Local Success: A Look at Under Armour's Growth
Published: Friday, October 11, 2013
Updated: Friday, October 11, 2013 02:10
Kevin Plank — the founder of Under Armour — has some unique connections to Georgetown. Legend has it that he started his business in his grandmother’s townhouse basement, just a few blocks from the university. That was 1996; today, the company is worth about $2 billion — enough for Plank to buy an eight-bedroom mansion on 34th Street this past summer. And although business operations are now housed in a state-of-the-art headquarters in downtown Baltimore, Plank has been known to hold weekly business meetings in the back room of Clyde’s on M Street.
How did this popular sports brand begin? Plank first thought of starting the company while playing football at the University of Maryland. Fed up with the sticky, sweat-soaked cotton shirts made by Nike and Adidas, he wanted to create a new fabric that kept players cool and dry.
It was risky business. Overshadowed by the industry giants, Plank initially marketed his product by using his high school and college football connections, which would test out his shirts and show them to other players on the team. He spent weeks on the road, driving to a number of summer training camps and practice sessions. Finances were tight, and Under Armour managed to squeak by with help from a small D.C. bank, loans from generous family members and over a dozen credit cards. Surprisingly, Plank never missed a minimum payment.
Soon, the company started gaining popularity. In 1996, Plank broke into the NFL market by gaining the attention of an Atlanta Falcons equipment manager. The company’s next big step came in 2000, when retail store Galyan’s — now owned by Dick’s Sporting Goods — agreed to sell Under Armour apparel. It became the official sponsor of the University of Maryland football team in 2004 and since then has signed contracts with 19 other universities, including Auburn, Boston College, Northwestern, South Carolina and Temple.
High-profile individual athletes also contribute to the company image. Among the company’s most famous sponsorships are Heisman Trophy winner Cam Newton, outspoken linebacker Ray Lewis and NBA point guards Stephen Curry, Kemba Walker and Brandon Jennings. Together, they promote a testosterone-driven marketing strategy that literally screams muscle and performance. Commercials feature jacked-up athletes lifting weights, pulling chains and groaning with determination. Chanting “I Will” and “We Will Protect This House,” Under Armour ads pulse with energy.
The strategy has paid off handsomely. In the apparel market, Plank has overseen 14 straight quarters of 20 percent revenue growth. Company shares have quadrupled since 2005, and although its share of the sports apparel market is still about half of Nike’s, its percent growth is unrivaled.
Such an upward trajectory is difficult to sustain, but Under Armour has made every effort to be creative in its approach. For instance, the company made headlines two years ago with its new Maryland football jerseys, which featured alternating patterns from the state flag. Its new Alter Ego t-shirt collection, which is emblazoned with superhero logos, also pastes an innovative design on the traditionally solid-color training shirt.
But in other ways, Under Armour is still playing catch-up. Multi-colored socks seem to be all the rage, and Nike has a firm hold on the market with its wildly popular Dri-FIT Elite collection — a staple in college basketball games throughout the country. Adidas also released its Team Speed Crew, a design popularized by the green and yellow neon colors of the Baylor Bears. Under Armour arrived late on the scene with its tornado-shaped Ignite design. The company may have entered the sock war, but it was a late entrance.
The company also struggles internationally, with only six percent of revenues generated abroad. Women’s apparel is also lagging: Both in the office and out in the market, Under Armour is largely defined by its masculine tenor, as is evident by the tone of its commercials, its choice of athlete sponsorship and the male-dominated makeup of its management team.
Yet as long as people remain willing to pay top-dollar for Under Armour products and designs, revenues can continue to grow and provide funding for an expanded market strategy. The UA logo is now even visible in the Georgetown bookstore — an outlet once dominated by Nike and Air Jordan. With the company’s Georgetown roots, that move just seems natural.
Nick Fedyk is a senior in the College. MORE THAN A GAME appears every Friday.