NEW YORK — Under Armour’s plan to become a publicly traded company will give more juice to a fast-growing, rising star of the activewear field.
The Baltimore-based firm, which had revenues of $205 million last year and is best known for its tight-fitting compression shirts, has filed a registration statement with the Securities and Exchange Commission for an initial public offering of as much as $100 million in common stock.
“This could be an attractive stock as long as it’s not priced too high,” said Jamelah Leddy, an analyst with McAdams Wright Ragen, who follows Nike and other athletic firms. “The company has had a couple of years of significant revenue growth and brand awareness growth, and this is an opportune time for an IPO, given the company’s strength.”
Leddy said there is a slight possibility that Under Armour is preparing for a takeover by Nike, similar to what happened with Converse in 2003 when that company said it was filing for an IPO and then was bought by Nike, which is said to have been interested in Under Armour for some time.
Founded in 1996 by former University of Maryland football player Kevin A. Plank, Under Armour basically created a new segment of the athletic apparel industry with its tight-fitting shirts that wick moisture and keep wearers cool and dry.
Plank, now 33 and the company’s chief executive, will retain a significant amount of control of the company, according to the filing. There will be two classes of stock: Class A will carry one vote per share, while class B will carry 10 votes per share, and all class B shares will be owned by Plank, the filing states. The company said it intends to apply for a Nasdaq listing under the symbol “UARM.”
Paul Swangard, managing director of the Warsaw Sports Marketing Center at the University of Oregon, said, “Under Armour has chosen a battleground strategy to go after the big guys. Everyone who follows the company sees a lot of potential paths for growth.”
Under Armour said in the filing that its growth strategies include increasing its focus on women’s, broadening its product offering with new categories and expanding internationally.
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The company said it plans to use some of the proceeds from the IPO to redeem outstanding preferred stock issued to private equity firm Rosewood Capital and its affiliates, and repay debt under a credit line. As of June 30, the company had total debt of $48 million. Goldman, Sachs & Co. is leading a group of underwriters that includes CIBC World Markets, Piper Jaffray, Wachovia Securities and Thomas Weisel Partners.
Under Armour’s products are sold in about 8,000 doors, and it also supplies apparel to a number of key teams and leagues. Its biggest retail partners include Dick’s Sporting Goods, The Sports Authority, Modell’s Sporting Goods and The Army & Air Force Exchange Policy. The brand was recently picked up by Nordstrom, which will begin selling it for the holiday season in the women’s activewear department.
Under Armour accounts for 71.1 percent of all compression apparel sales, including both tops and bottoms, according to SportScanInfo, a market research firm. Last year, compression sales were $500 million at retail. UA’s market share of all athletic apparel is now 7 percent, while Nike’s is 20.2 percent, according to SportScanInfo. For the year ended June 30, Under Armour’s operating income was $28.6 million.
Women’s has been a key strategy lately. Under Armour first introduced women’s products in 2001, although the merchandise was quickly pulled off the shelf since the product wasn’t right, Plank said in an interview with WWD earlier this year. Women’s was relaunched in 2003 with a small line and this time the company brought women on to help design the collection.
Under Armour now offers a range of colorful and stylish looks including inner layers, such as running bras and performance underwear, and sportswear, such as T-shirts and track jackets. There is now a team of about 30 people overseeing the women’s products, which account for about 20 percent of sales. This spring, the firm also ran its first women’s advertising campaign featuring soccer player Heather Mitts.
The company has expanded its product offerings for men with a wider selection of apparel for activities such as running, skiing and lacrosse, and also now has a selection of items produced under license, such as bags and socks. In addition, it’s in the process of expanding its children’s offerings and is set to introduce performance footwear such as cleats next year, which are made in-house.
UA has significant opportunities internationally. In 2004, about 2 percent of its sales were generated in Canada, while about 23 percent of licensed revenues came from Japan. This year, the company began selling in Europe, although it is primarily focused on building its business in Canada, Japan and the U.K. in 2005, according to the filing.