Drapers takes a look at how US sportswear giant Under Armour is gearing up for battle on UK fashion’s front line.
Under Armour, the third-biggest sportswear brand in the US, is making a play for the UK market by looking for its first flagship. It currently only has wholesale accounts and concessions in the UK, but property sources say it is on the hunt for a London store – the Oxford Street flagships of French Connection and H&M are mooted as possible locations.
One property agent indicated to Drapers that other stores outside London were not currently on the cards for the brand but given its magnitude across the pond, Under Armour could become a force to be reckoned with in the UK.
Founded by Kevin Plank in 1996 in Baltimore, Maryland, the brand has taken 21 years to move its bricks-and-mortar business across the Atlantic, but this could be a good time for the expansion.
Long the darling of the New York stock exchange, Under Armour’s home market has been anything but smooth sailing of late.
After delivering 26 straight quarters of 20%-plus year-on-year sales growth revenue rose just 12% to $1.3bn (£1bn) for the three months to 31 December, below the $1.4bn (£1.1bn) the market was expecting. Net profit for the quarter, meanwhile, fell 1% to $105m (£83m), missing expectations for an increase to $113.2m (£90m).
In its full-year 2016 results announced on 31 January, the company indicated the dip in sales growth and profits were a result of the recent bankruptcies of big US sports retailers, such as Sports Authority, which were among its wholesale accounts.
It is not all doom and gloom, however. The firm said its international sales (which only make up 15% of its overall sales) were strong in China and Europe so it will invest more in those businesses, and in its direct-to-consumer channels, including stores and online.
under armour campaign
The move to distribute its proverbial eggs into more international baskets is a smart one, according to Maureen Hinton, group retail research director at Global Data (formerly known as Verdict Retail): “It makes sense for Under Armour to expand [internationally], it has been growing rapidly in its own market and is now at risk of saturating it so it needs to look abroad for further growth. As it is, Under Armour has only maximised the sales of one market and unless it completely reviews every product all the time it needs new markets to continue the momentum.”
However Hinton cautions over the price of doing business on this side of the Atlantic: “The UK is always seen as an attractive market for international brands but they must consider that costs here are a lot higher than in the US.”
The brand’s strategy stateside has focused predominantly on wholesale accounts with a few top-of-the-line flagships supported by online and it is likely the same pattern will follow in Europe, starting with a London store, says Hinton, as this will “keep costs down as much as possible”.
The UK market is particularly tempting for Under Armour as sportswear and athleisure has exploded in recent years. Between 2010 and 2015 the women’s activewear market grew 26.1% to £710m in the UK, while the men’s jumped 22.6%, reports Global Data. It forecasts that activewear sales will continue to rise surging 22.6% for women by 2020 and 19.9% for men. Retailers including Lululemon, Sweaty Betty and JD Sports have capitalised on the booming trend so it is little wonder Under Armour wants in on the action.
It’s a woman’s world
From a product and marketing point of view, Under Armour has come a long way since producing thin moisture-wicking material garments American football players to wear under their equipment. Traditionally a male- orientated brand, it has targeted the womenswear market in recent years with great success, securing model Gisele Bündchen, among others, for huge TV and billboard campaigns.
under armour gisele
Of Under Armour’s current consumer base, 53% are male and 47% of customers are female, Gfk Mediamark Research and Intelligence, 2015 reports. This is in stark contrast to many of its competitors: Nike, for example, is aiming to grow its womenswear business to 20% of total revenue in 2017.
Under Armour will be able to establish itself as a unisex brand from the get go
Tiffany Hogan, senior clothing analyst, Kantar Retail
Because of this, Tiffany Hogan, senior clothing analyst at Kantar Retail, says Under Armour is going after women’s performance wear “in a big way” and this approach will help cement its position in the UK market: “Although it has a history with university sports, it’s important that it casts the net wider in this area as the preppy college sports gear market is quite saturated with the likes of A&F, Hollister and Jack Wills etc. Its performance gear proposition gives it a point of differentiation.
“What’s also interesting is that while other sports giants in the UK, such as Nike and Adidas, have significant women’s activewear propositions, they began with a majority male proposition and have gradually had to build up their reputations for meeting womenswear needs too. Under Armour, which has relatively low brand awareness in the UK, will be able to establish itself as a unisex brand from the get go.”
Going the distance
Derrick Hoyle, buying director of SoleTrader, one of Under Armour’s stockists in the UK, has little doubt the brand will fly on these shores: “Look at the yearly growth figures [of the business] since it was founded. It’s only a matter of time before they seriously start challenging [the likes of Nike and Adidas] here. They are a very impressive outfit.”
Given consumers’ appetite for athleisure the Under Armour’s UK invasion is sure to be a hit with shoppers. But the British high street is fiercely competitive and strong players such as JD Sports and Sports Direct will not make it an easy ride.
Under Armour has soared in recent years riding the activewear wave but, as is the case with all fashion trends, the passion for sports gear will not last forever. The company will have to prove that it is fundamentally a strong, solid brand in the vein of Nike and Adidas, which can go the distance in the UK even if sportswear goes out of fashion.
Under Armour: the facts
- Founded in 1996 and headquartered in Baltimore, Maryland, US
- It is the third-biggest sportswear brand in the US
- Turnover: US$4.8bn (£3.8bn) (FY 2016)
- Net profit: US$259m (£206m) (FY 2016)
- 53% of its customers are male and 47% are female
- Under Armour launched footwear in 2006
- Only 15% of Under Armour’s sales came from outside the US in 2016
- Dick’s Sporting Goods is its biggest stockist globally, accounting for around 10% of total sales. In January, Sports Direct took a 2.3% stake in Dick’s Sporting Goods
- Sports Direct is its largest stockist in the UK
- In the UK, Under Armour sponsors athletes including Andy Murray, boxer Anthony Joshua and Tottenham Hotspur Football Club