Under Armour could offer up $100 million in stock

Updated: August 26, 2005, 4:08 PM ET
By Darren Rovell | ESPN.com

Like Phil Knight, who two decades before sold Nike shoes out of his car, Under Armour founder Kevin Plank's first warehouse in 1996 was also his trunk.

Plank, a former University of Maryland running back, sold $17,000 worth of his shirts that year.

Today, Under Armour, based in Baltimore, is a booming business, with net revenues surpassing $200 million last year. And Friday, the company declared its intention to go public by filing its registration with the Securities and Exchange Commission, seeking to sell as much as $100 million in common stock.

The filing offered the first glimpse into a company that has managed to thrive in an extremely competitive environment usually dominated by the goliaths of the industry, including Nike and Reebok, which attempted to stunt Under Armour's growth with their Dri-FIT and NFL Equipment lines, respectively.

Under Armour proved that moisture wicking or compression apparel could be sold not only to athletes, but also to the mass market. Sales of lightweight microfiber performance apparel are expected to top $500 million this year.

"Under Armour is no longer an up-and-coming brand," said Ben Sturner, president of Leverage Sports Agency, a New York-based sports marketing firm. "They have positioned themselves as a real player in the industry and in the eyes of consumers in only a few years' time."

The company also sells its product to teams in Major League Baseball, Major League Soccer and the National Hockey League, and has been the undergarment of choice to at least 700 Division I men's and women's college teams. The company's only official college relationship is with the University of Maryland football team. The company is now the third largest branded sports apparel company in the United States. It currently owns 7.5 percent of the market and is behind only Nike and adidas, according to Neil Schwartz of SportsScanINFO, a retail tracking firm.

Not only has the company branched into apparel specifically designed for the playing surface or season, it has also quickly expanded into other products branded with its now familiar interlocking "UA" logo, including wristbands, underwear, socks and gloves.

"It's a remarkable story to come into the market and do what they have been able to do," Schwartz said. "Every category that they have gone into, they have been successful."

Last year, the company branched out into making performance gloves. Schwartz says Under Armour now owns 30 percent of the market, behind only Nike, which maintains a 50 percent share.

"Their growth has been phenomenal," said Jeff Hennion, senior vice president and chief marketing officer of Dick's Sporting Goods, which carries Under Armour product in its 239 sports specialty stores throughout the U.S. "The UA logo now really means something to athletes and kids alike."

Thanks to developing a tactical line, one of its largest customers is now the Army and Air Force Exchange Service, a retailer that sells gear to military personnel and their families.

In the early going, Under Armour did very little advertising. Most of the buzz came from word of mouth and from fans who saw the logo on the clothes of America's most famous athletes. The company eventually signed endorsers, who now include NFL players LaVar Arrington, Jonathan Vilma and Eric Ogbogu, Texas Rangers second baseman Alfonso Soriano, women's soccer star Heather Mitts and tennis player Robby Ginepri.

Under Armour also advertised cheaply by taking advantage of product placement opportunities in movies. Its big break came in the 1999 Oliver Stone movie "Any Given Sunday." When it was discovered the movie had a significant impact on sales, Under Armour became the gear of choice in movies ranging from "The Replacements" to "Dodgeball." The company received more exposure by outfitting the Cougars in the ESPN miniseries "Playmakers" two years ago.

It wasn't until August 2002 that the company unveiled its first television commercial. Its subsequent campaign, featuring the "We Must Protect This House," tagline, was widely acclaimed and earned the company an ADDY Award given by the American Advertising Federation.

Under Armour has only 535 employees in the United States, compared to Nike's 12,000, but the company continues to push the envelope. Tired of having to put its tight-fitting performance gear on non-athletic mannequins, the company made its own -- using Ogbogu and Mitts as models -- and shipped them to retailers so that its gear could be modeled more accurately. Under Armour products are now in 8,000 stores, up from the 500 retailers that carried the brand five years ago. The company's heavy reliance on online sales differentiates it from the traditional market leaders and reduces costs.

Under Armour plans to battle Nike head on next year when it unveils its line of cleats.

Darren Rovell, who covers sports business for ESPN.com, can be reached at Darren.rovell@espn3.com.

Darren Rovell | email

ESPN.com Sports Business reporter