SPECIAL REPORT T 5 1 at ARMOUR UNDER Aims to Doublesales by 2013

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SPECIAL REPORT T 5 1 at ARMOUR UNDER Aims to Doublesales by 2013 SPECIAL REPORT UNDER ARMOUR AT 1 5 From its humble beginnings in the basement of founder Kevin Plank’s grandmother’s house, Under Armour has grown into a $1 billion business during the past decade and a half. But it isn’t stopping there: the aggressive company aims to double sales by 2013. Polyester long-sleeve compression shirt and compression leggings. Chest protector. PHOTO BY ELI SCHMIDT; MODEL: AJ @ FORD; STYLED BY ALEX BADIA MODEL: AJ @ FORD; STYLED BY ELI SCHMIDT; PHOTO BY SR2 WWD THURSDAY, DECEMBER 1, 2011 Men’s Week SPECIAL REPORT Under Armour Scores $1 Billion in Sales Through Laser Focus on Athletes Founder Kevin Plank’s cotton T-shirt alternative has created a leading player within the performance apparel industry. Kevin Plank byJEAN E. PALMIERI mance apparel didn’t exist, he said. But he knew this much: “Whether you’re in the varsity, playing college sports, wearing soaking wet cotton T-shirts was “absurd,” and professional sports or just want to lose 20 pounds, what we WALKING INTO UNDER ARMOUR INC. headquarters on caused a “mental slowdown feeling. We didn’t invent synthet- inspire in people is a powerful belief,” Plank said. “We can the Baltimore waterfront is like being invited into the locker ics, but we did invent this application.” march 20 scientists in here and say our product is the best, but room of a professional sports team. Although there were plenty of naysayers — the catego- if that kid thinks so, then his mother trusts us enough to spend A bronze statue of a defensive end — who is now part of ry doesn’t exist, there isn’t room for a new brand — Plank 20 to 25 percent more. She knows it will last and if it has the the senior management team — stands outside the cafeteria. wouldn’t be deterred. “We decided to create our own pie.” Under Armour logo on it, it’s a guarantee of performance.” When not being used for corporate events, the conference First, Plank had to convince athletes that his product In the past 15 years, the company has expanded beyond center converts into a basketball court. Instead of designing was superior to any other. Eric Ogbogu, who had played with compression shirts into a variety of performance products, offenses and defenses for the football fi eld, the Xs and Os on Plank at Maryland and went on to compete professionally from yogawear and hunting apparel to footwear. The 2010 an- the whiteboards in the offi ces of the executive team detail with the New York Jets and the Dallas Cowboys, was one of nual report refers to “fi ve growth drivers — men’s and wom- the company’s game plan for growth. the fi rst to try the product while in the NFL. en’s apparel, footwear, direct-to-consumer and international.” The only thing missing is the pom-poms. “A lot of players laughed at a skintight shirt,” Ogbogu re- The company passed the $1 billion sales milestone last Now a $1 billion publicly held sporting goods company called. The initial reaction was that it was “girls’ spandex,” year, with net revenues increasing 24 percent to $1.06 billion. that is celebrating its 15th anniversary this year, Under he said, “and not manly. There were a lot of jokes and clown- Apparel sales — which represent 80 percent of the business Armour’s beginnings were quite humble. ing around about those girly T-shirts, but then quietly, guys — rose 31 percent to $853.5 million, direct-to-consumer rev- Kevin Plank, a football player at the University of would come to me and say, ‘Hey, can you get me one?’” enues increased 57 percent $244.7 million, and the licensed Maryland, couldn’t stand the heavy cotton T-shirts that got Ogbogu, who’s the guy represented by that statue in the business in Japan surpassed $100 million. In the third quar- soaked with sweat after a tough workout. He knew there had lobby and is now Under Armour’s director of camps, com- ter of this year, the company earned $46 million, a 32 per- to be something better, so he came up with the idea of a tight, bines, clinics and pro-leagues, said the players believed the cent increase over a year ago, on a 42 percent surge in sales polyester-blend shirt that would not retain moisture. With a shirts gave them the “edge” they needed on the fi eld. to $465.5 million. The numbers beat analysts’ estimates and little seed money and the help of a couple of jock buddies from For Plank, that’s one of the keys to Under Armour’s suc- prompted the company to raise its fi scal 2011 revenue guid- Maryland, he set up shop in his grandmother’s basement in cess. “Our mission statement is to make athletes better,” he ance to between $1.46 billion and $1.47 billion. Georgetown and gave birth to a new world of sports apparel. said. “Brands are about trust and being honest with con- “I always felt there was an opportunity to build a big busi- In his letter to shareholders in the 2010 annual report, sumer expectations.” ness,” Plank said. “But I also knew I was completely capable Plank writes: “When we fi rst brought the idea of moisture- He relates the story of a single mother from Portland, of totally screwing up.” wicking compression apparel to the market in 1996, our goal Ore., who was shopping with her son in a sporting goods Plank was also smart enough to surround himself with trust- was to make athletes rethink expectations for their apparel.” store. The boy was immediately drawn to the Under Armour ed colleagues who believed in the product and its potential. “I never had a perfect vision,” the 39-year-old president, presentation, but the woman, seeing the prices were high- They include Kip Fulks, chief operating offi cer, who at- chief executive offi cer and chairman said in a recent inter- er than most other products, tried to steer him to another tended Maryland with Plank and was among the fi rst to join view. “But I never believed that it could not happen either. brand. But the boy held up his arms in a Popeye pose and the fl edgling company. Under Armour was an idea whose time had come.” said if he were wearing Under Amour, he could do anything. “I knew Kevin in school but we weren’t friends,” Fulks When Under Armour was launched, the world of perfor- The mother relented. {Continued on page 4} SR4 WWD THURSDAY, DECEMBER 1, 2011 Men’s Week SPECIAL REPORT {Continued from page 2} said. “He played football and I played lacrosse, so we were Under Armour has taken over Procter & Gamble’s former headquarters in Baltimore. like oil and water.” After graduation, Fulks was playing lacrosse profession- ally and struggling with “how to get out of the jock world.” A mutual friend told him about Plank’s T-shirt alternative and he signed on to help. “He showed me the product, and as an athlete, I could see that it was lighter, faster and more comfortable,” he said. Fulks, who said he “rarely looks backward, which is prob- ably a flaw,” eventually took on the tasks of product devel- opment, sourcing and manufacturing. “I taught myself ev- erything I needed to know to be a garmento,” he said with a laugh. “I focused on operations, not marketing and sales, which is what Kevin does well.” Despite his success and position, Plank still signs every e-mail Humble & Hungry and acts more like a coach than a traditional ceo, firing up his 5,000 or so employees with motivational phrases and town-hall-style meetings. It’s clear that he relishes the company’s won-loss record and its 15- year streak. Plank speaks in awe about a dinner he had not long ago in Omaha with Warren Buffett, quoting his hero as saying: “The first $1 billion is the hardest.” With sales now exceeding that number, Plank said Under Armour is embarking on “another chapter of growth.” He has said publicly that he expects sales to double by 2013 and sur- rounds himself with those who have no doubt the company can attain that goal. “The only statement that will get you fired around here is, ‘That’s the way we’ve always done it,’” he said. “It took us five years to get to $5 million, five more years to get to $300 million and the last five to get over $1 billion. We’ve grown 42 percent over the last two quarters. The challenge is how to keep up with a moving decimal point.” He said the mistake many companies make once they’ve achieved some success is that “they think they’re Ralph Lauren and can do 15 different categories.” The genius of SAMUEL GORDON PHOTO BY Ralph Lauren, he said, is that over the past four decades, he has remained true to his vision and can now put his name to the market, such as Charged Cotton, billed as “the world’s shareholders. Fulks has a road map in his head on how to on everything from neckties to paint without anyone batting first true performance cotton that dries up to five times faster get there. an eye. So instead of raising eyebrows by seeing his paint in than ordinary cotton.” Introduced in January, the collection of “That’s really easy,” he said. “We have no big interna- Home Depot, the reaction is “if it’s Ralph Lauren paint, it men’s and women’s shirts and shorts, and capri women’s tights, tional business and we believe our product, messaging and must be richer and better,” Plank said.
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