Under Armour, a Baltimore based athletic clothing manufacturer, has thrived against titans of industry like Nike and Adidas for years. Now, the popular performance gear company is aiming its sights on a new market, and it’s not what analysts expected
Under Armour Tackles High-End Fashion
Under Armour brands itself as a tough, scrappy performance brand for tough, scrappy high school athletes. The branding is pretty spot on. Under Armour is just one tenth the size of industry leader Nike, yet still brought in $3.96 billion in revenue last year, showing double digit growth each quarter.
So how does Under Armour continue that growth?
There are four ways to increase revenue. A company can either:
- Increase prices
- Increase frequency of customers returning
- Increase average purchase size
- Increase number of customers
Under Armour is attempting to do all the above with their announcement last week that the company is entering the high-end fashion market with its Under Armour Sportswear (UAS) collection. Under Armour Sportswear focuses on the East Coast young professional look, with trousers, button-downs, and blazers. The collection is aimed at individuals who are growing out of logo-heavy streetwear into professional attire. The UAS line will feature high-end production, with a “sturdy” theme featuring elastic thread, rubber finish on buttons, and glued (rather than stitched) zippers to reduce any chance of buttons or seams breaking.
Under Armour isn’t blazing a new path. Other sports performance clothing companies such as Adidas and Puma have presented high-end lines with celebrities such as Kanye West and Rihanna in recent New York Fashion Week premiers. The difference here is that Under Armour has a huge following among high schoolers – especially high school athletes. By expanding their offering, Under Armour can captivate a young audience and stay with them as they go from high school to college to the professional world.
Under Armour finance chief Chip Molloy told analysts at a retail conference last week that development for the UAS line is a long-term project. “It’s going to take a couple years,” Mr. Molloy said. “But we firmly believe there’s another whole wave of growth to come with that.”
Molloy is absolutely right. Under Armour is showing they’re not a one trick pony. The company’s new product raises prices, expands the frequency with which customers purchase from them over the years, brings in new high-end clients, and allows current customers to expand average purchases.
Under Armour (UA) makes a great long term play.
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