Under Armour Inc. has set a goal to double sales by 2013. The lofty projection to reach the $2.13 billion mark, made by company Founder, Chairman and CEO Kevin Plank at Under Armours investor meeting on Thursday, would assume a compounded annual growth rate (CAGR) of 26 percent.
The growth plans will rely on continued growth in apparel and continued expansion in the direct-to-consumer (DTC) business through 2013. Plank said the DTC business, comprised of Internet sales, outlet stores and brand stores, would reach 30 percent of the business by 2013 from 23 percent currently. UA will have 80 owned-retail doors this year. The Direct business was said to be margin-rich, with gross margins in the 60 percent neighborhood.
Beyond 2013, UA sees footwear as a key driver in 2014 and International in 2015, which management expects to be as large as the domestic business over time. International is expected to reach 8 percent of total revenues by 2013, compared to 6.2 percent of the total last year.
Under Armour talked about three new apparel businesses helping to drive sales growth in the category. Charged Cotton represents about 4 percent of current sales and is reportedly not cannibalizing the non-cotton business. Storm Fleece, which is treated to repel water but has pure cotton hand and breathability. Cold Black, which is treated to repel the suns UV rays and keep the body cool. Management said the product even works in dark colors, hence Cold Black name. They see greatest application in golf and run.
The company is also expanding its mens underwear program, with plans to have UA underwear programs in 600 department stores nationwide, including Nordstrom, Macys and Bloomingdales, by next year.
On the womens apparel side, the company is rolling out a new line of sports bras called the Armour Bra and a yoga/fitness bottoms collection called Perfect Pant to focus efforts on females in their late 20s to early 30s. Plank said the company continues to forecast that the womens apparel business will surpass mens business.
UA plans to roll out two new key footwear products over the next year. The new releases include the Charge RC, a running shoe that will launch in October at $120. UA also featured a womens-specific footwear product called the Micro G Strut, which will retail at $87 for Spring 2012.
While continuing to open its own stores, Under Armour is also ramping up its shop-in-shop programs with its major retail partners this fall. They see opening 50 of the All American format shops in Dicks Sporting Goods by the end of this year, with over 700 expectations planned with Sports Authority, Dicks Sporting Goods, Hibbett Sports, Finish Line and others. They expect to have 100 of the new formats in Sports Authority stores alone. Fixtures are designed to hold 20% more merchandise than conventional fixtures
UA said the shops will impact 50% of revenues within two years.
- UA will continue to spend approximately 12% of its net revenues on marketing.
- UA sees operating income growing at a 31 percent CAGR rate through 2013.
- Expects to show operating margin leverage during growth.
Light and Strong is basketball footwear message
Footwear staff has grown from 54 employees in 2008 to 119 today.