Under Armour's Ads Target Nascent Sector
By Ylan Q. Mui
Washington Post Staff Writer
Monday, August 6, 2007
Perspiration, it seems, does not discriminate.
Sports apparel brand Under Armour launched its moisture-wicking shirts on the backs of football players at the University of Maryland. Now, the Baltimore company is betting that women get just as sweaty.
Under Armour, which only began selling to women four years ago, is undertaking its biggest advertising campaign so far aimed at high school and collegiate female athletes -- or "team girl," in marketing parlance. The first TV spot aired two weeks ago on ESPN, featuring soccer, volleyball, lacrosse, softball and hockey apparel in the company's signature high-tech fabrics, designed to help regulate body temperature and dryness.
The company wants its logo, a U intersected by an A, to be just as recognizable among women as men. The campaign has been dubbed "BoomBoom-Tap," to represent the sounds women make after breaking a huddle during a game -- and a reference to its onomatopoeic "Click-Clack" ads for its men's cleats. Under Armour founder and chief executive Kevin Plank called it a "rallying cry" for female athletes.
"Nobody is really speaking to this entire consumer segment which we believe exists," he said in an interview. "Listen, she's athletic and she's competitive, and she still wants clothes that look great and are stylish at the same time."
The campaign seeks to tap into the growing numbers -- and wallets -- of female athletes. Since Title IX was enacted 35 years ago, banning gender discrimination in educational activities at public schools, female participation in sports has increased 904 percent in high school and 456 percent in college, according to the nonprofit advocacy group Women's Sports Foundation.
Women have been one of the key drivers of Under Armour's growth, and Plank said he plans for the women's segment to pass the men's. Already, the growth in sales of women's apparel has outpaced men's, skyrocketing 53 percent during the second quarter, compared with the same period last year. Plank said popularity of Under Armour products has grow among females just outside their target age demographic.
"I think it's an obvious direction to go to," said Bob McGee, editor of Sporting Goods Intelligence, an industry newsletter. "These women were clamoring for a performance brand to call their own."
Plank said the company first attempted to launch a women's line in late 2001. The clothes were designed, manufactured and ready to ship to distributors when he pulled the plug. Plank said the line was largely derived from its men's products -- a process he jokingly called "pink it and shrink it" -- and it wasn't going to work.
"They needed their own point of view," he said.
In 2003, the company tried again. It brought in female designers who could advise on details such as the placement of a seam on a sports bra or the right length for compression shorts. (There are two options now.) The line launched with 11 styles and slowly expanded its offerings. Heather Mitts, of the U.S. national soccer team, and Cat Osterman, who won a gold medal on the U.S. Olympic softball team, have endorsed its products. Under Armour mainly sells its products through stores such as Dick's Sporting Goods and Sports Authority, but it plans to open its first full-service retail store in Westfield Annapolis Mall this year, in part to test its products in an environment with heavy female foot traffic.
Still, Under Armour remains dominated by male merchandise. Men's apparel sales grew 50 percent during the second quarter to $61 million and accounted for about 70 percent of the company's clothing business during the period. Women's apparel accounted for $18.5 million, or 21 percent of apparel sales, and youth apparel made up $7.7 million, or 9 percent. Under Armour also sold about $20 million in footwear for men and women, and plans to introduce its first non-cleat sneaker next year.
The company reported strong earnings overall during the quarter. Sales grew 51 percent compared with the same period last year, to $121 million. Profit jumped 136 percent to $5.7 million, or 11 cents per share. The company also increased its earnings forecast for fiscal 2007 sales to between $580 million and $590 million -- a 35 to 37 percent increase from 2006 results.
"On both the top and bottom line, the results were stronger than anticipated," said James Maher of ThinkEquity Partners, an investment banking firm.
That's not bad for a company that was started out of Plank's car. Under Armour has been a homegrown success story since 1996, the year Plank graduated from the University of Maryland. He had realized that the soggy, sweaty cotton T-shirts his Terrapin football teammates wore underneath their gear were weighing them down. But his Lycra compression shorts kept him cool and dry.
Plank fashioned the first Under Armour shirts out of lingerie material and gave them away to his teammates. When some of those friends went on to play for the National Football League, Plank suddenly had celebrity endorsements. Soon, sporting behemoths such as Nike and Adidas created similar moisture-wicking garments. A niche -- and heated competition -- was born.
"Because Under Armor was the first, they're considered the pure, authentic one," McGee said.
The company went public to much fanfare in 2005. The initial public offering was the most successful offering by a U.S. company in five years, virtually doubling on its opening day. The stock was originally set at $7.50 a share but was bumped up to $13 a share at the last minute because of high demand. The day of the offering, Under Armour stock hit $31 before closing at $25.30.
Maher said he thinks Under Armour is laying the groundwork for solid growth over the next several years. But he cautioned that the company's rivals are formidable and that its history is short. Management is still green and grappling with heady growth, he said.
"Right now I think that one of their main challenges is that the expectations are very high," Maher said.
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