“Protect this house.”
That’s the marketing motto made famous by Under Armour in a series of commercials, which has been adopted by athletes on fields across the U.S. as a spirited rallying cry at their home games. The ads were overseen by Kevin Plank, founder, chairman and chief executive officer of the performance apparel and footwear maker — and a big fan of aggressive dictums, which he inscribes on an oversize whiteboard in his office at the firm’s Baltimore headquarters.
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Some of Plank’s other favorite mantras — Focus and finish; No loser talk; Dictate the tempo; Big bets with big partners; Over-promise and deliver — permeate Under Armour Inc.’s corporate culture and have helped create one of the fastest-growing companies in the apparel arena.
“The Under Armour brand is very much like a team brand, and that is the way we run our company,” said Plank, a former University of Maryland football player who founded the company in 1996. “Sales and marketing are like offense; manufacturing and distribution are like defense; finance and I.T. are like special teams. But what you learn in this business is that not just one team is on the field alone, but we’re all on the field at the same time. The companies that will win are the ones that communicate the best.”
Starting out with a simple idea — to create a lightweight, wicking compression T-shirt for athletes to replace sweaty, heavy cotton base layers — Plank went from sales of $17,000 that first year to $281 million in 2005, the year Under Armour went public. This year, the company expects to report total revenues of $830 million to $835 million.
Growth has been fast and furious for most of the company’s 13 years, including more than 50 percent growth in 2006 and 40 percent in 2007. But when growth slowed to 20 percent last year, Plank voluntarily reduced his salary from $500,000 to $26,000, which was his pay during his first year in business. He also didn’t receive any bonuses under the company incentive plan or stock awards last year.
Plank is aiming to blast Under Armour through the $1 billion in sales mark, although he’s careful not to set a target date for that goal. “We’re getting into waters that are kind of tricky,” he said, describing the growth period for brands between $500 million and $1 billion. “It’s proven tricky for brands before us. That’s why I call it the Bermuda Triangle.”
That means moving into new product categories, new distribution channels and new geographic markets. Under Armor has moved in recent years into footwear — it now holds the number-two position in cleated shoes for football and baseball. It’s also taken on new mall-based retail partners like Foot Locker and Finish Line in the past 18 months.
Women’s apparel is another category primed for growth, said Plank. It accounts for 24 percent of sales, and Plank expects it to eventually overtake men’s in volume.
Similarly Plank expects footwear to one day exceed the size of its men’s, women’s and kids’ apparel businesses combined — as it does at his much larger competitors Nike and Adidas, who loom large in Plank’s business conscious.
As a brand intrinsically associated with athletes and athletics, innovation is central to Under Armour’s products and marketing message. Likening Under Armour’s research and development process to a pharmaceutical company — which use processes that winnow down thousands of ideas for potential drugs via both outside research universities and internal teams — Plank said Under Armour sought innovation from both outside and within the company.
For example, this spring Under Armour will introduce a new product called the Core Short, developed by an independent Canadian physiologist who spent 12 years on the process. A product generated from within the company is the Under Armour Recharge recovery suit. Launched last spring, the full-body compression suit is designed to restrict the flow of fluids into swollen muscles after a workout or competition, reducing recovery time from the usual three to four days, down to two to three days.
The company has also created breathable, wind and waterproof suits for the U.S. Olympic ski and bobsled teams, who will be competing in Vancouver next year. Alpine skier Lindsey Vonn, a photogenic blonde who has won back-to-back World Cup overall championships, features in upcoming Under Armour commercials.
After hitting home runs for so long, Plank and Under Armour are under pressure from investors for continued superior performance — and the ceo remains prepared to swing for the fences. “The signature on my e-mails doesn’t say ‘respectfully’ or ‘best regards.’ he said. “It reads ‘humble and hungry.’”