Under Armour 2008 Annual Report Download - page 13

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Wholesale Distribution
In 2008, approximately 81% of our net revenues were derived from wholesale distribution. Our principal
customers located in the United States include national and regional retail chains such as, in alphabetical order,
Academy, Ltd., Dick’s Sporting Goods, Hibbett Sporting Goods, Modell’s Sporting Goods, and The Sports
Authority; hunting and fishing, mountain sports and outdoor retailers such as Bass Pro Shops and Cabela’s; and
The Army and Air Force Exchange Service. Our principal customers located in Canada include national retail
chains such as Sportchek International and Sportman International. In 2008, 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 31% of our net revenues in 2008, and each of these customers individually accounted for at
least 10% of our net revenues in 2008.
In 2008, approximately 75% of our wholesale distribution was derived from large format national and
regional retail chains. Additional wholesale distribution in 2008 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 performance training footwear in 2008 and
performance running footwear in 2009, we have expanded our distribution at the mall through national footwear
retailers including Finish Line and Foot Locker.
Direct to Consumer Sales
Approximately 14% of our net revenues in 2008 were generated through direct to consumer sales. Direct to
consumer sales include sales through our global website and catalogs, discounted sales through our own retail
outlet stores and sales through our full-price specialty retail stores. Our 25 retail outlet stores are located at outlet
centers primarily on the East Coast of the United States. Our retail specialty stores are built to enable consumers
to immerse themselves in performance products and the brand. We opened our first branded, full-price retail
store in Annapolis, Maryland in November 2007 and opened three additional full-price retail stores near Chicago,
Illinois, Boston, Massachusetts, and Washington, D.C. during 2008.
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 and eyewear, 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 2008, license revenues accounted for approximately 4% of
our net revenues. Beginning in 2009, a product licensing relationship will begin with a licensee for team
uniforms.
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.
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