Under Armour 2015 Annual Report Download - page 38

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The information contained in this section should be read in conjunction with our Consolidated Financial
Statements and related notes and the information contained elsewhere in this Form 10-K under the captions
“Risk Factors,” “Selected Financial Data,” and “Business.”
Overview
We are a leading developer, marketer and distributor of branded performance apparel, footwear and
accessories. The brand’s moisture-wicking fabrications are engineered in many different designs and styles for
wear in nearly every climate to provide a performance alternative to traditional products. Our products are sold
worldwide and worn by athletes at all levels, from youth to professional, on playing fields around the globe, as
well as by consumers with active lifestyles. The Under Armour Connected Fitness platform powers the world’s
largest digital health and fitness community and our strategy is focused on engaging with these consumers and
increasing awareness and sales of our products. We plan to grow this community by developing innovative
applications, services and other digital solutions to impact how athletes and fitness-minded individuals train,
perform and live.
Our net revenues grew to $3,963.3 million in 2015 from $1,472.7 million in 2011. We believe that our
growth in net revenues has been driven by a growing interest in performance products and the strength of the
Under Armour brand in the marketplace. We plan to continue to increase our net revenues over the long term by
increased sales of our apparel, footwear and accessories, expansion of our wholesale distribution sales channel,
growth in our direct to consumer sales channel and expansion in international markets and engaging with
consumers through our Connected Fitness business. Our direct to consumer sales channel includes our brand and
factory house stores and websites. New offerings for 2015 include our Stephen Curry signature basketball shoes
and new UA SpeedForm®running introductions.
A large majority of our products are sold in North America; however, we believe our products appeal to
athletes and consumers with active lifestyles around the globe. Internationally, our net revenues are generated
from a mix of wholesale sales to retailers, sales to distributors and sales through our direct to consumer sales
channels in Europe, Latin America, and Asia-Pacific. In addition, a third party licensee sells our products in
Japan and Korea.
Our operating segments include North America; Latin America; Europe, the Middle East and Africa
(“EMEA”); Asia-Pacific; and Connected Fitness. Due to the insignificance of the Latin America, EMEA, and
Asia-Pacific operating segments, they have been combined into International for disclosure purposes.
We believe there is an increasing recognition of the health benefits of an active lifestyle. We believe this
trend provides us with an expanding consumer base for our products. We also believe there is a continuing shift
in consumer demand from traditional non-performance products to performance products, which are intended to
provide better performance by wicking perspiration away from the skin, helping to regulate body temperature
and enhancing comfort. We believe that these shifts in consumer preferences and lifestyles are not unique to the
United States, but are occurring in a number of markets globally, thereby increasing our opportunities to
introduce our performance products to new consumers. We plan to continue to grow our business over the long
term through increased sales of our apparel, footwear and accessories, expansion of our wholesale distribution,
growth in our direct to consumer sales channel and expansion in international markets.
Although we believe these trends will facilitate our growth, we also face potential challenges that could
limit our ability to take advantage of these opportunities, including, among others, the risk of general economic
or market conditions that could affect consumer spending and the financial health of our retail customers. In
addition, we may not be able to effectively manage our growth and a more complex global business. We may not
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