Under Armour SWOT 2024 | SWOT Analysis of Under Armour

Company: Under Armour
CEO: Kevin Plank
Year founded: 1996
Headquarter: Maryland, USA
Number of Employees (March 2024): 15,000
Public or Private: Public
Ticker Symbol: UAA
Market Cap (Nov 2024): $4 Billion
Annual Revenue (2023) : $5.9 Billion
Profit | Net income (2023): $ 387 Million

Products & Services: Running shoes | Golf shoes | Training shoes | Hoodies | Backpacks and bags | Golf shirts Football gear | Hiking boots | Basketball shoes | Polo shirts | Gym Bags | Sports bra | Gym and training tops | Running shorts | Short sleeve shirts | Caps | Football boots | Sleepwear
Competitors: Nike | Adidas | Reebok | New Balance | Converse | Puma | Bata | Umbro | Woodland | Liberty Shoes | Fila

Fun Fact:

• Did you know the CEO, Kevin Plank, started the business in his grandmother’s basement?
• Under Armour’s shoes and clothing are made in over 150 countries worldwide
• Under Armour sponsors NBA athlete Stephen Curry, considered the “face of their footwear line.”

An Overview of Under Armour

Under Armour was founded in 1996 by Kevin Plank, who still serves as the company’s CEO. It produces both casual and sports apparel along with footwear and accessories. It has outlets in Europe, the Middle East, Africa, North America, Asia Pacific, and South America. 

The company has consistently maintained its position against major competitors in the sportswear industry, including Nike and Adidas. In collaboration with its affiliated entities, the company develops, markets, and distributes a variety of performance clothing, shoes, and accessories for men, women, and young people. It offers its clothing in three styles: compression, fitted, and relaxed. The company also has a range of footwear for running, training, basketball, sports with cleats, recovery, and outdoor use.

It mainly sells its products through brands like UNDER ARMOUR, ARMOUR, HEATGEAR, COLDGEAR, HOVR, UA, PROTECT THIS HOUSE, I WILL, ARMOUR FLEECE, and ARMOUR BRA. The products are designed to adapt to the weather conditions. Its international reach and evolutionary transformation have made Under Armor the largest digital fitness and Health Company worldwide.

The brand experienced a rapid ascent, achieving a significant milestone by 2015 when it surpassed Adidas to become the second-largest sports apparel firm in the United States, only trailing behind Nike in terms of sales. Its presence in the US market has surged, partly due to impactful advertising strategies and the company’s ability to select top athletes as brand ambassadors at the peak of their careers: Misty Copeland, Stephen Curry, and Tom Brady, among others.

SWOT Analysis of Under Armour

The following is a detailed Under Armour SWOT analysis.

Under Armour Strengths

1. Diversified Product Portfolio 

Under Armour’s broad product portfolio has strengthened its standing. The company is not dependent on one specific product. Its establishment has not limited itself to only footwear but has also incorporated apparel, accessories, etc. Moreover, it offers a range of add-ons such as gloves, bags, hats, and socks; it also participates in brand licensing, digital membership, marketing, and various online business operations. The extensive product line eliminates the risk of failure. It also ensures a high sales ratio and continuous growth of the company. Apparel sales accounted for 66% of total revenues at $3.9 Billion in 2023, footwear at 25% at $1.5 billion, and accessories at 6% at $409 million. 

2. Distribution Network

Under Armour has amazed investors with its accelerated growth in the market thanks to a robust distribution network that enabled products to reach customers worldwide. It has collaborated with well-known retail outlets in physical stores and digital marketplaces to guarantee broad accessibility and convenience. 59% of its Revenue was accumulated through wholesale distribution, whereas 41% was gathered through direct consumer sales in 2023. The company currently sells its products in some countries through licensing. These operational modifications have continued to expand the brand globally.

3. High-Quality Products

High-quality products were the catalyst behind Under Armour usurping Adidas, the second-biggest sports brand in the US. The company’s advanced manufacturing capabilities have been a major advantage in providing top-notch products to its clients. It employs state-of-the-art technologies and methods to guarantee smooth and accurate production. Automation and creative manufacturing strategies can make processes more efficient, use resources better, and cut down on production times.

Adoption of Digital Apps – Under Armour has adapted digital transformation with apps like MapMyFitness, MyFitnessPal (calorie and nutrition app), and Endomondo (fitness app maker). This has enhanced its revenue potential, allowing it to diversify its resources and continue its transformational industrial potential.

4. Brand Recognition and Loyalty

Under Armour has effectively established a globally recognized brand known for its innovative performance clothing. Brand loyalty is evident in its steady customer following, especially among sportspeople. It also boasts of a solid and loyal customer base due to its commitment to excellence, functionality, and the happiness of its customers. Through its regular production of items that surpass expectations, it has earned the confidence and allegiance of athletes and fans of sports. The brand’s focus on designs aimed at performance and cutting-edge technologies has struck a chord with consumers looking for equipment that boosts their sports performance.

5. Marketing Advertising

Under Armour has established its market position through successful marketing and advertising tactics. The company regularly produces powerful and meaningful campaigns that resonate with its intended market. Under Armour forms deep bonds with its consumers through narrative, motivating them to surpass their boundaries and reach new heights.

Additionally, it has effectively capitalized on celebrity support and collaborations with leading sports figures to boost the brand’s trustworthiness and expand its reach. Under Armour has cultivated significant brand recognition through its deliberate marketing strategies and has encouraged high levels of customer interaction.

6. Strategic Partnerships

The endorsement of major sports events and personalities has played a crucial role in elevating its global visibility and recognition. The company can reach a broad audience of sports fans by teaming up with renowned tournaments, championships, and sports competitions. Among the biggest names sponsored by the company are Stephen Curry (NBA), Tom Brady (NFL), and Jordan Spieth (Golf)

These partnerships offer Under Armour numerous chances for product placement, branding on the field, and endorsements by athletes, all of which contribute to strengthening its brand image. Being linked to prestigious events broadens the company’s impact, cements its reputation, and positions it as a reliable collaborator in the sports sector. Moreover, these collaborations give the company a stage to display its newest innovations and technologies, highlighting its leadership in the sportswear market.

7. Adoption of E-Commerce 

Under Armour’s robust online sales platform enables consumers to conveniently purchase from the comfort of their homes conveniently. This also gives the brand access to important customer information that can be leveraged to shape product creation and advertising tactics.

Under Armour Weaknesses

1. Limited Operating Presence

The company is still relatively new and has a limited operating presence in international markets. 64% of its revenue is gathered from its North American branches, making it dependent on the American markets. It has yet to strengthen its operations on the international scene to diversify its revenue streams. Overdependence on North America exposes the company to market and economic uncertainties and political instability.

2. Dependence on Apparel Product Line

The apparel product line accounts for 66% of the company’s total revenue base, which exposes the company to significant risks.  Should there be a substantial change in customer preferences and fashion trends, Under Armour’s revenue streams could be pressured as it would take some time to transition to more casual or athleisure-focused styles.

3. Limited Diversification

Compared to its peers, Under Armour needs to improve product offerings across sports and lifestyle items, potentially narrowing its appeal to consumers. While it caters to both genders, it ranks lower among female athletes as their preferred brand. Additionally, the selection of customizable Under Armour clothing and accessories is quite limited. This weakness makes it difficult for the company to stand out in the crowded marketplace.

4. Reliance on Athlete Endorsements

Dependence on celebrity sponsorships exposes the company to significant risks, as the brand’s reputation and success are closely linked with those of the athletes it endorses. Should a sponsored athlete encounter bad press, controversy, or a drop in performance, it could affect how the public views and trusts Under Armour. This places the company at the mercy of possible damage to its reputation that it cannot prevent.

5. Slow E-Commerce Adoption and small retail presence 

Compared to competitors, Under Armour’s e-commerce adoption could have been faster. Most of its core customers are now accustomed to in-store purchases and slow payments, which makes it difficult to shift to e-commerce. Its recent e-commerce effort failed to take because of customers. Additionally, the company boasts of a much smaller retail presence than its competitors, limiting its ability to target a broader target market to grow sales.

6. Pricing Inefficiencies

Under Armour’s pricing strategy, which aims to position itself as a high-end brand, could be a disadvantage when facing cheaper alternatives. The elevated costs discourage customers who are more budget-minded, valuing affordability more than the brand’s image, leading to a smaller customer base and possibly hindering the brand’s expansion.

Under Armour could consider offering more competitive prices or launching product lines with varying price ranges to appeal to a broader audience. Additionally, emphasizing its products’ distinct qualities, technological advancements, and performance advantages could help explain the higher prices and set Under Armour apart from its budget-friendly rivals.

7. Supply Chain Issues

Global supply chain disruptions have revealed weaknesses in Under Armour’s supply chain and distribution methods, affecting its capacity to satisfy customer needs efficiently. Issues like transportation problems, lack of raw materials, or production delays can result in needing more stock or delays in delivering orders. These issues can negatively impact customer happiness and the company’s image. Under Armour needs to concentrate on creating a strong and varied supply chain, finding alternative suppliers, and putting plans for potential problems in place. Improving teamwork and communication with suppliers and logistics partners can assist in actively dealing with and solving issues related to the supply chain.

8. Poor Expansion Strategies 

Under Armour was focused on direct-to-consumer sales as its long-term growth opportunity instead of online sales, which needed to be revised. The company invested in new stores, including a new flagship store in New York, but later pulled out of the deal. The events of 2020 highlighted the ineffectiveness of this strategy. It contributed to a decline in sales by 23% and 40% in Q1 and Q2 of 2020, respectively.

Under Armour Opportunities

1. International Markets Expansion

The global high-performance apparel market is experiencing a robust growth rate of 9.6% annually and is anticipated to soar from $1 trillion in 2022 to $22.82 trillion by 2031. Under Armour has a significant opportunity to leverage this growth by broadening its international presence, particularly in emerging markets such as Asia, Latin America, and Africa. By entering these new markets, the company can diversify its revenue streams and lessen its reliance on the American market.

2. Esports Opportunity

High-speed internet, improved streaming platforms, and advanced gaming hardware are the catalysts driving growth in the Esports market, which is expected to reach $10.9 billion by 2032 from $1.9 billion by 2023. Under Armour could ink strategic collaborations with Esports squads or competitions to promote its merchandise to a younger, tech-oriented crowd, growing its revenue base.

3. Smart Clothing Opportunity

The demand for smart clothing is on the rise, particularly in the sports and healthcare industries, driven by increased health and fitness awareness. The market is expanding rapidly, with a compound annual growth rate of 27.4%, growing from $2.98 billion in 2022. Under Armour can seize this opportunity by investing in the development of smart clothing that monitors health metrics, positioning itself at the forefront of this innovative trend.

4. Focus on Women’s Apparel 

The women’s apparel segment is one of the fastest growing, with revenues expected to reach $1.05 trillion by 2028 from $820 billion as of 2022. The demand for sports clothing and casual workout wear for women is increasing. Under Armour has the opportunity to broaden its range of products in this area to accommodate the growing need. Additionally, they could focus on developing marketing tactics to draw in more female customers who currently do not find their products as appealing as they might. Under Armour can tap into the expected growth by diversifying and expanding its product line to cater to women’s needs and reduce its reliance on men’s apparel. These increases highlight the huge potential of focusing on women’s apparel.

5. Health and Wellness

Under Armour should seize the growing trend in the health and fitness market, which is expanding at a compound annual growth rate of 8.89% and is expected to reach $9.37 billion by 2029. The company can diversify its offerings by introducing more health-focused products, such as exercise apps and wellness programs. Enhancing their online platforms to improve the shopping experience and integrating advanced technologies like artificial intelligence for personalized products and services can further boost revenue and customer loyalty.

Under Armour Threats

1. Political Polarization 

The Company was involved in a controversy because of the Trump administration. CEO Kevin Plank initially supported President Trump only to withdraw when his actions resulted in public. This controversy has not subsided for the company and has threatened its working ability in the face of political polarization.

2. Regulatory and Compliance Pressure

Changes in legal and regulatory frameworks concerning employment, commerce, or ecological standards might affect Under Armour’s activities and raise expenses. Adhering to employment regulations, including equitable pay and working environments, is vital for guaranteeing ethical practices in sourcing and production. Achieving eco-friendly and sustainable production standards may necessitate significant financial commitments to new technologies and methodologies. Furthermore, adhering to regulations concerning product safety is crucial for safeguarding customers and preventing possible legal issues. Staying informed about regulation updates, developing vital compliance initiatives, and participating in forward-thinking conversations with regulatory bodies are crucial for Under Armour to successfully address these obstacles.

3. Supply Chain Disruptions

Incidents such as natural calamities, outbreaks of diseases, or political turmoil impacting nations where Under Armour produces its goods can interrupt the flow of its supply chains. The company depends on an intricate worldwide network to create and distribute items, making it susceptible to interruptions caused by natural disasters, political unrest, or other elements.

4. Increased Competition 

Its significant competitors, Nike and Adidas, have higher brand recognition and better operational experiences overseas. This has helped them to gain a stronger customer base that could threaten Under Armour’s working ability in the future. This competitive environment may compel the company to lower its product prices to secure a competitive edge, potentially affecting its profit margins. The rise of new entrants and smaller, specialized sportswear companies targeting particular customer groups can increase rivalry and possibly diminish Under Armour’s market presence. Under Armour needs to keep innovating, set its products apart, allocate resources to marketing and branding efforts, and build solid connections with customers to hold a lead in the market against this challenge.

5. Economic and Market Uncertainties 

Under Armour’s core business depends on the health of the global economy. During periods of economic and market uncertainties, consumers’ purchasing power takes a hit, which could make it difficult for the company to attract sales.

6. Counterfeit Threats

Counterfeit products harm the brand’s image and reduce consumers’ confidence in the realness and excellence of Under Armour items. Buyers might choose these counterfeit products because they are cheaper, which results in the company losing money. To fight this issue, Under Armour needs to put money into strong measures against fake goods, like cutting-edge verification tech, constant surveillance of online stores, and working together with police to find and prosecute those who make counterfeit items. Teaching shoppers about the dangers of buying fake goods and highlighting the importance of real Under Armour products can also be effective.

 References & more information

1. Felsted, A. (2020, February 11). Under Armour’s New CEO Makes an Ugly Start. Bloomberg
2. Statista Research Team (2020, Mar 2). Under Armour’s net sales share worldwide in 2019. Statista
3. Statista Team (2020, Mar 5). Under Armour’s net sales worldwide in 2019. Statista
4. Johnston, L. (2020, Feb 13). Under Armour Hoping its New E-Commerce Platform Will Accelerate its Turnaround. Consumer Goods Technology
5. Thomas, L. (2020, May 11). Under Armour, sales plummet 23% as coronavirus stalls turnaround plans. CNBC
6. Barkho, G. (2020, Feb 12). With sluggish DTC growth, Under Armour lowers 2020 expectations. Modern Retail
7. Roberts, D. (2020, September 2). 3 signs that Under Armour is shrinking to grow. Yahoo Finance News
8. Verry, P. (2020, Sep 15). Under Armour Has a New Basketball Shoe Coming. Footwear News
9. SR Team (2020, Mar 2). Under Armour’s net sales share worldwide in 2019. Statista
10. LoRé, M. (2020, Sep 15). Under Armour’s Focus On Women Is Paying Dividends In Innovation And Sales. Forbes
11. Balu, V. (2020, July 31). Under Armour warns of margin pressure for the rest of 2020. Reuters
12. Clough, R. (2020, July 27).  Under Armour falls after the founder, CFO, is named in the SEC probe. The Detroit News

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