Under Armour 2010 Annual Report Download - page 13

Download and view the complete annual report

Please find page 13 of the 2010 Under Armour annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 92

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92

In 2010, approximately 75% of our wholesale distribution was derived from large format national and
regional retail chains. Additional wholesale distribution in 2010 was derived from independent and specialty
retailers, institutional athletic departments, leagues and teams. The independent and specialty retailers are
serviced by a combination of in-house sales personnel and third-party commissioned manufacturer’s
representatives and continue to represent an important part of our product distribution strategy and help build on
the authenticity of our products. Our independent sales include sales to military specialists, fitness specialists,
outdoor retailers and other specialty channels. With the launch of our footwear, we expanded our distribution at
the mall through national footwear retailers including Finish Line and Foot Locker.
Direct to Consumer Sales
In 2010, 23% of our net revenues were generated through direct to consumer sales. Direct to consumer sales
include discounted sales through our own factory house stores and sales through our specialty stores, global
website and catalog. As of December 31, 2010, we had 54 factory house stores, of which the majority are located
at outlet centers on the East Coast of the United States. Through our specialty stores, consumers experience our
brand first-hand and have broader access to our performance products. These specialty stores are located near
Annapolis, Maryland, Chicago, Illinois, Boston, Massachusetts, and Washington, D.C.
Product Licensing
In addition to generating net revenues through wholesale distribution and direct to consumer sales, we
generate net revenues from licensing arrangements to manufacture and distribute Under Armour branded
products. In order to maintain consistent quality and performance, we pre-approve all products manufactured and
sold by our licensees, and our quality assurance team strives to ensure that the products meet the same quality
and compliance standards as the products that we sell directly. We have relationships with several licensees for
socks, team uniforms, eyewear and custom-molded mouth guards, as well as the distribution of our products to
college bookstores and golf pro shops. In addition, we have a relationship with a Japanese licensee that has the
exclusive rights to distribute our products in Japan. In 2010, license revenues accounted for 4% of our net
revenues. We have developed our own headwear and bags, and beginning in 2011, these products are being sold
by us rather than by one of our licensees.
Net Revenues in Other Foreign Countries
Our net revenues in other foreign countries include net revenues generated in Western Europe, primarily in
Austria, France, Germany, Ireland and the United Kingdom. In addition, net revenues in other foreign countries
include net revenues generated through third-party distributors primarily in Australia, Italy, Greece, New
Zealand, Panama, Scandinavia and Spain, along with license revenues from our licensee in Japan. We believe
that the trend toward performance products is global, and we will continue to introduce our products and simple
merchandising story to athletes throughout the world. In international markets, we are introducing our
performance apparel, footwear and accessories in a manner consistent with our past brand-building strategy,
including selling our products directly to teams and individual athletes in these markets, thereby providing us
with product exposure to broad audiences of potential consumers.
Since 2002, we have had a license agreement with Dome Corporation, which produces, markets and sells
our branded products in Japan. We work closely with this licensee to develop variations of our products for the
different sizes, sports interests and preferences of the Japanese consumer. Our branded products are now sold in
Japan to professional sports teams, including Omiya Ardija, a professional soccer club in Saitama, Japan, as well
as baseball and other soccer teams, and to over two thousand independent specialty stores and large sporting
goods retailers, such as Alpen, Himaraya, The Sports Authority and Xebio. We made a minority equity
investment in Dome Corporation effective January 2011.
In 2006, we opened our European headquarters in Amsterdam, The Netherlands from which our European
sales, marketing and logistics functions are conducted. We sell our branded products to Premier League Football
5