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Under Armour's Strategic Entry into Brazil: Opportunities for Growth in Rio and São Paulo

Under Armour plans to expand its presence in Brazil by establishing specialty stores in Rio de Janeiro and São Paulo. This move aligns with the brand's long-term growth strategy, leveraging Brazil's recovering economy and anticipated GDP growth. With major international events like the 2014 World Cup and the 2016 Olympics, Under Armour aims to enhance brand awareness among Brazilian athletes, focusing on the lucrative soccer market. The establishment of a South American headquarters and distribution center in Rio is also part of this strategic initiative.

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Under Armour's Strategic Entry into Brazil: Opportunities for Growth in Rio and São Paulo

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  1. UNDER ARMOUR in BRAZIL Specialty Stores in Rio de Janeiro and Sao Paulo Dominick FuccilloScott GlasthalGuiveSavojiIvan Velev

  2. "Under Armour's international expansion is a key component of our long-term growth strategy for the brand,“ Ryan Wood, President of Under Armour Europe - July 2006 International Business Opportunities • 2009 - 5.6% of sales outside of USA / Canada • Primarily in Europe / Japan • Third-Party Manufactured from Southeast Asia and South America • Source: Under Amour Press release 2006, 2009 Under Armour Annual Report

  3. Brazilian economy has rebounded from the global recession and projects 5.5% GDP growth in 2010 with currency stability and a strong, inflation targeting central bank. • World Cup in 2014 and the Summer Olympics in Rio de Janeiro in 2016, a high-upside international marketing opportunity for global brand exposure. Why Brazil? Source: The IMF

  4. Proposal –Projected Cost $25 million USD in 2011, $73 million USD in 2014, $88 million USD in 2016 • Establish two Under Armour retail stores in Sao Paulo and Rio de Janeiro. • Create a South American Headquarters in Rio de Janeiro and central distribution center for all South American product distribution and potential third-party retail sales. • Implement marketing strategy targeting current and up and coming Brazilian athletes, specifically focused on the soccer market and creating brand awareness and status among high end Brazilian consumers. • Targeted ramp-up of investment to coincide with World Cup and Olympic events. Brazil Entry Proposal • Source: Under Amour Press release 2006, 2009 Under Armour Annual Report

  5. Brazilian Apparel/Footwear Market

  6. Competitor Pricing Strategy • Source: esporte.netshoes.com, www.adidas.com, www.nike.com

  7. Common External tariff is 35% on clothing and athletic shoe • China anti dumping law will not be applicable to premium shoes • Foreign companies treated the same as Brazilian companies • Paperwork chains Tariff and Legal Source: The International Custom Journal: Brazil #6, 20th edition, 2008, Doing Business: Measuring Business Regulations. www.doingbusiness.org

  8. Socialism fears in 2002 of the first working class president were proven wrong by a balanced government actions that increased minimum wages, kept inflation low, and is working to facilitate more foreign direct investment • 2010 elections are expected to elect a leader that will continue this trend • President Obama called Lula “the most popular politician on earth” Political Economic Stability • Source: The Most Popular Politician on Earth. Margolis, Mac. Newsweek. September 22, 2009. http://www.newsweek.com/id/215941

  9. Capital account Crisis in 1999 Currency Instability

  10. Brazil’s Unholy Trilemma – Pre 1999 Brazil’s Unholy Trilemma – 1999 Free capital flow East Asian Financial Crisis Fixed exchange rate Sovereign Monetary Policy

  11. Brazil currently has a slight current account deficit that is dwarfed by the US’s. This would suggest further appreciation of the Brazilian Real. Currency Stability Source: www.oanda.com via Interbank exchange rates

  12. Exchange Rate Risk

  13. $187 Million just sitting on the balance sheet and its time to make a moveQuestions? We must protect this house!

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