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Under armour brazil

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Under armour brazil

  1. 1. UNDER ARMOUR Specialty Stores in Rio and Sao Paulo, BRAZIL Dominick Fuccillo Scott Glasthal Guive Savoji Ivan Velev
  2. 2. Under Armour Needs More Intl Business "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 2009 - 5.6% of sales outside of USA / Canada. - All in Europe / Japan - All with distribution method Source: Under Amour Press release 2006, 2009 Under Armour Annual Report
  3. 3. Under Armour Needs More Intl Business Source: Under Amour Press release 2006, 2009 Under Armour Annual Report •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 Janiero. Create a South American Headquarters in Rio de Janiero 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.
  4. 4. Why Brazil? •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 Janiero in 2016, a high-upside international marketing opportunity for global brand exposure. Source: The IMF
  5. 5. Market Niche
  6. 6. Competitors prices higher than domestic Nike Adidas Under Armor Shirt $ 25 $ 30 $30 Cleats $ 150 $ 195 $100 Nike Adidas Under Armor Shirt R$ 44 R$ 53 R$ 53 Cleats R$ 264 R$ 343 R$ 176 Nike Adidas Under Armor Shirt R$ 110 R$ 80 TBD Cleats R$ 400 R$ 650 TBD Nike Adidas Under Armor Shirt 2.5x 1.5x TBD Cleats 1.5x 1.9x Price in the US (in US Dollars) Price in the US (in Brazilian Real) Price in Brazil (in Brazilian Real) Brazil price / US price in Brazilian Real markup Source: esporte.netshoes.com, www.adidas.com, www.nike.com
  7. 7. Tariff and Legal • 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 Source: The International Custom Journal: Brazil #6, 20th edition, 2008, Doing Business: Measuring Business Regulations. www.doingbusiness.org
  8. 8. Political Economic Stability • 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 • Barak Obama called Lula “the most popular politician on earth” Source: The Most Popular Politician on Earth. Margolis, Mac. Newsweek. September 22, 2009. http://www.newsweek.com/id/215941
  9. 9. Currency Instability Source: The IMF and recent Capital Account Crises, Evaluation Reports, 2003, www.ieo-imf.org • Capital account Crisis in 1999
  10. 10. Brazil’s Unholy Trilemma – Pre 1999 Free capital flow Sovereign Monetary PolicyFixed exchange rate East Asian Financial Crisis Brazil’s Unholy Trilemma – 1999
  11. 11. Currency Stability 1.0x 1.4x 1.8x 2.2x 2.6x 3.0x 4/26/2006 4/26/2007 4/26/2008 4/26/2009 4/26/2010 Average:2.65x Min:1.56x Max:2.65x Brazil currently has a slight current account deficit that is dwarfed by the US’s. This would suggest further appreciation of the Brazilian Real. Source: www.oanda.com via Interbank exchange rates
  12. 12. Possible exchange rate risk
  13. 13. $187 million just sitting on the balance sheet and its time to make a move Questions? – We must protect this house

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