Similarities Between Nike And Under Armour

There are Cats and Dogs , Coffee and Tea and then there are Nike and Adidas. It is no twist in the story that they are arch rivals. But what is the Plot? Nike and Adidas seemed to have a good and almost equal market initially in the ‘00s. Adidas then dropped the mic with its super popular Y-3 label and signed David Beckham for a lifetime $160m deal while Nike went shopping and came back with Hurley, Converse and Starter for an estimate of $450m. While backstage Current CEO Herbert Hainer took over in 2001 and Nike Co—founder Phil Knight stepped down from CEO a year later. Meanwhile Michael Jordan hung up his sneakers in 2003.

Financial-Under Armour is a publicly traded company on the NYSE. Results from the fourth quarter, ending December 31, 2011, shows that net revenues increased 34% to $403 million, $102 million more than

Competitors in the industry can wreak havoc on the bottom line for a company. With rivals, a price competition usually ensues, which benefits the customers but hurts the competing businesses that share a common strategy. In reviewing rival sellers, many competitors exist within the sports apparel and footwear industry, but most of them are unable to compete with the industry giants, Nike and Adidas. They are well seated in the industry and their sales reveal this ultimate strength, however, Under Armour is putting pressure on these mammoths. In 2015, global sales of sports clothing and footwear equated to $250 billion, of which Nike grabbed $30.6 billion, Adidas held in its grasp $18.8 billion and Under Armour had a much smaller piece of the pie, at $3.9 billion globally. In reviewing these numbers, it looks like Under Armour is really subpar to the industry giants, but this is not exactly the case. Under Armour in the past couple of

“Assets are economic resources that have expected future benefits to the business” (Baker, 2014). There are short and long term assets. Short-term assets are assets that will be utilized within a year. Examples of short-term assets are cash, inventory, and accounts receivable. Long-term assets are assets that will continue to beneficial longer than a year. Examples of long-term assets are buildings, land, and equipment.

a. Under Armour’s approach towards innovation is very unique, they think and plan out their projects thoroughly in order to create a one of a kind product that could be appealing to their consumers. The company has been extremely progressive throughout the years in order to stay ahead of the other competitive companies in their targeted industry. By constantly updating and coming up with different product lines, such as compression shirts and cleats, Under Armour is able to compete with other top athletic wear company’s in their market. If

The current assets are those which are readily convertible into cash and cash equivalents due to their highly liquid nature and also form part of working capital of the company’s operations. However, the long term assets in contrast are not liquid because since they have a useful life of more than a year and hence their full value cannot be easily realized within

The price of Nike’s common stock has gone down in the past five years. It was at its highest point in 1997 and next highest in 1999.

Under Armour is continually improving their apparel line and broadening there market. The company has been growing at a substantial rate, 30.5% annually over a 5-year period, largely due to the ambition of Kevin Plank, founder, and also to heavy marketing and promotions. Plank attributes the success of the company to brand recognition and the ability to market to all consumers. Under Armour makes “head-to-toe” apparel for anyone during any season. It has pushed its image into as many stores as it can,

sponsors. Nike's market cap is $98 billion and Under Armours market cap is $22 billion. Nike

From the beginning, Under Armour has been a very innovative company. CEO, Kevin Plank innovated the way athletic apparel was made. They also still display passion through one of their core competencies, listed in Exhibit 3, which is to bring as much value as possible to their customers. Another one of Under Armour’s weaknesses according to Exhibit 2 is the lack of their international business. When you compare Under Armour to Nike it is easy to see how big of a difference there is between their geographical exposures. While the majority of Nike’s revenue comes from North America, they also have business segments all over Europe, China, Japan and some emerging markets as well. Adidas is modeled the same way. As mentioned briefly earlier, they have large segments of their revenue coming from regions around the world such as Europe, China, Asia and Latin America. When you compare this to the fact that roughly 94% of Under Armour’s net revenues over the past several years has come from North America, it is easy to see why they need to focus on expanding their international business segments in order to keep competing in this industry (Under Armour 10K). Under Armour’s competitors are working to further

Overall, Nike’s inventory turnover is greater than Under Armor by .86%. This leads us to believe Nike is selling more inventory than Under Armor and making a greater profit. Nike’s annual sale’s are 8.4 times greater than Under Armour’s, which leads them to have an extra advantage because they have more money to spend on marketing, and advertising (Sparks). Not only that, the current ratio of Nike is 2.52% and Under Armour is 3.67%. Even though Under Armour has a higher ratio, Nike is also competently larger in size than Under Armour so has more current liabilities, but Nike, for its size is still has a comparable current ratio.

The athletic industry is a demanding market where brands battle for consumer’s attention and try to hold on to them through brand loyalty. To compete with one another, companies have to come out with new trends regularly. Nike is a leading competitor in the market and has been for the last fifty years. However, Under Armour, an up and coming competitor is challenging Nike through new styles and lower prices. These two companies look fairly similar; however, Under Armour’s strategy is different and it should be putting Nike on edge.

Other clothing brands have the ability to start manufacturing athletic apparel to take away market share and diversify their portfolio. Thus, existing apparel companies could enter the performance apparel market if they decide to invest capital for advertising and building product demand. Under Armour has weak patent protection over its product; hence, there is a threat of different unexpected entrants who want to reiterate on their proven formula. Overall, the threat is less imperative to their continued success since other issues are more pertinent and likely.

Currently Nike has the largest selection of sports gear. As more and more people participate in sports Nike continues to grow their market share. When you go to sports gear stores such as Dick’s, you probably see more Nike products than Under Armour. Nike is much larger with a revenue of almost 33 billion versus Under Armour with a revenue of only 4.8 billion. Since Nike is more than six times larger, they are most likely to have more gear to choose from in almost any sport you can imagine.

The strength of the competitive forces vary among the Under Armour, Nike, and The Adidas Group. The buyer bargaining power of Under Armour, is somewhat weak. Under Armour’s growth strategy entails, “Securing