Logo: Under Armour
Over the last 19 years, Under Armourhas grown to become a globally recognized brand, making headway in the both the U.S. and global athletic wear market. That's no small feat considering the U.S. market has major, long-standing competition like Nikethat doesn't give up any of the field without a fight.
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Nike still dominates the global sportswear market, without a doubt. However, there are still huge growth opportunities in this quest for market share. Such is the case with Under Armour, which in 2014 beat out Adidas to become the second largest athletic apparel company in the U.S. Here's how they did it, and what they'll conquer next.
Beating AdidasUnder Armour recently became the second largest sports wear company in the U.S. by total sales thanks to impressive total U.S. sales growth in both its growing apparel line and footwear segment. By apparel, Under Armour had already beat out Adidas as the second most purchased athletic wear brand in the U.S. behind Nike. But thanks to even more gains here, the company now also beats Adidas in total revenue.
Under Armour also has been particularly aggressive in catching Adidas lately in the footwear segment. Adidas' shoe sales were down 30% year over year in the most recent quarter, hurt by declines to its major brands, such as its Reebok line. While Nike seized on Adidas' footwear losses and now has half of the U.S. athletic shoe market, Under Armour experienced the most year-over-year growth in this area with a 50% jump in its shoe sales in the most recent quarter.
So while Under Armour is still a relatively small player overall, should we hope that it will catch Nike?
Focusing on high-end qualityWell not exactly. And that's a good thing because that's not what the company is focused on now.
In fact, much of the appeal of Under Armour is that it's not Nike and not the globally dominantbrand that makes athletes feel like a cog in a machine. Much of the appeal of Under Armour has been its boutiqueness, and much of its marketing depends on keeping this image. So, for now, second place is just where the company wants to be and here's why.
Instead of catching Nike, the company will focus on creating innovative and high-quality products, breaking into new segments, and continuing to keep a niche-market image.Thecompany's focus on being viewed as a disruptive company for high levelathletesis apparent in its "I WILL WHAT I WANT" ad campaign, which boasts American Ballet Theatre dancerMisty Copeland as a spokeswoman in aprovocativeunder-dog-story ad campaign.
American Ballet Theatre dancer, Misty Copelandin Under Armour Ad. Photo: Under Armour
By keeping their disruptive image, they can continue to charge a premium for their product, continue to post strong growth for years to come without saturating the market, and continue to make athletes, and investors, wanting more. So while its nice that Under Armour has passed Adidas and continues to gain attention in the market, Under Armour is right where it needs to be now in second place, with still plenty of room for more growth.
The article Under Armour Is No. 2 in U.S., but Will It Catch Nike? originally appeared on Fool.com.
Bradley Seth McNew has no position in any stocks mentioned, though he does own a pair of Under Armour SPEEDFORM running shoesthat he bought solely because of the cool colors and only after realized that they are also really good running shoes. The Motley Fool recommends Nike and Under Armour. The Motley Fool owns shares of Nike and Under Armour. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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