Under Armour poised to storm field

Apparel: With booming sales and an improving economy, the Baltimore business builds toward a promising future.

November 01, 2003|By Jamie Smith Hopkins | Jamie Smith Hopkins,SUN STAFF

Under Armour Performance Apparel has grown by leaps and bounds, but the athletes-turned-businessmen who run the Baltimore company think now is the time to really show what they're made of.

The nation's economy is suddenly booming - it just enjoyed the fastest three-month growth in almost 20 years, in part because of strong consumer spending - and that is good news for any operation that does better when weekend warriors have cash in their pockets.

Under Armour broke its monthly sales record in August, broke that in September and did it again last month. A new advertising campaign had something to do with that, but the more favorable economic environment didn't hurt either.

"The timing is perfect because the economy is now starting to turn and we have built a great foundation," said Ryan Wood, the company's vice president of sales and one of its owners. "We have just started to scratch the surface."

Under Armour hired more than 120 people in the past year, doubling its staff. Its headquarters stands in Locust Point, overlooking the Inner Harbor, and it has offices in Toronto and Tokyo.

But the company traces its beginnings to a football field.

Under Armour's president, 31-year-old Kevin Plank, was a University of Maryland special teams captain when he first thought about the untapped possibilities of apparel. Sick of sweaty T-shirts that he and his teammates had to change during halftime, he wondered if there could be a better alternative to cotton.

In 1996, after graduating with a degree in business, he maxed out four credit cards to start a company offering microfiber compression shirts that wick moisture from the skin to the outside of the fabric. That year Plank sold $17,000 of the form-fitting outfits dubbed "performance apparel."

Now Under Armour holds 73 percent of the compression clothes market. Last year it sold $55 million in anti-sweat products - from shirts to underwear to leggings - and company officials expect to more than double that this year.

Last month, Inc. magazine named the company No. 2 on its list of the fastest-growing private companies in the nation.

The behemoths are trying to eat away at the upstart's lead, but so far Nike, Reebok and Adidas haven't managed it. Under Armour's share of the market has increased since last year, when its products accounted for less than two-thirds of all sales.

Its clothing lines the shelves of 4,500 stores. It is the official performance apparel supplier to Major League Baseball, Major League Soccer, the National Hockey League, USA Baseball and the US Ski Team. Actors in the football movie Any Given Sunday wore Under Armour, and the "athletes" on the ESPN drama Playmakers are walking commercials for the products.

"You see more of Under Armour than any one actor in that show," said Neil Schwartz, director of marketing for SportScan INFO, a Florida market research firm that collects data for the sporting goods industry. "There's been a real increase in awareness."

Schwartz said the sporting goods apparel market is down about 10 percent overall this year, reflecting months of job losses nationwide, but the compression clothes sector has nearly doubled. The way he sees it, Under Armour essentially created a new market - one that appeals to serious athletes who are willing to pay even when the economy is lousy.

But he thinks an economic improvement could only help. In the past six weeks, Schwartz said, sports apparel sales have picked up.

"When the economy is stronger, people are more willing to focus on discretionary spending," said Mike May, spokesman for the Sporting Goods Manufacturers Association, based in North Palm Beach, Fla. "It's the athlete who's borderline serious and casual who will invest in an item like an Under Armour garment if they've got the extra money."

Scott Hoyt, director of consumer economics at Economy.com in West Chester, Pa., warned that the economy may be "entering recovery" but hasn't completely turned around. He said consumers might not throw as much cash into retail stores' registers for the rest of the year because their strong spending in recent months was fueled by tax rebates and refinancing.

"We don't have any tax rebate checks in the current quarter," Hoyt said. "Mortgage refinancing has slowed quite significantly. So consumers don't have those types of sources of cash for the all-important holiday season that they did for back-to-school."

Still, it's very possible that retailers will see an improvement compared to last November and December, he said. And Under Armour, which expanded its line to include women's clothes in January after adding children's sizes last year, has a wider audience of present givers and receivers to reach this holiday season.

The company's sales staff is meeting this weekend at the Baltimore Marriott Waterfront Hotel to prepare for the addition of 80 new styles in the next year. Wood, the vice president of sales, is glad that economic indicators are looking up just in time.

"We think we've prepared ourselves for some incredible growth," he said.

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