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Plank: Under Armour’s new goal is $2B in sales by 2013
While it took sports apparel maker Under Armour Inc. 15 years to hit $1 billion in sales, the company aims to double that number by 2013.
Under Armour CEO and founder Kevin A. Plank announced Thursday the new goal of reaching $2 billion in sales during an Investor Day meeting at the company’s Tide Point headquarters.
Under Armour reached $1.06 billion in sales in 2010, exceeding Plank’s goal of reaching $1 billion by the end of the year. But accelerating that growth is the company’s next step, while laying a foundation for international sales and footwear development in the years beyond 2013.
“It’s not just about two times by 2013,” Plank said. “It’s about making a broad foundation for 2014 and beyond.”
To hit $2 billion, Plank and other Under Armour executives told Wall Street analysts that the company will focus on growing its apparel and direct-to-consumer sales domestically over the next two years because both of those branches are burgeoning already.
Next spring, Under Armour will release its “Cold Black” apparel line, which further reflects UVA rays and keeps athletes cool during extreme temperatures. A soon-to-be-expanded “Charged Cotton” apparel line is also expected to bring in more consumers because of its lower price point, with T-shirts starting at $25.
Other new products will include “Storm Fleece” hooded and zip-up sweatshirts that are water-repellant, and women’s yoga and workout attire. The company will also expand its sales of men’s underwear into department stores. By the spring, the company said it expects to have its underwear in 600 department stores nationwide.
Many of the new products were met with applause by analysts at the meeting.
“I think it went great,” said Sam Poser, an analyst with Sterne, Agee & Leach Inc., headquartered in Birmingham, Ala.
To increase sales in stores and online by 30 percent by 2013, Under Armour will use a number of tactics to improve its retail operations.
Eighty more outlet store locations will be open by the end of the year, and the company expects to open 220 locations by 2013, said Dan Sawall, vice president of retail. About 700 Under Armour brand “shops” will be set up in Dick’s Sporting Goods, Sports Authority and Finish Line starting this August, which will make the company’s products more visible to customers, with signs and better displays. The company’s website will be revamped in October to engage a broader audience and be more enticing for online shoppers.
Under Armour has 72 Factory House outlet stores open in 34 states, four of which are in Maryland.
Customers will also see apparel prices tick up in 2012, which executives said they expect won’t hurt sales.
But Raymond James & Associates Inc. Analyst Dan Wewer was skeptical about how higher prices could drive away customers already dealing with higher gasoline and grocery costs, and asked Plank and Dickerson how confident the company was in raising prices at a tough economic time.
“We have room for pushing the customer,” Plank said.
Under Armour’s footwear line is expected to make a bigger splash in sales by 2013, as the company is taking its time re-creating its business philosophy and rebuilding its footwear team.
Led by Senior Vice President of Footwear Gene McCarthy, the footwear department at Under Armour has expanded to 119 employees, from 54 employees in 2008.
The company plans to unveil two new shoe models over the next year. One will be a “Charge RC” men’s and women’s running and training shoe that will be released in October. The top-of-the-line shoe will sell for $120. A new version of the company’s “Micro G” training shoe, with an adjustable heel strap, will sell for $87 starting next spring.
For fiscal 2011, the company’s guidance for net revenue is to increase 29 percent to 31 percent from $1.37 billion to $1.39 billion. Operating income is also expected to increase by about 33 percent to 36 percent, from $149 million to $153 million, Chief Financial Officer Brad Dickerson said.
The $2 billion mark will be a far cry from its $17,000 in sales the company had in 1996, its first year of existence, and the $281 million it had when it went public in 2005.
“The same thing worries me today that worried me in 1996: ourselves, our ego,” Plank said. “We’re going to make mistakes. But we promise to make full-speed mistakes, and we won’t make them twice.”
