Faster, higher, stronger: Nobody in the sports industry has taken the Olympic motto to heart so enthusiastically as Kevin Plank. The American founded Under Armour exactly 20 years ago. This milestone coincides with the listed company progressing to third place among the biggest global sports manufacturers. Nike is unchallenged in first place, followed by Adidas, albeit some ways back.
Under Armour grew last year by 28 percent and now generates revenues of around €3.6 billion ($4 billion). It is racing ahead of Puma, based in Franconia in southern Germany, which occupied third place in the sports industry’s pecking order up to now.
Puma still hasn’t presented its annual figures, but the label with the beast of prey logo has not made as dynamic an impression as Under Armour in recent times. In 2014 Puma generated revenues of around €3 billion.
This is now the 25th quarter in succession where revenues in our core clothing business have increased by more than 20 percent. Kevin Plank, CEO and founder, Under Armour
Between September and the end of December last year, Under Armour managed to grow even more dynamically than the rest of the year with a revenue increase of 31 percent. “This is now the 25th quarter in succession where revenues in our core clothing business have increased by more than 20 percent,” Mr. Plank emphasized on Thursday.
The results were greeted with a wave of enthusiasm on the New York Stock Exchange. Pre-trade activity saw the stock gain more than 14 percent, signaling an end of a downward spiral lasting several months during which the stock lost more than a third of its value. At the beginning of January, Morgan Stanley had downgraded its rating and made a recommendation to sell Under Armour. They justified this by claiming the company was losing market share, especially with women.
But Mr. Plank has exceeded the expectations of analysts with the most recent quarterly figures. And now, investors too are focusing again on the company’s strengths. In the United States Under Armour has already overtaken its German rival Adidas as number two in the sports business, although in the rest of the world, the brand is still not well known. The share of its revenues generated internationally is only 11 percent, although sales abroad did shoot up by 70 percent in 2015.
There was a sharp increase in Germany too. That is shown by the ranking of the biggest suppliers to Intersport, Germany’s biggest sports retail chain: In 2014 Under Armour occupied a lowly 73rd place. Last year saw the label advance to 41st place. If it carries on like that, Under Armour will be in Intersport’s top 10 this year.
“We want to become a genuinely global brand,” Mr. Plank repeatedly emphasizes, and Germany is to play an important role. That is why he will be kitting out the soccer second league club FC St. Pauli starting in the summer. And there are ongoing speculations about other deals here in Germany. For example, the Americans are being rumored as sponsors of first-league Bundesliga club Bayer Leverkusen, and Mr. Plank is said to be interested in signing top Bayern Munich star Thomas Müller.
Sports experts are convinced that the Americans’ products will find their way onto the shelves. But in the opinion of Jochen Schnell, board member of Intersport, it will depend on the brand being visible in Germany. He thinks Under Armour has a convincing overall package to offer: “They have a good combination of function and style.”
The functionality is no surprise, as the company’s roots are in so-called compression clothing, i.e. extremely tight-fitting shirts and shorts. Mr. Plank only diversified into sports shoes at a later stage, and they generate less than one fifth of revenues. However, this category grew disproportionately with an increase of nearly 60 percent last year.
So there is a good reason for Under Armour setting up its own offices in Munich with more than 30 employees. Until now the brand is little known in Germany, but this is set to change. Mr. Plank has signed a contract with Sport Scheck, a subsidiary of the big, globally active retailer, the Otto Group, for 'shop-in-shop' space. That means that the company has its own, permanent retail space in the outlets of Sport Scheck.
For the current year Mr. Plank promises revenue growth of about a quarter to around €4.5 billion. It will take a while for Puma to catch up with the Americans again.
Joachim Hofer covers the high-tech industry and IT sector for Handelsblatt. [email protected]