Under Armour Business Model

Under Armour’s business model revolves around delivering high-performance sportswear and athletic gear to athletes and fitness enthusiasts. They focus on product design, manufacturing, and distribution, while building a strong brand and forming partnerships with athletes and retailers. Revenue is generated through sportswear sales, branded apparel, and licensing/sponsorship deals. Key activities include research and development, marketing, and retail operations. Key resources include design capabilities, manufacturing facilities, and brand equity. Costs are incurred in product development, marketing, distribution, and partnerships.

Distribution Model:

Under Armour employs a multi-channel distribution model to make its high-performance sportswear and athletic gear accessible to customers:

  • Own Retail Stores: The company operates its branded retail stores and factory outlets, providing customers with a direct shopping experience.
  • E-Commerce: Under Armour maintains an online presence through its e-commerce platform, allowing customers to browse and purchase products conveniently.
  • Retail Partnerships: The brand collaborates with various retail partners, including sporting goods stores and department stores, to extend its reach and availability.
  • Athlete Partnerships: Under Armour leverages athlete partnerships to enhance distribution, as athletes endorse and promote the brand’s products.

Marketing Strategy:

Under Armour employs a dynamic marketing strategy to promote its sportswear and build brand recognition:

  • Athlete Endorsements: Partnering with athletes and sports personalities to endorse products and increase credibility among the target audience.
  • Sponsorship Deals: Sponsoring sports teams, leagues, and events to enhance brand visibility and connect with sports enthusiasts.
  • Marketing Campaigns: Launching marketing campaigns that highlight the performance and quality of their sportswear, targeting athletes and fitness-conscious consumers.
  • Digital Presence: Utilizing digital marketing channels, including social media, to engage with customers and promote products.
  • Brand Consistency: Maintaining brand consistency by emphasizing high-performance and innovative design in all marketing efforts.

Revenue Streams:

Under Armour’s revenue is generated through several streams:

  • Sportswear Sales: Revenue from the sale of sportswear and athletic gear, including apparel, footwear, and accessories.
  • Branded Apparel: Income generated from branded apparel, which includes licensed merchandise and branded accessories.
  • Licensing and Sponsorship: Additional revenue comes from licensing agreements and sponsorship deals with athletes, teams, and organizations.

Organizational Structure:

Under Armour’s organizational structure facilitates efficient operations and brand management:

  • Under Armour, Inc.: The parent company overseeing various divisions and brands.
  • Performance Apparel, Footwear, and Accessories: Focusing on the development, design, and manufacturing of performance sportswear, footwear, and accessories.
  • Connected Fitness: Operating the MapMyFitness, MyFitnessPal, and Endomondo platforms, emphasizing digital fitness and tracking.
  • International: Managing operations and expansion efforts in international markets to tap into global demand.
  • Marketing and Branding: Responsible for marketing, branding, and athlete partnerships to maintain brand consistency and recognition.
  • Retail Operations: Overseeing retail stores, factory outlets, and e-commerce platforms for product distribution.
  • Research and Development: Focusing on product innovation, materials, and design to ensure high-performance sportswear.
  • Digital and Technology: Managing digital platforms and technological initiatives for customer engagement and growth.

Key Highlights

  • High-Performance Sportswear: Under Armour’s primary objective is to create and provide high-performance sportswear and athletic gear catering to athletes and fitness enthusiasts.
  • Product Design and Manufacturing: The company emphasizes innovative product design and efficient manufacturing processes to deliver sportswear that meets the needs of active individuals.
  • Distribution and Retail: Under Armour manages the distribution and retail of their products to ensure they reach their target customers through various channels, including their own stores, e-commerce, and retail partners.
  • Brand Building: Under Armour focuses on building a strong brand identity associated with high-quality and high-performance athletic wear.
  • Athlete Partnerships: The company collaborates with athletes and influencers to endorse their products, adding credibility and connecting with their target audience.
  • Retail Partnerships: Under Armour forms partnerships with retailers to expand their distribution reach and make their products more accessible to consumers.
  • Diverse Revenue Streams: Revenue is generated through direct sportswear sales, branded apparel, and additional income from licensing and sponsorship deals.
  • Research and Development: Continuous research and development efforts drive Under Armour’s product innovation, ensuring their sportswear remains competitive in the market.
  • Marketing: Effective marketing strategies help Under Armour promote their brand and products to athletes and fitness enthusiasts worldwide.
  • Retail Operations: Under Armour’s own retail stores and online platform contribute to their direct-to-consumer strategy, allowing them to control the shopping experience and gather customer data.
  • Key Resources: Under Armour’s key resources include their design capabilities, manufacturing facilities, and the strength of their brand’s reputation.
  • Cost Management: Managing costs is essential for profitability. Under Armour focuses on optimizing product development, marketing expenses, distribution, and partnerships.
  • Customer Focus: Under Armour tailors their products and marketing efforts to resonate with the needs and aspirations of athletes and fitness-conscious consumers.
  • Innovation: Staying at the forefront of sportswear technology and trends is a priority, as Under Armour continually seeks innovative materials and designs.
  • Global Reach: Under Armour’s global presence allows them to tap into various markets, adapting to regional preferences and expanding their customer base.
  • Eco-Friendly Initiatives: Like other companies, Under Armour’s focus on sustainability aligns with the growing concern for the environment and ethical consumption.
Value PropositionUnder Armour offers the following value propositions for its customers: – Performance Apparel: High-quality sportswear for enhanced performance. – Innovative Technology: Incorporating advanced sports technology. – Comfort and Fit: Providing comfortable and well-fitting athletic gear. – Athletic Style: Stylish and trendy sportswear designs. – Durability: Known for the durability and longevity of its products. – Brand Loyalty: A loyal and engaged customer base. – Athlete Endorsements: Associating with professional athletes. – Fitness and Lifestyle: Catering to both active and lifestyle consumers.
Core Products/ServicesCore products and services provided by Under Armour include: – Performance Apparel: Manufacturing and selling athletic apparel. – Footwear: Producing athletic shoes for various sports. – Accessories: Offering sports accessories and gear. – Connected Fitness: Digital fitness and health tracking platforms. – Branded Apps: Mobile apps for fitness and nutrition tracking. – HealthBox: Health and fitness monitoring kits. – Under Armour Connected Footwear: Smart shoe technology. – MyFitnessPal: A popular fitness and nutrition app.
Customer SegmentsUnder Armour targets various customer segments: – Athletes: Individuals engaged in sports and fitness activities. – Sports Teams: Athletic teams requiring sportswear and gear. – Fitness Enthusiasts: People focused on health and fitness. – Casual Athletes: Individuals adopting an active lifestyle. – Retail Partners: Sporting goods and retail partners. – Youth and Schools: Schools and youth sports organizations. – Tech-Savvy Consumers: Users of connected fitness technology. – Lifestyle Consumers: Those seeking athleisure and casual wear.
Revenue StreamsUnder Armour generates revenue through several revenue streams: – Product Sales: Earnings from the sale of sportswear, footwear, and accessories. – Connected Fitness: Subscription fees from the MyFitnessPal app and connected fitness platforms. – Licensing and Partnerships: Income from brand licensing and collaborations. – Retail Sales: Revenue from retail partners and distributors. – Branded Apps: Income from mobile app advertising and premium features. – Connected Footwear: Earnings from smart shoe technology. – Customization Services: Fees for personalized product customization. – Fitness and Nutrition Products: Sales of health and fitness products.
Distribution StrategyThe distribution strategy for Under Armour focuses on both physical and digital channels: – Retail Stores: Operating company-owned retail stores. – Wholesale: Partnering with sporting goods and retail stores. – E-commerce: Selling products through the official website. – Connected Fitness Platforms: Offering digital fitness and nutrition apps. – Athlete Endorsements: Associating with professional athletes for promotion. – Licensing and Partnerships: Collaborating with brands and partners. – Customization Services: Personalizing products for customers. – Connected Footwear: Integrating smart shoe technology.

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Under Armour Revenue

In 2021, the company’s net revenues increased to $5.68 billion, up from $4.47 billion in 2020, representing a 27% growth. The net revenues in 2021 were higher than the net revenues in 2019, which were $5.27 billion, representing an 8% growth compared to 2021. The decrease in net revenues from 2019 to 2020 was approximately 15%.

Under Armour Profitability

In 2019, the company reported a net income of $0.09 billion. In 2020, the company had a net loss of $0.55 billion. In 2021, the company’s net income was $0.36 billion.

Under Armour Revenue By Channel

under-armour-revenue-by channel
In 2021, wholesale accounted for 57% of the company’s financial data. Licensing represented a smaller portion, contributing 2% to the financial data. Direct-to-consumer sales made up a significant share, comprising 41% of the financial data in 2021.

Under Armour Revenue By Product

Apparel revenue: $3.47 billion in 2019, $2.88 billion in 2020, and $3.84 billion in 2021. Apparel has been the largest revenue contributor in each year. Footwear revenue: $1.09 billion in 2019, $0.93 billion in 2020, and $1.26 billion in 2021. Footwear revenue showed a decline in 2020 but rebounded in 2021. Accessories revenue: $0.42 billion in 2019, $0.41 billion in 2020, and $0.46 billion in 2021. Accessories revenue remained relatively stable throughout the period. License revenues: $0.14 billion in 2019, $0.11 billion in 2020, and $0.11 billion in 2021. License revenues experienced a decline from 2019 to 2020 but remained stable in 2021. Corporate Other revenue: $0.16 billion in 2019, $0.14 billion in 2020, and $0.004 billion in 2021. Corporate Other revenue saw a significant decrease in 2021.

Under Armour Revenue By Geography

North America revenues: $3.66 billion in 2019, $2.94 billion in 2020, and $3.81 billion in 2021. EMEA revenues: $0.62 billion in 2019, $0.60 billion in 2020, and $0.84 billion in 2021. Asia-Pacific revenues: $0.64 billion in 2019, $0.63 billion in 2020, and $0.83 billion in 2021. Latin America revenues: $0.20 billion in 2019, $0.16 billion in 2020, and $0.20 billion in 2021. North America revenues: Decreased by 19.7% from 2019 to 2020, and increased by 29.4% from 2020 to 2021. EMEA revenues: Decreased by 3.2% from 2019 to 2020, and increased by 40.8% from 2020 to 2021. Asia-Pacific revenues: Decreased by 1.6% from 2019 to 2020, and increased by 32.3% from 2020 to 2021. Latin America revenues: Decreased by 20% from 2019 to 2020 and increased by 18.5% from 2020 to 2021.

Under Armour Profits By Geography

North America operating income: Decreased by 35.3% from 2019 to 2020, and increased by 104.8% from 2020 to 2021. It contributed the most to the total operating income in each year. EMEA operating income: Increased by 12.8% from 2019 to 2020, and grew by 118.8% from 2020 to 2021. EMEA’s contribution to the total operating income increased over the years. Asia-Pacific operating income: Decreased by 100% from 2019 to 2020, and increased significantly from near-zero in 2020 to $132.91 million in 2021. The Asia-Pacific segment rebounded in 2021. Latin America operating income: Improved from -$3.16 million in 2019 to -$42.79 million in 2020, and turned positive with an increase of 152.3% to $22.39 million in 2021. Latin America’s contribution to the total operating income improved in 2021 after two years of negative operating income.

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