting Notes (7/8/15 11:51) -----
Include global sports apparel market CAGR
----- Meeting Notes (7/7/15 23:20) -----
Add another row of information
Make it clearer what we mean by reputation
Quality
----- Meeting Notes (7/8/15 11:51) -----
Define the perspective as consumer's
Add one more thing like comfort
Reformat consumer preference
----- Meeting Notes (7/8/15 15:42) -----
What the harvey balls mean
After completing our research, we concluded that Under armour is overvalued by the market at 68$ per share for four central reasons.
-The first driver of our valuation regards Under Armours position within the sportswear apparal market, how does Under Armour differentiate itself from their competitors and gain market share within the sports apparel and equipment industry?
-The second driver of our valuation growth examines how Under armour leads innovation in their industry.
-The third driver assesses opportunities of growth for Under Armour as they expand abroad, enter new markets, and the potential risks associated with these strategies. their creation of new products, strategies for expanding internationally, and the efforts to capture the growing market of athletic leisure apparal for women.
For these three reasons, we recognize that Under Armour would need to sustain, what we believe is an unsustainable long term growth rate, thus making their stock currently over valued.
Next, Julia will expand on Under Armours role within their market.
http://investor.underarmour.com/income.cfm
http://www.uabiz.com/company/history.cfm
Kevin plank talks about UA genuine products-
http://www.inc.com/magazine/201407/tom-foster/kevin-planks-formula-for-under-armours-innovative-design.html
New image links:
https://a248.e.akamai.net/f/248/9086/10h/origin-d4.scene7.com/is/image/Underarmour/V5-1257468-600_HTF?scl=1&fmt=jpg&qlt=70&wid=1064&hei=1240&size=2266,2641&extend=0,792,0,0&cache=on,off&bgc=efefef&resMode=sharp2
-Strategic sponsorships help Under Armour increase brand recognition, reach new consumers, and help them compete against highly competitive companies like Nike and Adidas.
-Just last year, Under Armour signed Misty Copeland, the first female African-American dancer to be the principal dancer in the 75 year history of the American Ballet.
-In 2013, Under Armour scored two huge deals with the signing of Jordan Speith, the winner of this years Masters and US Open Golf tournaments, in addition to Steph Curry, the leading point guard for the Golden State warries, this years NBA’s MVP leading his team to an NBA Championship over Lebron James and the Cavaliers last month.
-Under Armour has always had a strong connection to football as the CEO Kevin Plank played for the Maryland Terps in his college days. Under Armour is the offical sponsor for the Terps, as well as Notre Dame, one of the top ten best college teams in the country. Under Armour’s presence expands beyond collegiate sports, in 2010, they signed star quarterback Tom Brady, 4 time super bowl champ, 3 time super bowl mvp, and 2 time NFL mvp.
-These sponsorships enable Under Armour to grow, the Steph Curry basketball shoe produced last year contributed to the 41% increase in footwear sales in 2014, as well as Misty Copeland’s ad campaign illustrating Under Armour’s efforts to reach female consumers as women’s apparal has become a crucial revenue driver, reaching over 30% of Under Armours total revenue.
Scoring the top athletes is not the only way Under Armour tries to edge itself out amongst it’s competitors, in the next slide we will look at their entry into the health and fitness app market as they continue to try and become a leader within the sports apparal industry.
Over the past two years, Under armour has acquired three fitness and health applications, Mapmyfitness, Myfitnesspal, and Endomondo.
mapmyfitness is a comprehensive health and fitness app that includes the sub categories of mapmyrun and mapmyride. This app enables users to map their exercise with over 70 million different routes to choose from, track their acitvity and share with friends. Mapmyfitness reaches over 20 million users.
-myfitnesspal is the most popular traking application for food intake and calories, used widely by personal trainers.
-myfitnesspal was such an attractive acquisition for Under Armour because the app is built into most other health fitness apps which use myfitnesspal as a direct connection to funnel their data through.
-they currently boast 45 million active users
-endomondo is a similar health and fitness tracking app with it’s headquaters in Copenhagen. Of their 20 million subscribers, 80% live outside the U.S.
Under Armour invested heavily, $571 million over the past two years, to acquire these three apps and combine their capabilities into one all inclusive platform known as Under Armour Record, a synthesized fitness and health app that creates the largest connected fitness community in the world where users can track personal health data with fitness activity, participate in community challenges, and easily share content to keep you synced with your fitness goals. In creating the Record app, Under Armours hopes to connect to new consumers and increase brand awareness amongst app users for their existing products. By creating a digital service that helps athletes and fitness minded people train and preform optimally, this will ultimately bring more customers into their stores. Record is also Under Armours way of competing against Nike +’s fitness app, vying to gain the first mover advantage in building the connected fitness application network.
The difficulty in quantifying the success of the Record app lies in the fact that the revenue derived from Record is intangible. Under Armour must find a way to monetize this fitness network. One way under armour is trying to do this is through their recent partnership with HTC, who manufacters the Grip, a wearable activity tracking device that exclusively uses the Under Armour Record platform software. HTC provides the hardware and Under Armour supplies the software.
Currently, CEO Kevin Plank has measured the success of Record by the number of new consumers reached, in quarter 1 of 2014, on average 130,000 people per day download the app. Yet, the Connected Fitness revenue as represented in the balance sheet is only $8.4 million. If Under Armour can successfully create this global fitness community that mirrors the global social community created by facebook, analyst reports value the Record between 5-10 billion of dollars, but that remains to be unseen. In the next slide, Claudia will explain opportunities for growth and the strategies Under Armour is employing capture these new opportunities.
After completing our research, we concluded that Under armour is overvalued by the market at 68$ per share for four central reasons.
-The first driver of our valuation regards Under Armours position within the sportswear apparal market, how does Under Armour differentiate itself from their competitors and gain market share within the sports apparel and equipment industry?
-The second driver of our valuation growth examines how Under armour leads innovation in their industry.
-The third driver assesses opportunities of growth for Under Armour as they expand abroad, enter new markets, and the potential risks associated with these strategies. their creation of new products, strategies for expanding internationally, and the efforts to capture the growing market of athletic leisure apparal for women.
For these three reasons, we recognize that Under Armour would need to sustain, what we believe is an unsustainable long term growth rate, thus making their stock currently over valued.
Next, Julia will expand on Under Armours role within their market.
Include CAGR
According to NPD, sales of activewear reached $35.1bn through October, representing 17% of the total apparel market, keeping the category on an upward trajectory for the past few years. NPD also noted that activewear sales have increased 8% for the 12 months ended in October while denim is down 8%. http://blogs.barrons.com/stockstowatchtoday/2015/02/13/nike-under-armour-lululemon-how-millennials-will-drive-demand-for-athletic-wear/
Drivers of athletic leisure apparal mrket
-increased heatlh consciousness amongst consumers
-growing popularity of sports leisure apparel amongst women partiucarly, comfortable atheltic apparel has become part of everyday wardrobe
-rising demand for sprots apparl abroad in emmerging markets and incresased disposable income of consumers in these same markets
All thise combine to contribute to an 8% increase in sales since 2013. add cagr rate after 2014 (and we believe under armour is well positioned for the reasons in the next slide)
11.) rely on high quality products to sustain success in growing athleisure market(high quality leggings. Use lululemon case w see through leggings)
The global sports apparel market was worth $135 billion in 2012, according to our estimates. We expect the market to grow at a CAGR of 4% during 2012-2019 to reach $178 billion.
Various factors are expected to drive market growth such as growing fitness consciousness, rising income levels in developing countries, the growing popularity of sports apparel for women as well as the trend towards stylish and comfortable sportswear.
Rising demand from Asia Pacific and Latin America due to growing economic prosperity in these regions coupled with a trend towards leading a healthy lifestyle will be the key catalysts for market growth.
(trefis)
----- Meeting Notes (7/8/15 15:42) -----
What is the CAGR for UA women (around 50%)
somehow show that it is higher than the market
----- Meeting Notes (7/8/15 19:44) -----
Add CAGR, ADD source, #s within the bar
Expect to have 35-38 branches in southeast asia by 2018.
International expansion has reversed from previous challenges and appears to be accelerating, still representing a large opportunity, as less than 10% of revenue is from outside North America.
30% of total by 2020, there is a potential for growth in the market.
At some point, Plank projects that more than half of the company’s sales will be outside the United States
----- Meeting Notes (7/6/15 21:52) -----
Use Bar graph
----- Meeting Notes (7/7/15 23:20) -----
Make the title claro
Or maybe include jst
----- Meeting Notes (7/8/15 11:51) -----
Make a slide for number of stores only
Fix source
----- Meeting Notes (7/8/15 15:42) -----
CAGR
Increase in UA owned stores from 134 in 2014 to 153 in 2015
----- Meeting Notes (7/8/15 19:44) -----
add in CAGR!!!
Notes for claudia
Under armour (this past year) opened new offices in Germany, a new store in Sao Paolo Brazil and Abu Dhabi, UAE
http://globalbb.onesource.com/Web/Reports/ReportMain.aspx?KeyID=51347623&Process=CP&CIK=1336917&Report=STRENGTHWEAKNESS
10K--Many of the specialty fabrics used in our products are technically advanced textile products developed by third parties and may be available, in the short-term, from a very limited number of sources. Substantially all of our products are manufactured by unaffiliated manufacturers, and, in 2014, 10 manufacturers produced approximately 52% of our products. We have no long term contracts with our suppliers or manufacturing sources, and we compete with other companies for fabrics, raw materials, production and import quota capacity.
Pictures: http://www.eventostoppanama.com/wp-content/uploads/2010/10/under-armour-panama.jpg
----- Meeting Notes (7/7/15 21:17) -----
Limitted brand recognition *abroad*
After completing our research, we concluded that Under armour is overvalued by the market at 68$ per share for four central reasons.
-The first driver of our valuation regards Under Armours position within the sportswear apparal market, how does Under Armour differentiate itself from their competitors and gain market share within the sports apparel and equipment industry?
-The second driver of our valuation growth examines how Under armour leads innovation in their industry.
-The third driver assesses opportunities of growth for Under Armour as they expand abroad, enter new markets, and the potential risks associated with these strategies. their creation of new products, strategies for expanding internationally, and the efforts to capture the growing market of athletic leisure apparal for women.
For these three reasons, we recognize that Under Armour would need to sustain, what we believe is an unsustainable long term growth rate, thus making their stock currently over valued.
Next, Julia will expand on Under Armours role within their market.
After completing our research, we concluded that Under armour is overvalued by the market at 68$ per share for four central reasons.
-The first driver of our valuation regards Under Armours position within the sportswear apparal market, how does Under Armour differentiate itself from their competitors and gain market share within the sports apparel and equipment industry?
-The second driver of our valuation growth examines how Under armour leads innovation in their industry.
-The third driver assesses opportunities of growth for Under Armour as they expand abroad, enter new markets, and the potential risks associated with these strategies. their creation of new products, strategies for expanding internationally, and the efforts to capture the growing market of athletic leisure apparal for women.
For these three reasons, we recognize that Under Armour would need to sustain, what we believe is an unsustainable long term growth rate, thus making their stock currently over valued.
Next, Julia will expand on Under Armours role within their market.
Graph shows compound annual growth rate over the past 4 years and our projections
Cagr= 27.96% and 21.5%
----- Meeting Notes (7/6/15 21:52) -----
Under Armour growth rate 20%, leading the industry
Expected under 2015
Include total size for each bar (100m, ex)
Label CAGR for both percentages
Split into 2 slides
This should be the first slide but for the whole market!
----- Meeting Notes (7/8/15 11:51) -----
Use the same wording as in the previous slide in the title
----- Meeting Notes (7/8/15 15:42) -----
Fix title
----- Meeting Notes (7/8/15 20:38) -----
HACE FRIO
-CEO and founder of Under Armour, Kevin Plank incorporated the company in Baltimore, Maryland in 1996.
- As a former University of Maryland football player, Plank noticed that compression shorts worn during practice and games stayed drier than any other sports apparel.
-Plank used the same moisture wicking material of the compression shorts he wore so often in his collegiate football career to create other compression apparel items that regulate body temperature by wicking sweat away, optimizing comfort, mobility and performance for athletes and active persons alike.
-After dipping $40,000 into credit card debt to fund his idea, Plank scored his first sale to Georgia Tech for $17,000, marking the start of a billion dollar business and the signature under armour compression shirt.
-Under Armour creates high quality branded performance apparel, footwear, and accessories for men, women, and youth. Under Armour specifically engineers fabrics and designs that enhance performance for athletes at all levels and consumers with active lifestyles. The brand’s signature moisture-wicking fabrics come in various styles, worn on basketball courts to playing fields around the world.
-Since its inception, Under Armour has represented the hard working, gritty, and determined athlete. Quality, performance enhancing sports apparel made for those who take to the field with passion.
-Summed up pretty concisely by one of their most popular tag line’s, Under Armour’s trademark “I Will” encapsulates the brand’s unique position as a leading supplier of high quality sports products for athletes of all levels.
Heatgear
HEATGEAR® is engineered with a microfiber blend designed to wick moisture from the body which helps the body stay cool, dry and light. (10K)
Coldgear
COLDGEAR® is designed to wick moisture from the body while circulating body heat from hot spots to help maintain core body temperature.
Allseasongear
ALLSEASONGEAR® is designed to be worn in between extreme temperatures and uses technical fabrics to keep the wearer cool and dry in warmer temperatures while preventing a chill in cooler temperatures.
Within each gearline apparel comes in three fit types
Compression
Fitted
Loose
Footwear offerings include football, baseball, lacrosse, softball and soccer cleats, slides and performance training, running, basketball and outdoor footwear
Footwear is light, breathable and built with performance attributes for athletes.
It is designed with innovative technologies which provide stabilization, directional cushioning and moisture management engineered to maximize the athlete’s comfort and control
Accessories primarily includes the sale of headwear, bags and gloves. Our accessories include HEATGEAR® and COLDGEAR® technologies and are designed with advanced fabrications to provide the same level of performance as our other products.
Show the story behind the company 30-40 seconds--give intro to the company
What is the company and what do they sell?
----- Meeting Notes (7/8/15 11:51) -----
Take out the numbers--should be a softer intro.
Put this into the appendix
Health and fitness devices: Led by the popularity of activity tracking devices, health and fitness devices will lead unit sales among all wearables in 2015 with a projected 20 million units. Revenue is expected to surpass $1.8 billion in 2015. (https://www.ce.org/News/News-Releases/Press-Releases/2014/Record-Breaking-Year-Ahead-CEA-Reports-Industry-Re.aspx)
“consumer revolution in healthcare. Consumers want faster, easier, self-serivce ways to manage and improve their helath- a trend that will continue to increase. By 2017, it is estimated that 1.7 billion smartphones and tablets wll have an m-helath app installed.” “companies outside the traditional consumer health industry are entering the arket to fufill the unmet needs of the health oriented consumer… these companies are entering into the market to respond to the connected consumer who wants to better manage their health.” https://www.accenture.com/t20150523T041535__w__/us-en/_acnmedia/Accenture/Conversion-Assets/DotCom/Documents/Global/PDF/Industries_13/Accenture-Changing-Future-of-Consumer-Health-High-Performance-Business-Study-2013-Update-Infographic.pdf
UA is attempting to create the “Fitness Network,” similar to Facebook’s social network or LinkedIn’s business network. Recent acquisitions Endomondo and MyFitnessPal have expanded UA’s reach to 120M users across three separate apps. The apps help consumers track their health and fitness. UA’s new, 4th app, “UA Record,” is an effort to blend the three apps into one big community.
Building a big online community likely helps UA sell more athletic apparel and footwear: We believe a fitness network can help UA by 1) increasing awareness of and loyalty toward the Under Armour brand; and 2) motivating consumers to workout more, which ultimately drives category sales. This is a worthy pursuit in our view. We assume in our base case the apps are marketing expenses which help drive UA’s core business. Our 20+% long-term UA sales CAGR outlook remains intact.
Adding $7 to our bull case: If UA can monetize the network beyond apparel & footwear, we see $5-10B potential value creation. UA has only $45-60M in digital sales today, but networks can grow very fast. Facebook, LinkedIn, Twitter, etc. averaged 123% 4-year sales CAGRs from the time they were roughly the size of UA’s digital business. If UA can grow like the others, we see $500M-$1B in potential sales valued at 10x in four years (Exhibit 1). We discount that value back and add it to our existing bull case to arrive at our change.
Facebook had 890 million daily active users on average in December 2014. LinkedIn has 347 million members as of 2/5/2015. Twitter had 240 million monthly active users as of its last 10K. Yelp had approximately 120 million unique visitors to its website on a monthly average basis during the quarter ended December 31, 2013.
Nevertheless, UA's mission is to reach critical mass. Plus, UA must be first. It is likely in a race with Nike and others to achieve the “first mover advantage” and build the definitive fitness network. Therefore the near-term goal is integrating the three communities by promoting Under Armour Record as an aggregator/dashboard app. if UA can achieve a critical mass of users. One basic premise UA is basing its digital strategy on - if it knows more about its consumers, it can sell them more stuff, is applicable across many industries, not just apparel and footwear. If UA can build and maintain a large, active community of health & fitness enthusiasts, why wouldn't personal trainers, fitness event promotors, nutrition companies, sports equipment companies, grocers, health care providers, etc. all want to know what these people are doing so they can sell them more stuff too? There are many, many more possibilities. The point is for these companies to gain access to the data generated by UA's network, they will likely have to compensate UA. This is one way UA can monetize the network beyond apparel and footwear.
evolution of health lifestyle industry, huge size, big potential
“consumer revolution in healthcare. Consumers want faster, easier, self-serivce ways to manage and improve their helath- a trend that will continue to increase. By 2017, it is estimated that 1.7 billion smartphones and tablets wll have an m-helath app installed.” “companies outside the traditional consumer health industry are entering the arket to fufill the unmet needs of the health oriented consumer… these companies are entering into the market to respond to the connected consumer who wants to better manage their health.” https://www.accenture.com/t20150523T041535__w__/us-en/_acnmedia/Accenture/Conversion-Assets/DotCom/Documents/Global/PDF/Industries_13/Accenture-Changing-Future-of-Consumer-Health-High-Performance-Business-Study-2013-Update-Infographic.pdf
----- Meeting Notes (7/7/15 21:17) -----
Just have a slide with a description of the product
----- Meeting Notes (7/6/15 21:52) -----
Consider using the 100% stock bar format
See if this looks better
Include average industry line
Bottom horizontal line
68% of consumers prefer athletic clothing made of cotton
----- Meeting Notes (7/7/15 21:17) -----
Care more that UA is tailoring their apparel to these preferences
By 2017, it is estimated that 1.7 billion smartphones and tablets wll have an m-helath app installed.” “companies outside the traditional consumer health industry are entering the arket to fufill the unmet needs of the health oriented consumer… these companies are entering into the market to respond to the connected consumer who wants to better manage their health.” https://www.accenture.com/t20150523T041535__w__/us-en/_acnmedia/Accenture/Conversion-Assets/DotCom/Documents/Global/PDF/Industries_13/Accenture-Changing-Future-of-Consumer-Health-High-Performance-Business-Study-2013-Update-Infographic.pdf
-CEO and founder of Under Armour, Kevin Plank incorporated the company in Baltimore, Maryland in 1996.
- As a former University of Maryland football player, Plank noticed that compression shorts worn during practice and games stayed drier than any other sports apparel.
-Plank used the same moisture wicking material of the compression shorts he wore so often in his collegiate football career to create other compression apparel items that regulate body temperature by wicking sweat away, optimizing comfort, mobility and performance for athletes and active persons alike.
-After dipping $40,000 into credit card debt to fund his idea, Plank scored his first sale to Georgia Tech for $17,000, marking the start of a billion dollar business and the signature under armour compression shirt.
-Under Armour creates high quality branded performance apparel, footwear, and accessories for men, women, and youth. Under Armour specifically engineers fabrics and designs that enhance performance for athletes at all levels and consumers with active lifestyles. The brand’s signature moisture-wicking fabrics come in various styles, worn on basketball courts to playing fields around the world.
-Since its inception, Under Armour has represented the hard working, gritty, and determined athlete. Quality, performance enhancing sports apparel made for those who take to the field with passion.
-Summed up pretty concisely by one of their most popular tag line’s, Under Armour’s trademark “I Will” encapsulates the brand’s unique position as a leading supplier of high quality sports products for athletes of all levels.
----- Meeting Notes (7/8/15 15:42) -----
Delete the tracker, bro
----- Meeting Notes (7/8/15 22:50) -----
Good job mia! shorten it maybe?
Heatgear
HEATGEAR® is engineered with a microfiber blend designed to wick moisture from the body which helps the body stay cool, dry and light. (10K)
Coldgear
COLDGEAR® is designed to wick moisture from the body while circulating body heat from hot spots to help maintain core body temperature.
Allseasongear
ALLSEASONGEAR® is designed to be worn in between extreme temperatures and uses technical fabrics to keep the wearer cool and dry in warmer temperatures while preventing a chill in cooler temperatures.
Footwear offerings include football, baseball, lacrosse, softball and soccer cleats, slides and performance training, running, basketball and outdoor footwear
Footwear is light, breathable and built with performance attributes for athletes.
It is designed with innovative technologies which provide stabilization, directional cushioning and moisture management engineered to maximize the athlete’s comfort and control
Accessories primarily includes the sale of headwear, bags and gloves. Our accessories include HEATGEAR® and COLDGEAR® technologies and are designed with advanced fabrications to provide the same level of performance as our other products.
----- Meeting Notes (7/6/15 21:52) -----
Year, pictures, replace with an informal slide
----- Meeting Notes (7/7/15 20:42) -----
What is the point that we are going for? Apparel is the most important. How has this been changing? Maybe not the best slide to start.
----- Meeting Notes (7/7/15 23:20) -----
This is more just a breakdown of revenues
Make technology the focus of this slide
----- Meeting Notes (7/8/15 22:50) -----
took a little long. emphasize important message
----- Meeting Notes (7/8/15 19:44) -----
PUT BEFORE INTL REVENUE SLIDE, add source! (make sign bigger by how many in each location?)
