Under Armour 2015 Annual Report Download - page 21

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Sales of performance products may not continue to grow and this could adversely impact our ability to
grow our business.
We believe continued growth in industry-wide sales of performance apparel, footwear and accessories will
be largely dependent on consumers continuing to transition from traditional alternatives to performance products.
If consumers are not convinced these products are a better choice than traditional alternatives, growth in the
industry and our business could be adversely affected. In addition, because performance products are often more
expensive than traditional alternatives, consumers who are convinced these products provide a better alternative
may still not be convinced they are worth the extra cost. If industry-wide sales of performance products do not
grow, our ability to continue to grow our business and our financial condition and results of operations could be
materially adversely impacted.
We operate in highly competitive markets and the size and resources of some of our competitors may allow
them to compete more effectively than we can, resulting in a loss of our market share and a decrease in our
net revenues and gross profit.
The market for performance apparel, footwear and accessories is highly competitive and includes many new
competitors as well as increased competition from established companies expanding their production and
marketing of performance products. Because we own a limited number of fabric or process patents, our current
and future competitors are able to manufacture and sell products with performance characteristics and
fabrications similar to certain of our products. Many of our competitors are large apparel and footwear
companies with strong worldwide brand recognition. Due to the fragmented nature of the industry, we also
compete with other manufacturers, including those specializing in outdoor apparel and private label offerings of
certain retailers, including some of our retail customers. Many of our competitors have significant competitive
advantages, including greater financial, distribution, marketing and other resources, longer operating histories,
better brand recognition among consumers, more experience in global markets and greater economies of scale. In
addition, our competitors have long term relationships with our key retail customers that are potentially more
important to those customers because of the significantly larger volume and product mix that our competitors sell
to them. As a result, these competitors may be better equipped than we are to influence consumer preferences or
otherwise increase their market share by:
• quickly adapting to changes in customer requirements;
• readily taking advantage of acquisition and other opportunities;
• discounting excess inventory that has been written down or written off;
• devoting resources to the marketing and sale of their products, including significant advertising, media
placement, partnerships and product endorsement;
• adopting aggressive pricing policies; and
• engaging in lengthy and costly intellectual property and other disputes.
In addition, while one of our growth strategies is to increase floor space for our products in retail stores and
generally expand our distribution to other retailers, retailers have limited resources and floor space, and we must
compete with others to develop relationships with them. Increased competition by existing and future
competitors could result in reductions in floor space in retail locations, reductions in sales or reductions in the
prices of our products, and if retailers earn greater margins from our competitors’ products, they may favor the
display and sale of those products. Our inability to compete successfully against our competitors and maintain
our gross margin could have a material adverse effect on our business, financial condition and results of
operations.
Our profitability may decline as a result of increasing pressure on pricing.
Our industry is subject to significant pricing pressure caused by many factors, including intense
competition, consolidation in the retail industry, pressure from retailers to reduce the costs of products and
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