Test presetation

1. UNDER ARMOUR
Specialty Stores
in Rio and Sao Paulo,
BRAZIL
Dominick Fuccillo
Scott Glasthal
Guive Savoji
Ivan Velev

2. Under Armour Needs More Intl Business
"Under Armour's international expansion is a key
component of our long-term growth strategy for
the brand,“ Ryan Wood, President of Under Armour
Europe - July 2006
2009 - 5.6% of sales outside of USA / Canada.
- All in Europe / Japan
- All with distribution method
Source: Under Amour Press release 2006, 2009 Under Armour Annual Report

3. Under Armour Needs More Intl Business
Source: Under Amour Press release 2006, 2009 Under Armour Annual Report
•Proposal –Projected Cost $25 million USD in 2011, $73 million USD in 2014, $88
million USD in 2016
Establish two Under Armour retail stores in Sao Paulo and Rio de Janiero.
Create a South American Headquarters in Rio de Janiero and central
distribution center for all South American product distribution and potential
third-party retail sales.
Implement marketing strategy targeting current and up and coming Brazilian
athletes, specifically focused on the soccer market and creating brand
awareness and status among high end Brazilian consumers.
Targeted ramp-up of investment to coincide with World Cup and Olympic
events.

4. Why Brazil?
•Brazilian economy has rebounded from the global
recession and projects 5.5% GDP growth in 2010
with currency stability and a strong, inflation
targeting central bank.
•World Cup in 2014 and the Summer Olympics in
Rio de Janiero in 2016, a high-upside international
marketing opportunity for global brand exposure.
Source: The IMF

5. Market Niche

6. Competitors prices higher than domestic
Nike Adidas Under Armor
Shirt $ 25 $ 30 $30
Cleats $ 150 $ 195 $100
Nike Adidas Under Armor
Shirt R$ 44 R$ 53 R$ 53
Cleats R$ 264 R$ 343 R$ 176
Nike Adidas Under Armor
Shirt R$ 110 R$ 80 TBD
Cleats R$ 400 R$ 650 TBD
Nike Adidas Under Armor
Shirt 2.5x 1.5x TBD
Cleats 1.5x 1.9x
Price in the US (in US Dollars)
Price in the US (in Brazilian Real)
Price in Brazil (in Brazilian Real)
Brazil price / US price in Brazilian Real markup
Source: esporte.netshoes.com, www.adidas.com, www.nike.com

7. Tariff and Legal
• Common External tariff is 35% on clothing
and athletic shoe
• China anti dumping law will not be
applicable to premium shoes
• Foreign companies treated the same as
Brazilian companies
• paperwork chains
Source: The International Custom Journal: Brazil #6, 20th edition, 2008, Doing Business: Measuring Business
Regulations. www.doingbusiness.org

8. Political Economic Stability
• Socialism fears in 2002 of the first working class president
were proven wrong by a balanced government actions that
increased minimum wages, kept inflation low, and is working
to facilitate more foreign direct investment
• 2010 elections are expected to elect a leader that will
continue this trend
• Barak Obama called Lula “the most popular politician on
earth”
Source: The Most Popular Politician on Earth. Margolis, Mac. Newsweek. September 22, 2009.
http://www.newsweek.com/id/215941

9. Currency Instability
Source: The IMF and recent Capital Account Crises, Evaluation Reports, 2003, www.ieo-imf.org
• Capital account Crisis in
1999

10. Brazil’s Unholy Trilemma – Pre 1999
Free capital flow
Sovereign Monetary PolicyFixed exchange rate
East Asian Financial Crisis
Brazil’s Unholy Trilemma – 1999

11. Currency Stability
1.0x
1.4x
1.8x
2.2x
2.6x
3.0x
4/26/2006 4/26/2007 4/26/2008 4/26/2009 4/26/2010
Average:2.65x
Min:1.56x
Max:2.65x
Brazil currently has a slight current account deficit that is dwarfed by the
US’s. This would suggest further appreciation of the Brazilian Real.
Source: www.oanda.com via Interbank exchange rates

12. Possible exchange rate risk

13. $187 million just sitting on the balance
sheet and its time to make a move
Questions?
– We must protect this house