Under Armour is moving into the "next chapter" of its business evolution

Under Armour is moving into the "next chapter" of its business evolution

International sportswear brand Under Armour is planning to double revenues to $4bn in the next three years as it moves into the "next chapter" of its business evolution.

Speaking at the company's investor day yesterday (5 June), CEO and founder Kevin Plank said the company will "reach out to a new consumer, in new geographies with new strategies and new ways of selling and speaking to them".

Women's wear has already been a strong growth driver for the brand, and Under Armour expects the business to approach $500m by 2016.

"It frankly is our biggest product opportunity and one of which we've never been better poised frankly to take advantage. We've built a very large women's business and have done so through authenticity and focused distribution," said Plank.

He added that there is still a women's consumer out there that the company has not been addressing, and it is now working to get more fashion-forward consumers on board.

Speaking about the most important product for female consumers, Gwyn Wiadro, vice president global women's apparel, said: "For the athletic female, it's her sports bra that is the most important piece of apparel she will choose.

"No longer a singular item now, the ArmourBra has evolved into a high-impact platform where a stable of bras that has created a halo effect for the entire category. This business, once less than 6% of our total, is tracking to exceed $140m by 2016."

International growth
Another opportunity the company sees is through international expansion.

"International will be our first chapter that will not be written solely in English, but in Spanish, Mandarin, Portuguese and many of the other languages spoken around the world," Plank said.

"International is the biggest opportunity for the Under Armour brand, and because we believe we're now in position where our strategy is truly aligned with the size of that opportunity."

What this means, is that the company will focus on the three biggest markets in Asia, Europe and Latin America. In Asia, this means China, Korea and Japan, while in Europe, the company will build its presence in the UK, France and Germany. In Latin America it will focus on Mexico, Brazil and Argentina, said president of international, Karl-Heinz Maurath.

It will also launch a subsidiary in Australia within the next two years.

In Europe, the company is currently converting from a distributor model to setting up its own sales offices in key European markets.

Maurath said Under Armour sees cumulative annual growth rather than by market, reaching from 20-60% over the next three years. 12% of total revenue is expected to come from international sales by 2016.

Speaking about how long it will take to get the international plans up-and-running, Maurath said: "If I'm honest, not really for World Cup 2014, but for Copa America 2015 and Rio de Janeiro and the Olympics in 2016."

Sourcing and supply
The company is also working to build its supply chain, describing this as an area "we need to continue to develop core competencies in people, process and systems in order to get ahead of our global growth ambitions," according to CFO Brad Dickerson. 

"However, our efforts to build a world-class supply chain will not come without some of the underlying challenges such as wage inflation, particularly in Asia, in expanding international business, continuing needs for IT infrastructure enhancements and integration, the ongoing need for supply chain talent acquisition and the overall challenge of supporting a brand growing at plus-20% annually."

Strategically the focus will be on three objectives - balancing meeting demand with efficiently managing supply; improving costs and margins, while maintaining standards; and building a longer-term effective supply chain while managing SG&A and capex in the near term. 

Through the group's three-year planning process, Dickerson said it can plan capacity, and bring new quality vendors on board to support anticipated growth in an effective manner. 

"Through multi-echelon planning, we will be able to optimise our grades, trim and yarn commitments to significantly reduce lead times, while also optimising for the next levels of finished goods inventory across our network."