Under Armour 2007 Annual Report Download - page 15

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fishing, mountain sports and outdoor retailers such as Bass Pro Shops and Cabela’s; and The Army and Air Force
Exchange Service. In 2007, our two largest customers were, in alphabetical order, Dick’s Sporting Goods and
The Sports Authority. These two customers accounted for a total of approximately 33% of our net revenues in
2007, and each of these customers individually accounted for at least 10% of our net revenues in 2007.
In 2007, 74% of our wholesale distribution was derived from large format national and regional retail
chains. Additional wholesale distribution in 2007 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.
Direct to Consumer Sales
Approximately 11% of our net revenues in 2007 were generated through direct to consumer sales. Direct to
consumer sales include sales through our global website and toll-free call center, and discounted sales through
our own retail outlet stores. In addition, in November 2007, we opened our first branded, full-price retail store
located in Annapolis, Maryland.
Product Licensing
In addition to generating revenues through wholesale distribution and direct to consumer sales, we generate
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 product
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 formed product licensing relationships with
several licensees for bags, socks, headwear, eyewear and watches, as well as the distribution of our products to
college bookstores and golf pro shops. In addition, we have a relationship with one Japanese licensee that has the
exclusive rights to distribute our products in Japan. In 2007, license revenues accounted for approximately 4% of
our net revenues.
International Revenues
Our international revenues include net revenues generated in Western Europe, primarily in the United
Kingdom, France and Germany. In addition, international revenues include net revenues generated through third-
party distributors primarily in Australia, Benelux, Italy, 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 intend to introduce our products and simple merchandising story to athletes throughout the world.
We are introducing our performance apparel in international markets methodically, 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 in these markets.
We entered the Japanese market in 1999 through a distribution arrangement with Dome Corporation. In
2002, we entered into a license agreement with Dome, and it now 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 baseball and soccer teams, and to approximately 1,700 independent specialty
stores and large sporting goods retailers, such as The Sports Authority, Alpen, Xebio and Sports Depot.
In 2005, we expanded our sales into Europe, beginning with the United Kingdom. We have sold our branded
products to numerous players on European soccer teams; First Division Football clubs and multiple cricket clubs
in the United Kingdom; soccer teams in Italy, Spain, Holland, Ireland and Germany as well as First Division
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