It's Under Armour to get used to a flooding today. We're going to do some of that. Days like today remind you why the world needs a company like Under Armour. Somebody's got to do something about 90% or 95% humidity. Good morning everyone, and welcome to our house. I'm Kevin Plank. I'm the Founder and CEO of Under Armour. Being in Baltimore and being in our house, we invited you down here for a couple of reasons. The first of which, of course, is to show you who we are. This will be a very informative day that'll help you build your models. We're going to give you all the numbers. We're going to discuss all the metrics and, of course, our plans to prioritize investments that will ensure our stable growth over the next several years.
The second reason we asked you to get away from your desk, to get on Amtrak, come down here to Baltimore, and to see, and more importantly, feel who we are. That's why we're here in the brand new Under Armour studios at Tidepoint, which is the original name of the buildings across the street and now campus that we recently purchased, because this better than any one product or financial metric that ever expressed tells you who we are and where we are going. This is our new house, the foundation from which we'll execute against the promise of what we have built to date.
We've invested our capital here because this is the house from which we will create our defining product going forward, which will become thought leaders in the footwear business and the house from which our global status as the world's next great athletic brand will emanate. Throughout the day, you'll have a chance to visit many of the 13 showrooms that we've built, including the Under Armour Innovation Lab just next door, where our defining product is being concepted and created every single day. The fact is, we expect to blow you away with an Under Armour experience you probably did not expect. First and foremost, that begins with our team, our people. We are very aware and proud of the practical infrastructure we have been building that provides the physical presence to help us reach our vision of being the world's number one performance athletic brand.
One of the greatest business compliments that I've ever received comes from our partner in Japan, a guy named Shuichi Yasuda, Shu, as he's known. Every visit, they do a great job of bringing their teams and basically implementing Under Armour in Tokyo. One of the things they do better than anything else that Shu said to me on a visit about a year or so ago, he said, "Every time I come back to Under Armour, there's always something different. There's always a new building. There's always more people. There's always a little bigger. There's always a little better. There's always more growth. There's always more revenue. And there's always more earnings." That's something that we take to heart and something that we see continuing to build on in many, many, many years to come.
Imagine what Investor Day 2012 is going to look like when you come back again. Now you're going to see how we started with 4,000 sq ft filled with cardboard boxes of tight-fitting shirts. It's now a campus that will help us recruit the best and brightest to ensure we continue to live against the promise of the Under Armour brand. Those are some of the original pictures from grandma's basement we started in 1996. I love before and after pictures. Let me paint one for you now. I can assure you that the after is still a work in progress, but we're a long way from where we were. Today, you're going to see Under Armour 2011, a very different company than when many of you were last here in 2008 and dramatically different from where we were when we went public five and a half years ago.
At our IPO in November 2005, we were a $281 million company with 600 employees, a fledgling website, and four factory outlet stores to deal with excess inventory. We were just getting our feet wet in Europe and hadn't made our first shoe. Today, we maintain the same five key growth drivers we listed on the roadshow: men's apparel, women's apparel, footwear, international, and direct-to-consumer. We have a much different, more mature perspective than we did in 2005. Our company has grown to over $1 billion in revenue, with 30%+ top and bottom line growth in front of us for 2011. We continue to demonstrate our thought leadership in apparel, with apparel growth exceeding 30% in 2010 and into the first quarter of 2011. We have roughly now 4,000 teammates across the world, roughly 1,100 of which are based here at Tidepoint, supporting and driving our brand every day.
Gratefully, we are seeing meaningful growth in Europe, Japan, and the opportunity that exists outside of the U.S. is beyond a theory as we continue to see trajectory and buy-in from new UA consumers from outside of the United States, and especially the foundation that has been laid in footwear. You will hear from Gene and our team later, but know that the house that is being built is being built with a solid foundation today, boasting millions of pairs of Under Armour footwear being worn by athletes at every level and where a much larger opportunity will exist in the future. We will be ready for that growth, and you will see later why we feel so confident in it.
Of course, a direct-to-consumer business that'll represent nearly 30% of our sales in 2013 and 23% of our sales today, with a new emphasis on the web and nearly 80 stores by year-end, including one we recently opened in Shanghai in April. We're in the retail business as well. You will hear more about each of these topics today and see what is behind the growth that we expect in UA's near and long-term future. On the opening page of the IPO of the book for our roadshow and our IPO in 2005, we said four things that we believed. The first was that our vision was to be the world's number one performance athletic brand. Secondly, that consumers were seeking out performance. Third was that Under Armour is the leader in authentic performance apparel, all true in November 2005 and all still true in June of 2011.
The last thing we said was something that we had to be measured on. We said this: Under Armour is positioned to take advantage of the shift to performance. I believe that the scoreboard of growth that we have posted since going public speaks for itself and that we have delivered against that promise. Our mission today is for you to understand where Under Armour is in June 2011, where we expect to be in 2013, and how that will ensure the foundation of growth that we are filled with for 2014 and beyond. Before we get into the day ahead and tell you where we are going, let me show you where we have been and let you feel Under Armour through a video that we call our brand voice.
Save me, Harold. [Trevor], what do you want to buy?
I want to buy a stock market investment for $65.
[Trevor], what stock do you want to buy?
I want to buy Under Armour.
Under Armour. You see, you know what's the big deal with Under Armour? They are a company born out of a base.
Let's all agree.
CEO and Founder Kevin Plank, he started Under Armour right out of college with borrowed money. Simply wanted a T-shirt that wouldn't weigh him down on the field.
My son was giving me just that little bit of extra damage.
It's really not Under Armour. Under Armour is good for innovation.
You drive me crazy.
It started with a T-shirt.
Be real tight.
You're well beyond t-shirt.
Under Armour continues to embarrass other brands in the sports performance space.
You try to use home.
I will. Our goal and our vision is to be the world's number one performance brand.
The skeptics quite simply argue the success we're experiencing is quite simply unsustainable.
How much longer can that kind of sentence continue, though?
People are questioning, now you're really treading on the turf of the giant. Under Armour is waging a concealable war.
Why take this fight?
We are building the bigger, baddest brand on the planet.
There can be only one winner Monday night, and it's a job. It's another sign Under Armour is a legitimate challenge to Nike's Goliath.
National championship. Yes, we can. Yes, we can. You know you're trying to get them.
to make them all believe it.
I know I'm going to finish reinventing the t-shirt. The Under Armour man had an idea, so he came up with a better product. A better product, and it worked. Under Armour is the success story. Welcome to Under Armour.
Yes, sir.
All right, we're not going to make you cry all day, but you got to get a little energy today.
Inspiring athletes at all levels, right? What we want you to leave with by the end of today is first a short-term vision, a long-term vision. We want you to meet our team, and we want you, most importantly, to experience our innovation, experience what we're up to. Beginning with our short-term vision, we'll be very prescriptive in our goals for the next two and a half years and what we expect to deliver. Our long-term vision, while growing through 2013, you will see where we are investing to build the foundations in both apparel and especially in footwear to become a truly global brand.
To see and hear our team, more than just the voices of Brad and I on the quarterly calls, you will see the depth of the team we are building and have the opportunity to interact and ask some questions throughout the day. At the break, at lunch, you'll be invited to walk the showrooms where our PLMs will be available to answer any questions that you might have. I encourage you to do this. Get out to the showrooms, and they will be fighting for you to come see their showroom as well. No changing cards, no information, and be nice. They're not used to dealing with Wall Street either, so take it easy on them. Finally, experiencing Under Armour innovation. At the end of the day, we're going to have a tour of the Under Armour Innovation Lab just next door. For Under Armour, innovation is easily defined.
It's a technical breakthrough that changes the way a product is used by athletes. Athletes wore cotton shirts underneath their uniforms prior to our introduction of the original 39 shirt back in 1996. We innovated, and we changed the way that product is used. We're proud of what we're building here and want you all to take in the full Under Armour experience. That starts with our relentless pursuit of innovation that makes all athletes better. How we deliver the numbers that Brad's going to share with you later on today, you'll hear it throughout the day. Since day one, Under Armour has been about one thing: making athletes better. That was the idea behind our first shirt, and it's what drives every member of our team today.
That means apparel that helps them perform in any condition, footwear that makes them quicker, faster, stronger, more comfortable, and accessories that have an advantage the athlete had not considered before that makes them better. It is the pursuit of perfection, building the perfect athlete. We take that responsibility very seriously here in Baltimore. That translates from the pinnacle with athletes like Tom Brady, Lindsey Vonn, and Cam Newton, all the way down to the 15-year-old kid on a muddy soccer pitch in the U.K.. We strive to inspire and elevate the athlete's ability to perform, and we do that by being the thought leaders in innovation for athletes. We've built this brand on improving the athlete's performance by creating a shirt that takes the moisture away from the body. We've set the bar, and athletes have come to expect Under Armour to take them someplace new.
We continue to do that with innovations like the E39 that I'm going to show you in just a minute. Our opportunity now is so much greater. With the strength of what we've built so far, we can now take our brand to a whole new audience of athletes. We will grow beyond core by bringing innovation to every athlete's closet with game changers like Charged Cotton. With all these compelling stories that reinforce our position in the athlete's mind as the industry thought leader, we believe that we still have not yet made our defining product as a brand. It's coming from within these four walls. That includes our ability to be humble enough to listen and act when the idea comes from outside of these walls too. We are focused with laser precision on making that happen very, very soon.
With that goal in mind, we've built the Under Armour Innovation Lab. This is not just a place to test long-term theories, but a legitimate commercialization facility that makes ideas into reality and tools to make athletes better. The Innovation Lab is located right next door, and we're going to take you through there, as I mentioned, in a little bit or later today. It's a state-of-the-art facility with a full environmental chamber and full motion capture capabilities, amongst other things, right here on our own campus. It's the place where we commercialize our latest technology to be introduced in the spring of 2012, called Cold Black. Cold Black is cool stuff, literally. I mentioned the greatest business compliment I got about our facilities and growth. The greatest product compliment that I ever received actually came from an Army Ranger who'd just gotten back from Iraq.
The email basically said, "You know, dear Under Armour, the whole unit wore your gear, and it really helped save us from the heat." You guys make 130 degrees Fahrenheit feel like 120 degrees Fahrenheit. Thanks. We've been told our whole lives not to wear black when it gets hot outside because it would attract the heat. Imagine a product that actually makes your body feel 10 degrees Fahrenheit cooler by reflecting the heat and UV rays before they get to you. This is going to be a big story for us in 2012 in categories like golf, but basically for anybody who plays outside will enjoy the benefits of this product. We have a room committed to it as well. I encourage you to get over to see what that means. There's plenty more where that came from, and Henry's going to tell you about it later on.
To give you a preview of what happens in that Innovation Lab, please take a look at this.
Hold up. We're met with innovation, attention, and understanding athletes, talking to them, being there. They have problems. We solve them with new innovations that give them incredible advantages. It ain't easy, but it's what we do. We do it right here in our house, a working lab where everyone gets their hands dirty. Our talented people come up with ideas. They go to the drawing board. They hypothesize. They experiment. You know what? They fail. They fail early, and they fail often, and they keep right on failing until they succeed. We have all the cutting-edge tools we need to lead to that success. We'll make prototypes. We'll tweak them. We'll put them through the wringer, and we'll break them.
We'll look at them from every possible angle to make sure Under Armour athletes are wearing the best gear in the world. Everyone at Under Armour is innovative. It's not just a statement. It's a requirement. We collaborate. We feed off the energy and passion of our culture because we're all in it together. When we're done with something, when it's the best shirt, shoe, or accessory that gives an athlete even the slimmest edge, we move on to the next. Hold up. Under Armour has not yet made its defining product. When we do, it'll happen right here.
Thanks to Scott Van Pelt for his help with that video. What does innovation look like for the elite athlete? Simply put, it's things like the E39. It's the world's most innovative athletic evaluation and improvement tool, all contained in our compression base layer. Named for our first style number, the 0039, and E for electric. The electronics in the shirt measure different metrics, including horsepower and G-force, as well as heart and breathing rates, things you can't get from any innovation that's out on the market today. You might sit there thinking, when does something like this ever become meaningful commercially? I would just say, 10 years ago, helmets effectively did not exist except for a few key sports. Now look at any ski mountain or group of kids riding bikes, and it's usually required, if not the norm. Safety was at the heart of that message.
True innovation is bringing the consumer something they don't realize they need yet. We believe that our bleeding-edge innovations like the E39 fall into that category. I'd like to show you the commercial that we ran featuring Julio Jones around Combine and NFL Draft, as well as some of the media that we captured, hyping this new technology and positioning Under Armour again as the thought leaders for the athlete.
This isn't just a shirt. This is the latest innovation from Under Armour. It's an E39 electronic compression shirt. Right now, it's measuring Julio Jones' heart rate. The brand that's on the mission to make all athletes better is coming to technology that will turn potentials to reality. The E39 shirt from Under Armour, with the glowing bug in the middle that's collecting all the neat information, is turning folks like Julio Jones and Cam Newton into Tony Stark. What this shirt allows them to do is actually understand what's going on inside their body while they're training.
What is this measure for what we're looking at?
It's their heart rate, breathing rate, and muscle core latency.
9.5 Gs is incredible.
On the broad jump.
Information, as a performance coach, that I'm going to take back on Monday to my field. We'll go back to the trenches, and it's going to affect all athletes, not just the NFL Combine kids and the pro guys, but all the way down into the youth and high school levels as well.
Imagine a day where water breaks during a practice or a game are no longer the subjective opinion of a coach or a trainer, but where actually each player on the field is mounting and wearing a system that's telling them how their body's performing, but fed to a central laptop that's monitored by a trainer that's looking at the 50 guys in practice or 100 men and women that are out there on a field training and saying, "You know what, coach? You better pull back a little bit," or, "You can push them a little farther," or, "How do we track or train this week?" The most popular pieces of equipment in any gym are typically the treadmill and the elliptical machine. Why is that? Because of data. How many calories did I burn? How far did I go? How long was I on? What's my heart rate?
All that data and all that information are things that's available now in apparel. We showcase that at something at the NFL Combine with the highest and the most elite athletes. This is Under Armour at its best. This isn't something that will be limited just for the elite of the elite. Imagine what 10 years looks like, and imagine who will be building that innovation. One of the benefits of our sports marketing strategy is being able to showcase this level of innovation on a stage as authentic as the NFL Combine. When the next generation of great football players wore the E39 at the Combine in February, it was a great example of us demonstrating our thought leadership in the absolute right environment. This is us taking a tremendous product story, a true leap beyond what has been in the market.
This is how you activate a sports marketing deal: by taking the NFL's most authentic event and using it to tell the world about Under Armour innovation. Innovations like the E39 keep us on the bleeding edge of building the perfect athlete. As we pass the $1 billion mark, we have the opportunity, though, to bring our brand to a much larger audience of athletes. Our big step in 2011 toward that goal is Charged Cotton. As you will see, even when we're talking about reaching new consumers, it's grounded in product leadership. You'll hear Henry Stafford and the apparel team talk about where we're going with Charged Cotton this year and beyond.
We've had a great launch with Charged Cotton, but we are still in the very earliest stages of where that positions our brand and especially how this sets us up for a new fleece opportunity for us in the fall called Storm Cotton. Of course, yes, it too is very technical, very cool, and right in the Under Armour wheelhouse. We are very bullish on the performance cotton market and its ability to expand our own addressable market size. The synthetic market is our heritage. We started it. We were told in 1996 that there was no room for performance in the original sports market pie. We made our own pie, and we called the performance apparel synthetic fabrics at the heart of it. It is a category that Under Armour originated from virtually scratch that now approaches $3 billion of retail sales in the United States alone.
Our brand is just scratching the surface here, given both our current distribution and product composition. We see Charged Cotton as our path to nearly quadrupling our 2010 addressable market to include the entire $11+ billion active use market and continue to help us blur the lines of the much larger $58 billion activewear market over time. That's the U.S. alone. Let me be very clear about Charged Cotton. It's not that we didn't like cotton. It's that we didn't like the fact that cotton hadn't performed before. We did something about it. Once again, we've redefined what athletes have come to expect from their apparel and again reinvented the basic white t-shirt at another $25 price point. What you will see from our apparel team is that it goes much farther beyond one product, but opens up multiple categories for us to now enter with performance cotton.
With that type of innovation, we are creating access to the brand that will drive meaningful revenue growth for many years to come. Next, I want to talk about footwear. This has a chance to be the most exciting thing that you're going to see today from our company. We've had great success on the field with our footwear to date, but that is not enough. This past year alone, we outfitted the national champions in college baseball in the University of South Carolina, NFL MVP Tom Brady, National League Rookie of the Year Buster Posey of the San Francisco Giants, and college football national champions Auburn University. Under Armour is authentic in footwear, and we are in it for the long haul. It took us four to five years making cleats to reach the pinnacle in these core sports of baseball and football.
Now we're just entering year three of running, and basketball is in the first eight months in the market. Just imagine where we're going to be in these categories as they too enter their fourth and fifth years. The authenticity is not a question from the athlete. We've built credibility with athletes at the highest level of performance. We have the opportunity to build on that credibility with a broad base of consumers by bringing Under Armour innovation to our footwear business. We showed you a peek inside our Innovation Lab earlier and spoke mostly about apparel, but understand that we continue to develop and refine our point of view in footwear.
While the market has understandably not seen everything that we're going to be in footwear to date, we're going to give you a glimpse today of what that point of view looks like and why we are so confident in the future of Under Armour footwear. We've gone from just 15 members on our footwear team when we launched in 2006 to today, roughly 120. We're confident in not only our point of view, but that it's going to translate into growth for Under Armour over the long term. Given the human and financial capital we've committed to footwear, today's presentation should give you every confidence that we are making a great investment and that the next big thing from this company has a great chance to be a shoe that changes the game. As we grow, our relationships are important.
Our relationships with the top leagues put us on the field at the very highest level, whether it's with the E39 at the NFL Combine, where the official outfit are there, or on the field as the official performance footwear of Major League Baseball, a deal that we just consummated this past year. Next season, we'll have a deal with the NBA, both on court and using their marks with our future [Assert 10], or on the best college programs like Auburn in South Carolina. Under Armour will continue to protect our house by being worn by the world's top athletes. We firmly believe that the playing field will always be our ultimate proving ground, and our brand will never stray from that field of play.
We were born on the field, and extending our relationships with these top athletes to footwear increases our authenticity with the millions of young male and female athletes of this generation and, of course, the next. Who is next? We've always understood that our core consumer always wants the latest on our innovation, but also wants to know what the next generation of athlete is going to be wearing. Let me now tell you about some of the athletes we've been building in our stable that you may or may not have heard of yet. Behind me are images of Bryce Harper. Bryce was selected first in the 2010 Major League Baseball Draft for the Washington Nationals at the age of 18, after setting numerous records at both the high school and collegiate levels.
Before then, at age 16, he actually took his GED so he could go on to junior college and compete with better competition. Now he's in single A, batting nearly .340. If you go on YouTube and watch the video of his home run, you'll understand why baseball people believe that he's the next great hitter in MLB. Bobby Brown, the world's preeminent freestyle skier specializing in slopestyle and big air. In 2010, he became the first skier to win two gold medals and to record a perfect score at the Winter X Games. It's a sport that'll blow your mind, and we are really excited to have Bobby Brown as a part of our team and our brand. Paul Rabil, two-time national champion and three-time first-team All-American in lacrosse. This guy is the sport of lacrosse at Johns Hopkins University, just around the corner from us.
In 2009, he was the Major League Lacrosse MVP, and in 2010, he helped the Washington Stealth team win the NLL Champions Cup. He also happens to hold the record for the fastest shot ever recorded in lacrosse at 111 mph . Lauren Cheney, a forward on the U.S. Women's National Soccer team, just scored the winning goal over Mexico last weekend and put the U.S. up one nil. At UCLA, she was the first player in school history to earn first-team All-American honors all four years that she was there and broke records for points and game-winning goals. Now she plays professionally for the Boston Breakers. Of course, maybe some more familiar names like Cam Newton.
He won the Junior College National Championship at Blinn Junior College in Texas, a record-setting quarterback for Auburn University who won the national championship, the winner of the 2010 Heisman Trophy, and the first pick in the 2011 NFL Draft selected by the Carolina Panthers. What are you going to tell this guy he can't do? The number one pick in baseball and the number one pick in football. We are now partners with the NFL, NBA, and MLB leagues, but our sports marketing philosophy has not changed. Even as we expand our presence through these league relationships, we will ensure that we're activating those relationships as we've done this past year with Auburn and the NFL. What has changed in our growth is enabling us to partner with a broader spectrum of athletes and teams and touch more consumers.
Starting in 2012, we will be in the English Premier League through our partnership with Tottenham Hotspur on the pitch in the global game. For those of you who may not be up on football, Tottenham is one of the top teams in the EPL. They're based in London, which happens to be hosting the Olympics next year, and they made it into the quarterfinals of the Champions League this past year. There are more than 20 million registered Tottenham Hotspur fans around the world, and the EPL has a global audience of more than 3 billion people, and many of them are in China. In April, we opened our first UA retail presence in China, a shop-in-shop store in the Grand Gateway Mall in Shanghai. I won't spend a lot of time telling you about the size of the opportunity.
Wayne will speak about it later and what's available for us in China. Other than to say that the sportswear market alone is expected to grow from about $13 billion in 2010 to more than $30 billion by the end of 2013, and we want to be positioned to get Under Armour's piece of that business. We're going to be telling the Under Armour HeatGear and ColdGear stories at this retail location. Our primary goal will be to, A, for us to learn about the Chinese consumer, but also for them to learn about us, to explain, to tell our story. Some of the feedback we've heard in our store so far to date use words like the store is arresting, and it's exciting.
Let's talk about how this translates into growth for Under Armour, the kind of growth that you've come to expect from us as a public company. Innovations like Charged Cotton and some of the other new ideas you'll see today will continue to drive our growth. New consumers, increased space within our existing channels with our great, great partners like DICK'S , The Sports Authority, Academy, Finish Line, and Foot Locker, and so many more, as well as some of our limited new distribution. Our direct-to-consumer business is also going to be a key driver of our growth through 2013, and you'll hear more about that after lunch. Innovation will be the key to our growth beyond apparel as well. It will drive our growth in footwear, and Gene and his team will be out here to talk about that.
Finally, bringing the UA story to a global audience will be a big growth driver for us in 2014 and beyond when Wayne comes out to speak about that. Having great apparel and footwear product stories to tell globally will be the foundation of our international growth, and our relentless pursuit of innovation will ensure that happens. To recap, the way we're thinking about growth and those growth drivers activating for the brand, apparel and direct-to-consumer will be the primary growth drivers for us through 2013. Footwear will begin to become a key contributor beginning in 2013, and that's not to give up on what we have now. We have great product in 2011 and 2012. International will have a growth rate above the corporate goal for the next few years, but really will start to kick in and become truly relevant for us in about 2015 and beyond.
Let's be clear. We are not saying apparel and DTC are slowing after 2013 either. We just want you to understand how we are investing and when we anticipate some of these other growth drivers to really start contributing for us. One of the great parts of our growth in direct-to-consumer is how well the team has integrated with our apparel, footwear, and accessory teams. For example, when we take what we're doing to upgrade our retail and e-commerce presence and combine it with the new shops that Henry's going to speak about when he comes up with his team and some of our larger accounts, we will be significantly upgrading our presentation in more than 50% of our distribution. What does all this mean between our growth plans, where we're thinking about it, and those great core partners of ours?
It took us 15 years to get this brand to $1 billion. We did it through focus, innovation, and investing so that when we hit that billion-dollar mark, we wouldn't stall like many others have done in the past. Our goals and your expectations, once again, need to be recalibrated. Welcome to Under Armour Investor Day. In our first five years of existence, we became a $5 million brand. Then in the next five years, our brand really started to build momentum, and we jumped to $281 million in revenue. Over the past five years, we've really begun to execute against the true promise of the Under Armour brand, adding over $750 million in sales and surpassing that $1 billion mark. It took 15 years for us to get to the $1 billion mark. Our new goal is to double that in the next three years. That's right.
We expect to reach that goal while accomplishing two other critical things as well. We're going to show operating leverage, and we'll continue to invest to ensure our growth remains strong in 2014 and beyond. Let that sink in. That's a big number and one that our team is going to explain to you exactly how we will get there. With that goal set, I want to talk a little bit about the presenters that you'll see today. One of the key lessons that I've learned over the last 15 or 16 years now is that the part that makes life a lot easier is when you just hire professionals. We are very fortunate to have a lot of professionals working as a part of our team, beginning with Henry Stafford, our Senior Vice President of Apparel.
Henry joined the Under Armour team this time last year from American Eagle, where he was Senior Vice President and Chief Merchandising Officer, and he has brought a tremendous amount of direction and focus to the apparel team. Not only has he gotten after the blocking and tackling that are so critical to a business with as much core product as we have, but he's really led pulling together some of the big product initiatives that you're going to see in just a moment. In women's, we have a strong and experienced team here today: Gwyn Wiadro, our General Merchandise Manager of Women's Apparel; Noreen Naroo Pucci, our Senior Creative Director of Design; and Adrienne Lofton Shaw, our Senior Director of Women's Marketing. We're going to answer questions for you about the women's business today.
When we went public in 2005, we identified women as a key growth driver for our brand, and we believe it still can be as big a percentage if not larger, as our men's business is one day. We have already shifted our apparel mix by 700 basis points toward women since going public, but we think the real opportunity still lies out there ahead for us. Gwyn, Noreen, Adrienne, and the women's team are going to walk you through the next steps in that zone. In footwear, you'll have Gene and his team come out. Gene McCarthy, who's our Senior Vice President of Footwear, with Dave Dombrow, the Director of Footwear Design; Andre Mossiat, our Senior Director of Run and Train; Ryan Drew, our Director of Basketball Footwear; and Josh Rattet, our Director of On-Field Footwear.
As I mentioned earlier, we are developing a very distinct point of view in footwear. Gene and his team are going to show you how we started to bring Under Armour DNA into our footwear design process. We're doing that across all footwear categories, beginning with cleated, but especially running, training, basketball, and the team will show you how we're going to get there. We're going to break for lunch, and you'll have an opportunity to get a closer look at our apparel, walk the showrooms again. Make sure you get around. Don't stay in one place. There's nothing worse than that night at the party you found out you were in the downstairs and you should have been upstairs the whole time. There's a better party up there. We'll balance it out. It's all pretty good, though.
After lunch, we'll get an update from our direct-to-consumer business from Dan Sawall, who heads up our retail team, and John Rogers, who leads our e-commerce group. When I say hire professionals, I was thinking of these two professionals. Dan's an industry vet who's opened many stores before coming to Under Armour, and it's great to have his expertise guiding us. John came to us from Orvis, where he was running a much larger business but saw the opportunity of what was available here at Under Armour. After direct-to-consumer, our COO, Wayne Marino, will come up to discuss our international business with a focus on China, Japan, and of course, our new relationship with Tottenham in the U.K. It's good to hear Wayne talk about more beyond the numbers as well.
Finally, our CFO, Brad Dickerson, is going to tie it all together for you with the math, how the math works, and what that means for our great shareholder base. Brad and I will then be back up to answer any and all questions that you'll have from the presentation, and the rest of the team will be available throughout to answer as well. If there were a coin toss right now, I'd tell you that we want the ball. Let's start with Henry Stafford and the apparel team and let him get going. Henry, thank you.
Thank you, everyone, for being here today. We are excited to talk to you about our story. Our story is a story of passion, of drive. In thinking about you coming down here, whether you took the train or whether you flew in, you probably asked yourself, how is Under Armour going to grow? How are they going to continue to lead and continue to lead the market? We have a story, and that story is a story of growth. It is about taking things to the next level. Our story is a story not just men's, not just apparel, but a story from head to toe. We do a lot of research here at Under Armour. We do a lot of research. We are with athletes all of the time, on the field, on the court, in the gym, in their homes. What this research leads to is innovation.
We will grow through innovation and innovative ideas. We're going to talk to you about three new businesses, three new inventions that Under Armour has created to drive revenue, growth through innovation. We're going to talk to you about growth in our women's business. We've got a very good women's business right now, but we are building a great women's business. We're going to talk to you about growth through the next generation. Our youth business is very important because it sets us up for growth for the years to come, decades, consumer loyalty. We'll get into that. As Kevin mentioned, our customer experience. End of story. Wherever we are, we will look the best. That is our passion. On to innovation. Innovation is core to our DNA. It is an engine of growth. We cannot reiterate this enough. It is huge at Under Armour.
Innovation is basically a technical breakthrough that changes the way that product is used by athletes, and that is what we do. Our passion for innovation led us to invent three new businesses, the first of which is Charged Cotton. We said cotton was the enemy. Kevin mentioned it. Cotton wasn't necessarily the enemy. A lack of performance was the enemy. We are with athletes all of the time. Our research led us to go into athletes' homes, into their drawers, into their closets, and what we found was athletes love cotton. In fact, the average athlete has about 30 t-shirts, and 25 of them are cotton. Five are synthetic, and we own four of the five. We could have scratched and clawed for the market share on that fifth t-shirt, and we will do that, by the way.
We also needed to solve a problem for athletes, and that is why we invented Charged Cotton. This was years in the making. We worked with world-class fabric engineers and the great folks down at Cotton Incorporated and invented Charged Cotton. Let us show you how it works.
Here it is, cotton from Under Armour. It's no ordinary cotton. It's cotton that feels incredible, with sweat, and dries fast. We call it Charged Cotton. What's charged about it? Let's break it down. Good old cotton. Everybody loves the stuff. Straight up, it doesn't make you better. You need it to keep you dry and light. It doesn't. In fact, cotton loves sweat. It absorbs the stuff that makes you heavy, tired, and not the best you can be. Not anymore. That's where the Charged part comes in. Under Armour Charged Cotton is some of the softest and most comfortable cotton in the world. We started with the best, and then our materials team went to work for it. We figured out a way to make cotton perform. Here's how. We took strands of amazing, comfortable cotton, and we charged them. The charge is a finish that repels sweat.
When sweat hits the fabric, it just slides right off. We mix the charged strand with the water-loving non-charged strand, and that creates a perfect surface moisture-mention. Now look at those lines. That's what tells you the shirt is working. You sweat, you see the line, and the sweat starts drying up. It's not a cotton shirt that you just lounge around in. You can do that if you want, but you can also go out and work hard in it. That's what Charged Cotton does for you. It's the incredible comfort of cotton with a cool, dry, light performance of Under Armour. Mother Nature made it. We made it better.
Okay, so Mother Nature made it. We made it better. We are very pleased with the performance of our cotton in the market right now. The point I want to make today is it's not just about a t-shirt. Cotton enables us to reach consumers that we never have been able to reach before. We're going to show you what Spring 2012 and beyond is. It is a cotton platform. It is a performance cotton platform. We're going to bring out some models and show you Spring 2012 and beyond. Come on out, guys. This is cotton from Under Armour. As you can see, we are going to expand in categories. Think about it in golf. We've got it in polos. We've got a performance cotton khaki. We've got a golf sweater, and again, a performance cotton khaki. We have it in graphite tees. You can see it in graphite t-shirts.
The great thing about cotton and graphite t-shirts is cotton enables you to use the coolest techniques out there, flocking appliqué techniques, so on and so forth. It's still performance. Think about the strength of the Under Armour brand. Think of the strength of the Under Armour brand for college students, high school students, and even youth. Graphite tees is a huge opportunity for us. Bottoms, sweatshirts, sweatpants, and just a different range of t-shirts. Here you see a beautiful slub t-shirt, a dip-dye performance cotton tank over there on one of the models. This is a platform that we are going to continue to build, and it will enable us to reach consumers that we never have before. All right. Thank you guys very much.
As soon as man's going to hit this foul business, it's going to witness stick right on.
Okay, growth through innovation, the invention of Charged Cotton. The next thing we want to talk to you about is another evolution of cotton, growth through innovation, and that is Storm Fleece. Storm Fleece, this is really cool stuff, and we're going to show you in a second. Here's what caused us to invent Storm Fleece. The outerwear business has changed. Over the course of the past decade, outerwear for athletes has changed. What it is right now is this hooded sweatshirt. It's a full zip fleece. You know the styles. You see them in the market. These are the styles that athletes are wearing for outerwear. The problem is fleece has not performed. It gets wet. It loads up. It gains weight when it gets wet, and it actually does not enable athletes to stay warm when they need it the most.
Whether an athlete is on a sideline, whether an athlete is training, or whether it's someone walking down the streets of New York or across a campus, we've invented something, this new outerwear category that will perform. Don't just take the video for it. We're going to show you actually how Storm Fleece performs. Let's bring some models out here. Come on out, guys. What I want from volunteers in the audience, come on, let's bring some people up. Volunteers, okay. You want to come up? Come on up. Come on up. Come on up right here. There, come on up. Come on up. We're going to show you how Storm Fleece performs. Pour the water on the fleece. Pour it on. Don't just dabble. Pour it on. Right there. Pour it anywhere. All over. Look at that. It performs. The water beads right off. It is an amazing technology.
If you think about the potential for this and where this is going, think about the outerwear category today. It is about hooded sweatshirts, full zip performance fleece. Storm is the next generation, the next invention from Under Armour, keeping athletes dry and keeping athletes warm. This is cool stuff. All right, thank you guys. You did a good job pouring there. I hope I don't slip on that a little later. We'll have to be careful. Okay, invention of Charged Cotton, invention and innovation with Storm Fleece. Another product, invention and innovation that we are bringing to the market is Cold Black. Some of you may have seen the room, the Cold Black room that we had this morning, and we encourage you to check it out at lunch. This is an incredible technology. It is going to keep athletes cool.
It is going to keep athletes dry, and it is going to help them perform like nothing else. Imagine training for the New York Marathon. You need to start in July. You need to train in the hot summer months of July and August. We have the U.S. Open tournament here at Congressional Country Club in Washington, D.C. next week, the U.S. Golf Open Championship. Athletes are going to be under the hot sun. What Cold Black technology does is it reflects the sun's heat, keeping athletes cool. They will sweat less, and their body temperature will be less. No distractions. It's going to be great on the course. It's going to be great in running. Heck, it would be great for all of us today because it's about 100 degrees Fahrenheit outside right now.
The great thing about Cold Black is this technology enables us to really be in categories where we are underpenetrated. Golf, a huge opportunity for Under Armour, Cold Black technology. Run, another huge opportunity for us in apparel. Cold Black will be huge. Think about it regionally. West Coast, we are underpenetrated in the West Coast. Cold Black will play a pivotal role in building a platform to allow us to increase our presence on the West Coast. Let's go to the screen and show you Cold Black.
As I'm sure Mother Nature is, but not Under Armour. We've never been afraid of a fight. At our core, we're about innovation and changing technology that take on the elements to win, from HeatGear to ColdGear, to Charged Cotton, Storm Cotton. Our legacy is clear. New innovations that make athletes better. Now, what's next? Cold Black. Cold Black is revolutionary. This is a fabric that does the impossible, reflects heat and UV rays before they get to you, keeping you cooler and more protected than ever before. Whether you're running a marathon in the desert or just playing eighteen holes in the summer, black out the sun, stay cool, dry, and protected. Cold Black by Under Armour.
Okay, innovation. We cannot reiterate that enough. Growth through innovation. The invention of Charged Cotton, the invention of Storm Fleece, bringing a new technology in Cold Black to the market, growth through innovation. All right, now we're going to talk about another growth initiative, a huge one for us, and that's our women's business. We have a very good women's business today, but we are building a great women's business, and we have the runway to do this. Consumers are demanding it, and we are going there. What does this take? It takes a great team of leaders. What we've done over the course of the past two years is build a great leadership team in women's. I'm going to bring three women onto the stage who are going to talk to you about where we are going in women's and how we are growing in the years to come.
Between them, these three individuals have over 60 years of experience in driving women's businesses from great brands ranging from Chanel to Limited, Gap, and Fila. Let's bring the team on. Come on out.
Good morning. Good almost afternoon. I'm Gwyn Wiadro. I am the GMM of Women's Apparel at Under Armour, and I'm thrilled to be here. I got to speak to some of you this morning, and I'm glad to be able to speak to the rest of you now. As Henry said, we have built the team. We are building the product that will make us the driving force in the world of athletic apparel, women's athletic apparel. Today, we're going to give you an inside look at what we're doing to build toward that huge future. Before I get started, I want you to meet the rest of the team.
Good morning. Adrienne Lofton Shaw, Senior Marketing Director.
Hi, Noreen Naroo Pucci , Senior Creative Director of Apparel Design.
Okay, so let's talk about how we're going to get this done. This is what we know. We know we own the 13- 22-year-old high school and college female athlete. She knows us. She loves us. We love her. She keeps asking us for more and more. We stay incredibly close to her, and by doing that, we stay incredibly authentic. That's what got us to where we are today. We're going to stay true to that core, but we're going to talk to her even more than we do. We've gotten even closer to her. We know exactly what she wants, and we're going to get the core to buy more. We know in order to grow the way we want to grow as a team, the way the company wants to grow as a division, we need to broaden our reach.
We're going to grow up with her. We're going to stay relevant to her as her needs change. We're going to build the product that speaks to her in a way that no other brand speaks to her now. We're going to transition past the college athlete into the world and beyond. That's our biggest opportunity, and we're going to stay connected and relevant at all times. We'll dress her 24/7 by doing this on the field, at the gym, in the studio, in all aspects of her life. Guess what? While we're doing this, we're going to grow faster than the men's division, and we're going to keep going faster until one day we are as big, if not bigger, than men's. That's why I came here two years ago to get that done. We're going to grab a significant share from our competition during that same time period.
Now today, many, including some of you, probably see us as a men's-only tight shirt brand. We are here as a group to make sure you leave this building today knowing that it couldn't be further from the truth. I can tell you for sure that is not why we're here. That's not what we're about. That's not how our girl looks. We have our own voice. We have a strong point of view, and we're reaching this broader consumer. Words are one thing, but I'm going to show you what I mean. Take a look at these women here. This is our athlete. This is who we're dressing. This is how she shows up. We're giving her everything she needs with benefits and style. We're going to dress her when she practices, when she trains, wherever she is, whether she's 18 or whether she's 28.
We're going to go after categories that are new to us, like yoga, and we're going to dominate in other ones, like run. At all times, it is about performance, the perfect fit, the perfect body, head to toe. Now I'm going to turn this over to Adrienne for the brand point of view.
Good morning. My name is Adrienne Lofton Shaw. I manage all of Women's Brand Marketing, including footwear, accessories, and apparel. I came to the company about three years ago, and the first thing that the team, the walls, the hallways said was the women's team was going to one day be as big as the men's business. That's in team, that's in revenue. I'm going to tell you a little secret. Our team, the ladies on the panel, and everyone that supports us knows the women's business is going to be even bigger. We're all competitive in this building, and the game starts now. For us, the first thing that we needed to do was to reset. We had to think about who are we truly talking to. Who is the UA consumer. What we quickly understood was it's not about shrinking it and pinking it.
We had a consumer name called Miss Train to Maintain. Done. What we learned over time is it's all about our female consumer. What we did to get there was a lot of qualitative and quantitative research. Quite frankly, we sat with the athlete, we talked to her, we learned so much more about her, we sort of are her. Here we are to introduce her to you. First up, it's Team Girl. You guys know Team Girl. I think you see us as Team Girl today. She's 13 - 22 years old. She has grown up and was born when Under Armour was incepted. For us, that gives us a special vein of differentiation that no other competitor has. We will be the brand of this generation for this female athlete and the next. What we love about her is that she's multifaceted.
We brought her name into an acronym so that you can sort of close your eyes and really see who she is. You don't have to close your eyes, but think about it. Who she is is a trendsetter. She's energetic. She's athletic, and she's multi-talented. It was key for us to redefine that in these walls because a lot of us used to think of her as a jock. She's a girl. She loves looking great. She loves feeling great, and she kicks butt when she's on the course. Also, she's a trendsetter. We think about her as the person everyone's following, and when she's wearing Under Armour, everyone starts to wear Under Armour. Lastly, I'll toss to that 18 - 22-year-old break. This is a huge opportunity for Under Armour and a lot of white space that we see as a brand.
When our teen sport athlete gets to college, only 4% of females actually get a college scholarship. That leaves 96% of females who are still athletic, who still have that same state of mind, and who grew up with our brand. We will own this girl moving forward and tomorrow. Now let's look at our big sister, City Girl. When you look at the images, you start to see our consumers come to life. Team Girl is all about her team. It's her family. She's bright. She's funny. She's having fun. City Girl gets a little bit more serious. She's a little bit more elegant. She expects so much more out of her product. Her products must perform in the gym, but absolutely look great when she's on the streets. We're going to provide that to our City Girl consumer moving forward. Finally, she's also an acronym.
It's all about being competitive, independent, trendy. She's looking for others for fashion cues like Under Armour and youthful. Again, 23 - 34 is the age break we speak to. A lot of us are beyond that break. They're still competitors, and it's a psychology we'll continue to focus on and drive home and meet this consumer from 23 - 65. Now that we have the ideas, let's talk about the objectives. We have three key strategies on the women's brand team that we will accomplish over the next three years. Significantly, growing awareness is our key objective. Females need to know our brand, and what we've learned is as she meets us, she loves us. We convert her immediately. For us, it's about introducing the brand to her. As we grow awareness, we're going to shift perception. No more brand of old. No more shrink it and pink it.
This is her brand. She's going to feel this brand through her voice and the lens of Under Armour. When you think about those two things that go together, it really starts with emotion. We are all about evoking emotion. You guys saw the voice reel. You do it very well on the men's side. You're going to start to see that come to life on the women's side as well. All right, you know the consumer. You know the objective. How did we get to 2012? This brand starts with the insight. We asked the female consumer in a proprietary study, what does she need to perform? What are the three key pieces of apparel and footwear that make her look great, feel great, perform? It's simple. Started with footwear. 92% of women need a performing shoe to get it done.
The second up is sports bras and finally bottoms. As we talked about that as a brand and product team, what immediately came to light was how do we build that perfect athlete that KP or Kevin talked about earlier today? It starts with emotion, but it also ends with solving for her needs. We're going to do that from head to toe, and in this situation, truly from toe to head. You saw the 92% stat. It starts with footwear. Gene and the team will tell you so much more about the Micro G strut, but know from the brand team, we're getting behind this product. We're supporting our female consumer. She's going to have a product that she can run and train in. She doesn't have two shoes. She does one thing and everything, and she could take it to the streets. We've gone from footwear.
Let's take it up to the bottom. If you look at the creative behind you, if you look at the tone that we're creating, it's all about City Girl and bringing her to life. For us, we know the bottoms are our vehicle to get into lifestyle. We want to see our brand on the street. We want to see our brand in Starbucks. You're going to start to see that more and more from us starting 2012 and forward. When it comes to bottoms, it's not just about great product. It's about a voice. You guys are so used to seeing hardcore Under Armour. We're solving for female needs, but we need to solve it in her voice and how she expects to be spoken to. We know that girl. We are a girl. Take a look. Whoa,
Whoa! Bottoms up! Noreen Naroo Pucci , Senior Creative Director of Design. You learned a lot about bottoms. We know that we like them. I like them, especially when mine look good. This team has perfected that. Without further ado, I would like to show you the perfect pant collection. Ladies, come on out, show us what you got!
Do you just go, "Ooh, that's not too bad.
All right, so what did we do? We are propellers of perfection. That's what we do. Be perfective for her in every single way. That's from head to toe. Innovation through construction. The winner weighs 10. It's constructed to not give her that little muffin roll that we know about. The perfect wide, not too high and not too low, not showing off anything she doesn't want to. The best world-class fabrics. They don't pill, they don't retain odor, and they look amazing. They give her versatility. When I joined three and a half years ago, they gave pink and blue, pink and blue. I remember I was at a sales meeting and I said, wow, I think there's some opportunity here for some color. We changed that, as you can see. Of course, I have to show you my favorite, the zebra print. Over there. Zebra, I can translate.
Okay. This fabric, this look, this product offering gives her the versatility that we need this woman to have. Taking away all of the distraction. Taking her from her gym time to her coffee time. As we know, what's a bottom without a top? We all know, especially the women in this room, how difficult it is to find a bra, let alone the perfect sports bra. I would like to introduce to you the Armour Bra. Ladies, show me what you've got. This is world-class. This is revolutionary. Let me just say that again. This is world-class. This is revolutionary. There is nothing, nothing out there. I can truly personally attest to getting stuck in a bra. We have created the perfect bra for every single cup size. This is innovation through construction with bonded edges. This is perforated cup sizes that are removable. They breathe the performance.
This is the best bra out there. As you can see, and if ladies, you could just turn around for us, every single back on this bra is different. That wasn't just some chance. That was for a reason. From the A cup, B, C, D, and DD. There was a different need for every single woman's cup size. The D needs easy entrance and exit. There is nothing worse than getting stuck in a sweaty bra in a locker room. It looks amazing. You look at this, we talk to her through the power of color, through the power of color, through the tweaks that we've added, through the trims that we've added to direct this goal straight to her purchase. This way she knows that she's color-coded. She's an A, she's going for the yellow, B, C, D, DD, and so forth. This is an amazing bra.
Of course, we wanted to message this so she knows that we make this just for her, just for you women in the room, because there is nothing like putting your bra on and getting ready to go out and perform. Inside there, there is a hidden message that says, this is my Armour Bra made just for me. You're speaking to our consumer. Thank you. Adrienne, can you bring this to life for us?
Absolutely. Thanks. You've seen amazing bottoms, you've seen amazing footwear, and now it's about the sports bra. The data speaks volumes, or just be a female. We know the sports bra is her first layer of performance. The guys have shoulder pads and knee pads. We need a sports bra that does its job, and for us, the Armour Bra will be our iconic product that will sell and tell all bras. Under Armour Women's realizes that we need to be authority in this space, and we will be by owning her through sport bras, through the education of sport bras, and telling it still in a fun way. You saw the bottoms video, a little bit cheeky. Under Armour does know how to wink at our female consumers. This is when you need to really start talking sport medicine.
When you go into store, you're going to see things like the little black bra book, something just for her, where she can keep her workouts, but oh, by the way, find out why an A cup does need a very secure bra. When you open up that bra and she sees her message, this is my Armour Bra, it's made perfectly for athletes, but it's built for me, that's the personalizing, surprising, delighting that we will do over and over and over again. Speaking of evoking emotion, let's take a look at the video and again, bring the Armour Bra to life.
I'm a great sports bra. You want to be able to just go in the store and say, I like this sports bra, I've worn it before, and it's great. You really don't find any sports bra that's great at all.
Sometimes I can't get them all.
Trying to pull off a sports bra looks like you're kind of having a seizure.
You have to double bra them.
Typing, it starts rolling under.
Is it too tight?
Uniboob.
Never can find my size.
Arm fat thing.
The band's too tight.
It looks like your arm is having a party between your boob and the pit. It's not a good look, I promise.
Baby, where you get your body from? Tell me where you get your body from. Baby, where you get your body from? Tell me where you get your body from.
Right. So that's the Armour Bra. For all the women in the room, we probably don't have to say another word. I bet you're sold. For the guys in the room, I invite you to meet me personally during lunch, where I will walk you through the Armour Bra in the women's showroom. Okay, this is the wrap-up, and here we go. You heard me say, we love our consumer. We're killing it with a 13- 22-year-old teen girl and college girl athlete. We're going to broaden our reach. We're going to grow up with her. We're going to be relevant as she gets older, as her needs change. You heard Adrienne talk about voice and telling an amazing story. You heard Noreen tell you about maniacal focus on the details that matter. That's who we are. That's what we live and breathe every day.
That's the story of women at Under Armour for today and beyond. With that, I'm going to kick it back to Henry.
Thanks.
Great job. That is our team. That is the team that is going to lead women through the next year through the big initiative. We have an amazing women's business on the go forward. All right, let's talk about our next initiative. We talked about growth through innovation, growth in women's. The next business we're going to talk about is growth through the next generation, and that's our youth business. Our youth business is gangbusters. Any girl or guy out there wants Under Armour. We have an amazing youth business. In fact, in most every account we have, we're at about 60% of the revenue in every account. The point is, we're investing here to build for the future. We have an active strategy to create brand loyalty for years to come.
The consumers that we gain now, and as we invest in the increase of consumers, 80% of them will be with us for decades. It's not just a growth strategy through 2013 or 2014. This strategy in youth is for the long term. The first way we're doing this is who we're partners with, and athletes that are part of the Under Armour brand. People like Cam Newton, Bryce Harper, Kevin talked about these, Paul Rabil, Bobby Brown, Maria Shishkina. You may not know who these athletes are, but the key is your 12-year-old does. That's what is most important in the youth business. In addition, we are going after categories that are very important to the next generation. We are very good. We are great in football. We are great in baseball. The categories in youth that we are going after are basketball and soccer.
Look at the participation rates that we have in basketball and soccer. Those are going to grow. The great thing about our initiative and going after basketball and soccer is that this is not just a U.S. strategy. There are global implications to this strategy. That is where we are investing aggressively. Our product lines, our strategies, our athletes. The last sport I want to talk about is lacrosse. It may look small on that screen, but we are going after lacrosse. We're going after lacrosse in apparel, in footwear, and in hard goods. Lacrosse is the fastest growing sport in this country, in the United States. I guarantee you, five years from now, that bar is going to be significantly higher, and it's going to rival that of football and baseball. The last point to note on youth is we are building our team.
In the past few months, we have hired a new Vice President of Youth Business who has over 20 years of experience in driving youth businesses. Glenn Silbert has joined us from Carter's Incorporated, where he was heading up the kids and baby division. Glenn was at Carter's for seven years, and I encourage you at the break for lunch to go into our youth studio, and Glenn can walk you through the strategies and the product and where we are going on the go forward. Another huge growth initiative for us is growth through our customer experience. This is a key initiative for us. We are investing in our customer experience. While our business and growth have been fantastic, we have not maximized the opportunities from either a presentation or a distribution standpoint. You know, my background actually is from retail.
Prior to joining Under Armour a year ago, I've been in retail my whole entire life. What's important in retail is your presentation. Obviously, it's a great product, but it's how the product looks, how your tables are configured, the experience, how people, how consumers are experiencing the brand, the windows, the tables, the whole entire lifestyle of what you're presenting. We are taking that approach and bringing it not only to our stores, not only to our website, but to our wholesale partners as well. End of story, wherever we are, we will look the best. Quite frankly, we have not had the ability to tell stories from head to toe, to present dominant key items. Our fixtures were not efficient enough, and we've been too cluttered. We are addressing this aggressively. We are investing in this.
Again, we are addressing this in our own stores, on our website, and in key accounts. The first way we're going to do this is partnering with our biggest account, and that is DICK'S Sporting Goods. This August, we are launching All- American Shops by Under Armour in DICK'S Sporting Goods. The launch is in August, and by the end of this year, we will have launched 50 All- American Shops. You can see the renderings behind me. In 2012, the rollout gets even more aggressive from there. We will have 50 by the end of this year, and the rollout in 2012 is even more aggressive. We will have more space, a more open shopping environment, fixtures that are 20% more efficient, 20% more efficient. We're able to put more product on these fixtures to drive revenue.
We'll have the ability to present dominant key items, the ability to tell stories from head to toe, and, very importantly, the ability to communicate our innovation. That is how we will cut through. This initiative of customer experience is not just DICK'S Sporting Goods. By the end of this year, we will have put in 100 new shops in the Sports Authority. In fact, over the next 12 months, we will put in 700 new shops in our accounts ranging from DICK'S to Sports Authority to Hibbett to Finish Line, and even for those of you from New York and Paragon. This is a big initiative for us. When you look at the next two years between our website, our key accounts, and our own stores, we will enhance the customer experience at touchpoints that affect over 50% of our revenue. That is staggering.
That two-year strategy, we are investing to enhance the touchpoints that affect over 50% of our revenue. Big, big initiative for us. The last thing to talk about in terms of customer experience: underwear. Not sure if you thought we were going to talk about underwear today, but underwear is actually a very key initiative for Under Armour. In spring 2012, we are expanding our underwear platform. We have an amazing product, an amazing underwear business. Starting this spring, we are launching underwear in 600 department stores. We are bringing this business to distribution where underwear is sold. We're going to bring some models out and show you why we are so passionate about underwear. Come on out, guys. Under Armour underwear. You know, years ago, I thought I actually wanted to work on Wall Street, like all of you.
Now I'm on a stage with four guys in their underwear. I couldn't be happier. There's nothing wrong with that. There's nothing wrong with that. This product is amazing. A few weeks ago, I was in one of our key accounts, shopping the market, and there was a mom there who was working with a store associate who said once her son went to Under Armour underwear, he will never go back to anything. We have an amazing product. The point is now we're taking that to different places. This is a start for Under Armour. We are going to learn. This is going to be a big business. We have a $30 million business right now, and we are going to grow significantly from there. The last point on underwear is we have hired new leadership in underwear. We have brought on board Helena Kalin.
Helena comes to us from Calvin Klein, where she was the global merchandise lead. She was responsible for the two biggest launches in Calvin Klein's history. She came to Under Armour because of the growth potential we have. This business is going to grow significantly. All right, thanks a lot, guys. Appreciate it. Okay, we've talked about a lot. In summary, we've talked to you about growth and innovation, growth in women's, growth through the next generation, and growth through an enhanced customer experience, investing in all of those areas. These strategies are so significant for us that they will drive apparel revenue growth of 30% a year. We very much encourage you during the break to go out there, check out the rooms, check out the men's room that you have here today, talk to the teams about the product, check out our youth room, check out women's.
We have Cold Black, a section for Cold Black, which will show you the technology. That is our growth story in apparel. The story does not end there for Under Armour. We have other stories, an amazing footwear story. What I would like to do now is introduce you to the Global Head of Footwear, Gene McCarthy, who's going to talk to you about footwear. Thank you very much.
Hello, good morning. Henry, that was great. We loved the presentation, but more importantly, I can tell you all here how fortunate I am to have a great partner in Henry to run such a robust business that it is clearing the way so that when footwear, and you will hear about it today, gets its traction, we can put our best foot forward. Thanks again. I'm Gene. I know some of you, and I've been at Under Armour now for just under two years. I'm a fortunate kid from New York City who was an all-American miler, who then many years later is able to have his avocation and his vocation in the exact same place. I love sports. I love what I do, and believe me, like my team who you'll meet today, we love footwear.
You'll see behind me on the board just what happened over my last almost two years here and the work that we had to do. In the beginning, we had to recalibrate the business model. The footwear industry is a very, very unique beast, unique to itself, very, very different from apparel. We had to recalibrate a couple of things. Number one is how are we going to go to market? How are we going to treat the market as a landscape? Number two is how do we work with the retailers so that we have a relentless flow of product and it keeps moving at a pace that is good for them and it goes towards the premium brand's model of evaporation versus liquidation. You can see we had to rebuild the team. I'm going to give you some statistics. There'll be some numbers.
They're never the numbers you guys want, but go with me anyway. The last time we had Investor Day in Baltimore, there were 54 people dedicated worldwide to Under Armour footwear. Today, there are 119 teammates in footwear around the world. Here's a big statistic. Only 10 of those 119 are in the exact same role that they were in in 2008. Since I've been here in August of 2009, we've added 45 people from the industry that are or were at the time new to Under Armour. That's a big number. I want you to understand that having a team in numbers is great. Having a team in talent is what we're after. Let me give you another statistic. Of the 93 people here in Baltimore that are dedicated to footwear, 44 of them were college athletes. 22 of those college athletes were actually team captains.
Eight of them were all Americans. Two of them were national champions. I tell you that not to be sport clichéist and just give you a little sport analogy there. I tell you that because athletes, first of all, have a lot of determination. They're self-motivated. Most importantly, they know how to focus. Something that is just unacceptable for anybody that wants to join us here, you have to know how to win. On top of that, one last statistic, if you put the whole team together, we have 677 years of footwear experience. I'm quite proud of that. You're going to meet some of my teammates here today, but let me tell you about them before they come on stage because it's important for you to embrace us as a unit. You're going to hear from Andre Mossiat.
Andre Mossiat had 10 years at Nike, where I first worked with him, and then eight years at Reebok, where I worked with him again. Andre is an unbelievable merchant, a meticulous shoe builder, and he is passionate about knowing the spaces in the market where we can go and knowing how to either blow through them or go around them. You're going to hear from Ryan Drew. Ryan Drew has 15 years of industry experience, specifically in basketball. On top of that, Ryan Drew, until recently, held the three-point record, three-point shooting record at the University of California. Like me, avocation and vocation. I have worked in my past in the basketball sector of this industry, as many of you know. Ryan is as good as it gets. You'll see why in a minute, why I say that. There is Josh Rattet.
Josh Rattet started his career as an intern, 19 years old, at a company called Reebok. He and I also worked together at Reebok, and he has been dedicated to one category his entire professional life, which is on-field: football, baseball, soccer, lacrosse. He has something that is distinctive in this industry. He has unbelievable working relationships with all of our retail partners. Ask any of them. He also has fabulous relationships with our athletes, who we consider family here. You're going to hear from a guy named Dave Dombrow. Dave Dombrow is our Creative Director. Dave started his career at Nike, worked on Nike basketball for a while, had a stop at a company called GBMI, where there were lots of brands, both fashion and performance, housed in the same area. Until recently, he was the Creative Director for Puma. Two things about Dave.
One is that he was the mastermind and the Creative Director that eventually built the shoes that Usain Bolt, the world's fastest human, wore in the Beijing Olympics. The second thing about him, which is probably indicative of our entire team, is Dave, as a young kid, a very little kid, used to go to bed with his sneakers because he loved them so much. Let that stand as something to notice about Under Armour footwear. You can also see behind me that we had to make a switch. We had to switch from repair mode to growth mode. There are two things you need to do to get from repair mode to growth mode. One is you have to bring in the right team with the right attitude. I've described them to you.
The second is you have to build great product. There are only two types of shoes in the industry: shoes that sell and shoes that don't sell. We are now going to err on the front side, not on the back side. We want to be a world-class premium brand. The reason I tell you that is because we don't want to just make shoes and outfit the world. We want to be precise, and we want to be performance-driven, and we want to be premier at every level of the marketplace. Please know there's a difference between the word premier and expensive. There are shoes that are expensive, but there are shoes that are premier. We intend to be premier at every price point and any place that we go. If it doesn't go through our filter and our definition of premier, we won't do it.
I've got a great team. We fixed the business model. Now what we really need is the point of view. You heard earlier about the idea of building the perfect athlete. The perfect athlete is something that all of us at Under Armour, Henry, Edward Giard in accessories , all of us aspire to. The word perfect, if you try to achieve it, you'll get somewhere along the way, you'll get excellent. We love the idea of the perfect athlete. Since I'm a shoe guy, what we want to do is we want to build the perfect foot. Watch this.
The lightweight movement was taking place and really gaining some steam. We looked at it and we noticed that everybody was mimicking the human anatomy. Ultimately, I think we came back to kind of question that. Was that the only solution? You know, ultimately, was it the best solution? Instead of just looking at one thing, we're like, you know, other species in some ways do it much better than humans do. Instead of just looking at humans, we looked at, you know, a tortoise offers better protection, a gecko offers better traction, and something like in a mechanical way, like carbon legs offer better energy return. Ultimately, it came down to hybrid all these things together and come out with something that's truly better than a singular expression like the human anatomy.
That led to the concept that we're calling eve anatomy, a hybridization of all species for maximum performance. With the apparel DNA, we felt that Under Armour had a unique sense of fit, and we really wanted to be about fit with this shoe, but performance fit. That was really what drove from the beginning is this whole idea of a base layer against your foot and how that could actually enhance your sensibilities and enhance your performance rather than being a typical shoe construction.
Any shoe construction build starts with the last. What we were trying to achieve is a minimalist drop. What we did is took an existing last, dropped the heel angle 6 mm, and increased the toe spring. What that allows is when the runner is running, it's a better transition, smoother transition from midfoot all the way to toe off.
The shoe is really inspired by our apparel DNA and in some ways really built like our apparel, which makes it quite unique. Shoes are usually one piece connected to a strobel. This shoe is actually made in two separate pieces completely, which is great because it actually lets you get articulated fit and kind of a more tailored fit in a sense. You have a single layer on the forefoot, which is our apparel HeatGear material. It's all about moisture wicking and lightweight. From there, we worked in our MPZ technology, which stands for modular protection zone. You'll see that on a lot of our apparel in football and baseball and whatnot. We worked that into the shoe, but we worked it in where you need it.
From there, we layered on a secondary element right here that's not unlike a grasshopper, almost like a skin that's articulating free of the forefoot base layer. The third thing we did is we layered on a tertiary element that you'll see on the bottom of the shoe. Underfoot, we have our Micro G midsole that is unique to Under Armour, combined with a blown rubber forefoot for maximum cushion. With that, we have a composite plate for maximum energy return. You can also see that we've cored it out for maximum flexibility and speed, kind of all in one perfect blend. It's hard to see.
Hello, everyone. My name is Dave Dombrow. I'm the Creative Director of Footwear. It's nice to see you all. I saw a technical. What we want to do is bring this shoe to life for you guys. Check this out. Everybody's hopefully looking at the screen right now and not me, because if you're looking at me, you're not seeing anything. If you're looking at the screen, some magic is going on. What I'm going to do is rotate this around. What you see real time is Charge RC here. See the inside? Yep, I am actually doing the heel and the lateral view, outside view. You go to toe. Oops, let's catch it back up. There you see. It's a really cool shoe, but what I want to do with this is actually show you the build of this shoe in a really simple way.
The magic is in the build and how simple this shoe really is, but how unique it is. What I'm going to do is explode it out, go piece by piece, and show you how it all comes together as one. I'm going to start with the forefoot. There you see the forefoot. Track that back again. There we go. With the forefoot, you see right there, it's all about our HeatGear material, as you saw in the video. It's HeatGear mixed with MPZ. MPZ is in the tongue, MPZ is in the toe, and it's all about leveraging our apparel DNA. This is a big thing for footwear. It's the big story. We really want to leverage our apparel DNA into footwear. It's a great and unique POV for us. With that, I want to bring in the heel. Pretty cool, right? There's the heel as it comes in.
You have two main pieces. The heel is completely separated from the forefoot. What's so unique about that? Really, what we're talking about is you can tighten the heel completely separate from the forefoot. Two distinct pieces are coming together, but in two pieces, not one. I can say this is a completely unique build you've never seen in footwear before. Let me say that again. A unique build you've never seen in footwear before. Pretty cool stuff. It's all about fit. Again, leveraging our apparel DNA. After you have this cool lockdown story in the heel, cool forefoot, let's bring in our Micro G EVA. There you go, Micro G midsole. What's so cool about that? This is a unique high rebound foam to Under Armour. It's all about going fast. The thing is, we wanted to go even faster.
What we did with that is we corded out and we layered on a composite plate. You check that out. We bottom-loaded the composite plate. Composite plate, as some of you may know, is all about energy return. Energy return is great. Combine energy return with high rebound foam, and you have something that's a go fast shoe. Lastly, what we did is we capped it off with blown rubber for maximum cushion and carbon rubber for maximum durability. There you go. You got the whole thing exploded out. That's all the pieces of the shoe. The beauty is in the simplicity, right? That's usually what it comes down to on this. You have the construction, you've taken you through it, and what I want to do is I want to bring it back together as one now. Wait. There it is. Ladies and gentlemen, Charge RC. Pretty cool, right?
What I'd like to do now is ask my partner, the real Andre Mossiat, to join me on stage. Thank you.
Hi, good morning, everybody. We are becoming a global company, so I've been working on this accent for the last two months. What am I doing? Actually, it's as real as it is yet. I am in charge of running and training here at Under Armour. The big number here is the wholesale number for the running category footwear globally, and it's growing. This is a category that has been growing for the last 20 years, and it's not slowing down. Trust me, that's not because there are more runners today than a decade ago. The main reason for this increase is that running and the running silhouette is really becoming the footwear of choice for everybody. If you visit a gym today, look at what people are wearing, and you will see that more than 95% of the people are wearing running shoes.
How are we going to approach this category here at Under Armour? It starts with the consumer. There are really two types of consumers. The first one is the consumer that trains to run. It's a little bit older, 30 and up, extremely dedicated consumer, and also extremely loyal to some vertical brand. While we know that a product like the Charge RC that they've just demonstrated will achieve and exceed their needs, this is not really the consumer we're going to focus on. The one we're going to look after is really the consumer that runs to train. This consumer is really a team sport player or an individual sport player. He can be a lacrosse, a football, a soccer, a rugby player. He can be a kite surfer or a snowboarder. This consumer somehow, somewhere will integrate running in his preparation.
Running will give him the extra edge for game days, race days, or riding days. This is a younger demographic, already an avid Under Armour consumer, but he's also a serious athlete. We will become the footwear brand of choice for him and for her, this generation and the next. How are we going to build that? We're going to segment our business in three different ones. The first one, we call it the go fast. It's a bit different than the traditional cushioning and motion control, etc. The go fast consumer, it's really this lightweight product. You had the first example today with the Charge RC. Moving forward, we're going to address the consumer that we're going after, the go far. That's where we're going to start bringing visible technology in the platform, an extremely lightweight product with some structures.
Finally, we're also going to address this go natural and lightweight minimal footwear that is tracking. We're also going to bring an Under Armour point of view in this business. Three distinctive ways to go after this running market, three distinctive ways of serving the consumer needs. Also, by doing that, we will create cadence of product delivery in the marketplace that will help us to achieve our goal of building the perfect athlete. Last but not least, our point of view. We will, and Dave just mentioned that, bring all our expertise and technology from apparel and integrate them in a very compelling and visual manner in our footwear.
That will create, without any doubt, a serious point of differentiation in the marketplace and highlight the fact that the fit that changed everything, and let me show you that to you, very simply to understand, the fit that changed everything is now available for your feet. Head to toe construction, and we complete the sentence below the ankles. We mentioned in a very good way about our women's business, and footwear will also be a key factor for the growth in women's. We will apply the same philosophy that I just explained for the women's side, and we will create a unique point of view and an aesthetic for the female athletes of the new generation and the next. How are we going to do that? Let me show you an example.
My name's Ryan Drew. I'm the Director of Basketball.
Yes, the basketball guy was the only one to wear a tie. The guy that worked for me didn't recognize me this morning. I don't have to tell anyone in this room how important this category is for our brand. Henry talked about how Charged Cotton allows us to reach an entirely new consumer that's never experienced our brand. Basketball gives Under Armour an opportunity to speak to an entirely new consumer. We're speaking to that consumer through new distribution channels, whether that's the mall or the sneaker boutique down the street. These are three words that are exciting to me. We're in the game. Under Armour is in basketball. It feels good for me to say that. I've been here for four years. We launched basketball footwear at retail eight months ago. That's a big gap.
You may say, "Hey Ryan, what the hell have you been doing that whole time?" It takes a long time to build footwear, but it doesn't take that long. We launched eight months ago, but we put shoes on court three years ago. Since 2008, we put over 30,000 pair of shoes on ball players before we ever put a shoe at retail. That's pretty significant. That's the most intense and in-depth wear testing program I've ever seen or ever been a part of. In our business, they talk about eight out of 10 basketball shoes sold at retail, they never see the court. All 30,000 pairs saw the court. Every single shoe went to battle. Any little issue, I mean, from a lace breaking to a blister on someone's big toe, I got a call. Kevin called me to tell me that he thought the laces were too long.
To know by decision, fix it. We learned a lot throughout the whole process. We outfit over 30 elite-level high school programs. 11 of those programs won their state championships this year. Head-to-toe Under Armour basketball product. We outfit 16 Division I college programs, head-to-toe Under Armour basketball product. Over a year ago, we stepped onto the NBA floor with Brandon Jennings, who introduced himself and our brand to the basketball world with a 55-point explosion in our shoes. We're in the game. Just like we've done in football, where we built our brand on the field, we're building this basketball category on court, one ball player at a time. What do we stand for in basketball? What's our voice? We're next. We have a responsibility at Under Armour to shake up the foundation in this category. It goes back to our beginning. What do we stand for?
We build product for athletes that truly makes them better. All we are, all we create, and all we do is next. We are the up-and-comers. We are the agents of change. We feel like we're about to change everything again. From a product perspective, our point of view in this category is what we call light and strong. Light as a feather, strong as a bull. Lightweight is the future. You've heard everyone up here talk about it. You won't hear ball players longing for the days of heavy footwear so that they can run slower and jump lower. Retro product looks great with jeans, but it doesn't play on court anymore. The challenge with lightweight is building the strength and durability into the product. As you remove things, you lose support. Shoes are getting lighter. Ball players and athletes in general are getting bigger, stronger, and faster.
We want these athletes to know that we're building lightweight product that is indestructible. You don't have to take my word for it. We have all of our products set up in a room. Go in there, touch it, feel it, pick it up, and see where this brand is going. Basketball is a global sport. It's why I love it. It's played in nearly every country around the world. In China alone, there are 300 million people that play basketball. There's another 100 million that are just basketball fans. That's a lot of feet that need hoop shoes. The investments that we are making in basketball products, athletes, and properties will make us the brand of the next generation worldwide. Thank you.
On the field today in stores this spring.
Good morning, everybody. I'm Josh Rattet. I'm the Director of our on-field footwear. This is a really exciting time for us as we are winning not only on the playing field with our pinnacle athletes, but on the retail front as well. That commercial you just saw is a true testament to the momentum we're generating on the playing fields with our premier athletes every single day. I came here three years ago, and I came here for one reason and one reason only, and that's to win and to be number one. My team, we are maniacally focused on that. When I got here, I remember very vividly in one of the first meetings that I sat in, I was just getting acclimated, starting to feel good about being here. I see Kevin beelined for me, like literally, and he's coming right at me.
I'm thinking, "Okay, what's going on here?" He said to me, about an inch away from my face, he looked into me and he said, "I am so sick and tired of hearing about the issues. You better get down and you better fix it, especially at Auburn University." Fast forward three years later, we won a national championship. We outfit the Heisman Trophy winner, the number one draft pick, in a brand technology called Confit that is part of our brand DNA and our heritage, with a compression sleeve that gives the athlete great mobility and support. After numerous trips, we have finally won. We had the great fortune of Coach Gene Chizik here yesterday as we speak, and he said to us, "Guys, for the past year and a half since I've been at Auburn University, your shoes have been unbelievable.
In all the years that I've been a coach, it is the best year by far that I've ever had in cleated footwear." We also have the great fortune of working with a tremendous amount of athletes. One event that I'd like to tell you a little bit about is the Senior Bowl. The Senior Bowl is the pinnacle all-star game for college football. We sponsor that event, and we meet and spend rigorous time putting product on those athletes. If you know anything about that event, 95% of those guys have never worn an Under Armour cleat before. They show up at that event. It's essentially the biggest job interview of their life. 55% of the athletes at that event put our cleats on day one. They wear them throughout the week.
They put them through the rigors and all of the trials and tribulations that cleats go under, and they perform at the optimal level. It takes time to build a business. Five short years ago, we didn't have one cleat in the marketplace. We didn't have one shoe on an athlete's foot, not one NFL MVP or one national championship. In years four and five in baseball and football alone, we have achieved a clear number two market share. It's a two-horse race. It takes tenacity and patience to build that sustainable business. Over a million athletes voted for Under Armour last year alone and bought our cleats. Anecdotally, with football just kicking off, the key selling season is right now through June, peaks in July, when guys are getting ready for summer practices.
At East Bay alone, which is the key pinnacle destination for that elite athlete, we are the number one shoe at $90 against the main two competitors. There are consumers and kids out there that are yearning for us every season to deliver them mind-blowing product. We are the brand of not only this generation, but the next one. We make a vow and we make a promise every single day to deliver on the brand value proposition of making athletes better. We obsess about the consumer and take a great deal of time and talk a lot about zero distractions for the athlete, to our athletes and how we want a cleat to enhance their performance and help them achieve greatness. We have a clear, distinct point of view in every category that we're in: in football, baseball, basketball, soccer. We are defining what the future of speed is.
Our goal is to get the athlete closer to the ground so his cleats act one and the same with his body, and an emphasis on innovating in a way that focuses on direction-changing speed versus straight-ahead linear movement. We incorporate brand technologies like Micro G, 4D foam, things that are really meaningful to the athlete. Like Ryan, we're not in the race to make the lightest shoe in the marketplace. What we are about, we're going to make super light, supportive, and perfect-fitting cleats. We want to enable an athlete to have that quicker, fair step off the line, quicker back generation, a quicker movement on the pitch or the gridiron. For us, it's all about giving that athlete an advantage. Where are we going? For 2012 and beyond, now that we have that core consumer, we have that young kid that covets and desires this brand.
As he's growing up and he becomes an elite-level athlete at 13, 14, we are the brand of choice. We're raising the bar. We're changing the game of what the next generation of cleats are going to look like. We're developing iconic statement looks that are revolutionary, that are going to make kids really in awe of what this brand is capable of. We're obsessing on building premium and pinnacle products at every price point in every category that defines what best-in-class represents. No one can take away the success that we've had on the playing field, but we are relentless and we're not going to stop there. Our team is pursuing the opportunity to really shock and awe that athlete. We're laser-focused on that number one position. No one on our team came here to be number two, and we're not going to stop till we get there.
We feel like this really is our time. I appreciate the opportunity to spend some time with you. I'm going to turn it back over to Gene to take us home. I do encourage you, like Ryan, please go look at the product. You'll see the next generation of our cleats on the wall and all of the details and the nuances that the team relentlessly spends time building. Thank you very much.
It's me again. I'm that one guy who's staying between you and a Maryland crab cake. I'll be brief, but I want to be poignant with you for these last few minutes. You've met the members of my team. You've heard about the team that we're trying to build here. I have to tell you, of all my years of experience in this industry, this is my proudest moment. We are all here to be a part of the brand, the brand that will be the choice for the next generation. We have a point of view, and we also have a provocative way in describing our point of view. That's just the beginning, the Charge RC. If you can see what we've done in just a short period of time, can you imagine what will happen in the years to follow?
The point about a premium brand: we will be nothing but a premium brand. Since we're in footwear, we're storytellers. I want to tell you a story that will take you to this idea of a premium brand. Last fall, we had the good fortune of signing Tom Brady to become a member of the Under Armour family. Josh Rattet and I actually flew up to Boston for a photo shoot that Tom was in. We sat in a makeshift dressing room, very, very small room. The three of us were in there, literally meaning me. Tom told us something that nobody knew at that time. He told us, "Guys, I have a broken bone in my foot. Not a stress fracture, a broken bone." The NFL didn't know that, and this is protecting a player. You know the game, you know the sport.
We're now entrusted with very, very delicate confidential information, and he trusted us. Beyond that, we had a challenge. How do we get Tom Brady to continue playing for the New England Patriots for the remainder of the season in our shoes? We went through six rounds of engineering, six rounds of engineering, back and forth to Asia with one of the best shoe builders that we have in China, with our team here. Finally, for the final nine games of the season, Tom Brady wore our shoe. I don't need to remind you how he performed in those final nine games, nor do I need to remind you that he is the first and only unanimous choice for NFL MVP. About a month ago, Tom came back. Actually, he came here to Under Armour to visit us.
In a room slightly larger and with only two or three more people in it, we still sat knee to knee. That's the relationship we have with Tom. It's the relationship we have with all of our athletes. Tom said to us, "Hey, there's one thing I want you guys to know." He said, "I went to see my surgeon." Obviously, he has to have surgery. He's had his surgery, and they were remarking about how the actual break didn't get any worse. It actually slightly healed. We're not magic here, but it's an important point. He said to us something from his heart, and it was very, very sincere, and I want you to take it away today.
He said, "That was the best football shoe I have ever worn since I started playing in the game." We make the best shoes in the industry, and we are going to continue to do that. We are, as Ryan said, in the game. Thank you very much.
Hi, it's [12:18 P.M. ] We're going to take a break here for lunch and open the showrooms back up for everyone. A couple of housekeeping items. Lunch will be back here. We had breakfast this morning. Kevin likes to say here at Under Armour we have working lunches, and this is no different. Grab some food. At the same time, I really want you to focus on walking around the perimeter, see where the brand is going. Go into the showrooms, touch and feel the product. These guys are fighting for your attention. They got great stuff to show you. Talk to the PLMs, learn about our point of view, and we'll meet you back here at 1:30 P.M. sharp to kick off the second half of the day. Thanks and you.
Everybody doing? Welcome back from lunch. Everybody fed? Feel better? How was the crab cakes? Pretty good. Welcome to Baltimore. Enjoyable. I see it does get a little chilly in here too. We could hang meat in some of these showrooms. I'm glad everyone has a sweatshirt too for you. We have more sweatshirts in the back. There's no run or anything limited about sweatshirts. It was great to be able to go through that in the first half of the day and give you a sense of where we are from a product standpoint and what the engines we have from a product, most importantly, point of view. It's three of the most important words in business. Hopefully, we gave you a real deliberate sense of the way that we are building out our product teams from an apparel and, again, especially a footwear sense.
The lowest hanging fruit is why we went so far as to highlight women's like we did today. It's because we think it's a very important story. It's so attainable and so close for us and something that we want you to know that we are very well down the road to securing that as part of our future. That leads to the back half of the day and then how are we going to sell this? Henry went into a little bit of depth as the key and great partners we have from a retail standpoint. I've had some questions about some of our distribution from DICK'S and Hibbett and Finish Line and everyone else, and Sports Authority and Foot. You look at the growth and the way that we have come and as we've grown as a brand.
One of the best assets that we have right now, and I mentioned in my opening remarks, was about our direct-to-consumer channel. It's about 23% of what we do today. It's, frankly, a business that, as we look to 2013, will be roughly 30% of our overall business. There's not a lot of people that are posting that type of control when they think about where their growth will come from. We are very fortunate to have, again, as I mentioned, a pair of seasoned veterans that are going to get them up on the stage now. Wayne will present the international strategy. We'll have Brad wrap up with the numbers. We'll do some Q&A.
Without further ado, I'd like to bring up the person in charge of what, by the end of the year, will be nearly roughly 75 outlet stores that we'll have, including four full-play stores within that mix. To tell you a little more about our strategy around our retail business is my good friend, Mr. Dan Sawall. Danny?
Good afternoon, everybody. My team earlier today asked me if I was nervous about this. I said, are you kidding? I got a microphone, a runway, an opportunity to talk about retail. Life couldn't be better. This is it. I'm thrilled to be here this afternoon. Retail has been a big passion in my life and over a 30-year retail experience. Direct to consumer at Under Armour is especially significant. I've been here 16 months. Prior to coming here, I lived and worked in Portland, Oregon, where I heard people talking every day about the threat in Baltimore. Now I'm in Baltimore. I understand what they were talking about and why. I'm particularly proud that my team is now part of that threat. Let's talk about direct to consumer and the role that we play in this company.
Wayne said earlier, if they like money, they're going to like your presentation. We're not just about making money. We're instrumental in building and driving awareness and growth around those key business initiatives that you heard earlier, women's footwear, and all the special launches. Now, Scott Plank, our leader in direct to consumer, John Rogers, my partner in e-commerce, my team and I totally understand how imperative team alignment is. We take responsibly the goal of escalating that talent base. Most importantly, we truly appreciate that success can only come from producing consumer-first product assortments and marketing techniques while working with our partners like Henry Stafford, Gene McCarthy, and Edward Giard in accessories. Let's talk about direct to consumer. 6% in 2005, as Kevin just said, 23% in 2010, and a potential for 30% within the next couple of years.
As a whole, you'll find out that we're nothing but growth. John Rogers and I have been working together to build an integrated view of the customer. We know that our consumer is our biggest asset. We're going to deliver a holistic and targeted consumer experience across both channels. We're going to do this to guarantee that our consumers are getting the right product and the right fit in the right technology to help them soar as athletes. We'll do this by offering best-of-class service, unique brand interactions. We're going to heighten the UA experience to exceed their expectations. Direct to consumer benefits Under Armour in many ways, and specifically by controlling presentation.
If you take the information you got from Henry earlier about what's happening in DICK'S and Sports Authority, and then you include John and my direct-to-consumer penetration, Under Armour is able to control presentation in over 50% of their distribution. This is significant. Direct-to-consumer also helps Under Armour by meeting the customer and responding to where they are shopping, specifically in outlets and online. We're able to do that in a model that is more profitable than developing another distribution process. Ultimately, direct-to-consumer benefits Under Armour as a whole by increasing overall brand awareness. You'll see the number of guests we bring into our forces of business authenticates the brand. It offers a medium to educate and engage consumers. It provides the lab for our product partners. For example, we work with Gene and Henry on launches within our levels of distribution.
Let's talk about where [USL] has been. Scott Plank and his skeleton team opened our first store in 2004. Today, we have opened 72 factory houses, including stores 71 and 72 as of Tuesday of this week, including one store this Tuesday in Cabazon, California, in one of the biggest outlet centers in the United States. To date, in 2011, we have opened 18 stores with eight more stores to go. Significant to that number is that the majority of this year's stores are already open before the halfway point in the year. Total 80 factory house stores by the end of the year. We also have four mall-based specialty retail stores, which are in significant markets like Baltimore, Washington, D.C., Boston, and Chicago. Here's the big number. Approximately 21.5 million athletes will pass through our physical doors.
That's up 53% from last year, inclusive of this year's new doors, full doors from last year, and our existing stores. In support of John's business, in the last two years at point of sale, we have collected 1.3 million email addresses. In retail alone, we have about 2,200 Under Armour athletes. That's over 50% of the entire Under Armour workforce. Every time we open a new store, we add 30 - 45 brand ambassadors to the group. Every time we hire a new store manager in existing stores or new stores, I interview that candidate. I trust that my team is bringing the best to the phone or to the office for me to meet. I want them to know how important that role is to me and to Under Armour.
Not only is this significant to building our workforce, but it also provides an excellent pool of talent for placement within retail and elsewhere within the corporation. Let's talk about retail in total and how I formulated my platform for success. I looked at four key categories: the team, existing stores, the emerging and changing retail landscape, and brand initiatives. As I said, I came here in February 2010. Let's talk about the team first. The team is the most pivotal component of the platform. Right people will do wonders. I got here and found the team to be operationally really strong, but also recognized that we had opportunities in other parts of the business. In the last six months, we have intensified our product and merchandising teams, our allocation, our planning teams, our visual presentation, marketing, and IT.
While doing so, we've also created a leadership team, 10 people strong, with areas of expertise over this entire organization. These 10 people have over 150 years of retail experience from brand retailers out there today. The team now is moving forward with great aggression. Existing stores, it was my job to come on board and find out what that secret sauce was in a successful retail group and replicate that across the country. In 18 months, we have opened new markets in the U.S., our first store on the West Coast, ironically on the fringe of Portland, and specifically four stores in California, in areas where Under Armour had limited distribution or recognizably the best outlet centers in the country. We've also increased the size of our footprint.
This was important because it helped us to build equity with our consumer and support behind the initiative that we are a footwear company. We are filling it in outlet malls that typically are not successful for other brands. This is brilliant. We came in at a time that there was an inviting retail landscape, in particular, the evolution of outlet malls and the consumer's reaction to them. Outlet centers were becoming a valid representation of the brand. We were coming in right at the pivotal moment in which we could initiate our retail footprint in alignment with this. Significantly, this was not the case for our competitors, who were already saturated into this market and now had the challenge of changing the customer's perceptions of what that box would look like. There is nothing better than to be a retailer and come into an organization full of brand initiatives.
The opportunity to work with Henry on intensifying women's, launching new products like Charged Cotton, connecting the consumer with new product lines around footwear, and then creating a brand-wide assortment in accessories. At the same time, within our own boxes, paying attention to the world and creating LEED-certifiable or LEED-directed boxes. Let's share a little bit of how we evolved. Scott and a skeleton team, as I said, opened the first two doors in October 2004 here in Curtis Bay and Hagerstown in Maryland with the sole purpose to liquidate excess. We continued to open a few stores, again, around the basis of liquidating excess. Eventually, as he
The outlet industry began to see a shift in perception. Economic situations had changed, so the outlets became more desirable. Neighborhood changes occurred. At one time, outlet centers were 30 mi- 50 mi from the nearest metropolis. Now communities had grown out to them, or new outlet centers were being built in the middle of them. While consumers accepted this as a valid brand representation, at the same time, they increased their expectations. They came to outlet centers expecting to get the same brand experience they did anywhere else. This was a responsibility that my team had to take very seriously. Under Armour saw this opportunity. They put in place a successful reroute. In just a few years, we have doubled our door count with compelling and in-stock assortment. Inclusive of that is made- for.
Made- for product just for the outlet centers, which tends to sound always like an interesting subject to most people. The question commonly asked is, what percentage is made- for? That's not how we plan and drive our business. Our made-for assortments are contrived on a business model that identifies basic product by gender and by end use, so that ultimately, when a consumer comes into a factory house store, they will be satisfied always within their basic product needs. This creates sustainability as a customer base. Industry estimates at one time were that the average customer came to an outlet store once every six months. Today, they're saying they come six times a year.
That customer needs to come in and feel confident that they will find the product assortments that they need and then exceed their expectation with all the additional products that we have in the store at that time. Our factory houses right now are considered best in class. If you haven't been to one of our stores in particular from the last two years, please do. We are very, very proud of what these stores look like. My team has focused on improving the in-store shopping experience for our consumer. Specifically, we have concentrated on three things. Number one, improve the messaging and signage. This is important because it provides customer service 100% of the time. It's a clear communication of product benefits. That is specifically important to Under Armour because every piece of Under Armour product has a story filled with benefit.
We are using new marketing techniques to get this message to our consumer through direct marketing and different social media practices. We put emphasis on zoning and floor layout. This was important because it enhanced the customer experience by making the store easier to navigate. It allowed us the opportunity for in-store storytelling through the creation of engaging and compelling product presentations. Most importantly, it optimizes floor space, which optimizes revenue. Business-driven assortments, point number three. Product assortments now are developed by product experts, and they're driven through insights, analysis, and trends. It allows us the emphasis to become more smart about our own business. Right now, we're looking at things of identifying what our top-to-bottom ratio should be, specifically around market trends and climate needs. These are the pictures behind you just saw. This is what a store looks like.
The brilliant thing about it is that you don't recognize the box; you see the product. As we go forward with outlook, we're very confident about opening 110 - 120 factory house stores. We are a coveted brand any time a landlord opens a new center. The opportunities are available in markets across the country, specifically, we will impact UA 's brand presence, as you'll see here in the Midwest, the Southeast, and the West Coast. We also see up to a 10-store factory house opportunity in Canada, recently authenticized by the fact that many of our U.S. landlords are now partnering with real estate people in Canada. As we tour stores from Seattle down to Florida, we are consistently hearing about the Canadian consumer. Additionally, we've increased our store size to drive sales and to make the visibility that we are a footwear company.
In 2009, our stores averaged 4,400 sq ft . In 2011, at the end, they will average 5,100 sq ft or up 17%. Our targeted box and moving forward is 6,500 sq ft , allowing us to push corporate initiatives. Here's the significant thing. Even with increased store size growth, our annual sales per square foot continues to increase. More importantly, we are significantly above mall averages. With that said, in my retail experience and now my understanding of Under Armour, I am confident that this is a brand strong enough for many concepts. This is a challenge that my team is working with every day. Right now, we have successfully landed upon one concept that I have tested successfully in a previous life, and that is being done by other brands throughout the industry. We have hired an outside firm to come on and support us with information.
We have recognized that there is a value customer currently not being serviced by outlet centers because there are none in their market. We are calling this a hybrid model. This will look very familiar to a factory house base and will have much of the made-for and excess product assortments, but will also allow us the opportunity to present new brand initiatives as we move forward. We will be opening our first hybrid store in October of this year. We have UA specialty, our four stores. This is not the specialty model that we plan to continue with. We are working on what that will look like moving forward.
We have done a lot to these four stores. We have done some basic retail improvements around messaging, signage, layout, product initiatives. We are using these four stores as a test lab for product and for in-store experiences. We have got strategic learnings from these four stores. We are working closely with the UA brand people to make sure that this is the ultimate expression of the brand. My team takes very strongly the obligation of creating new concepts moving forward. It is something that we are working on every single day.
Your expectation of me should be that I will continue to drive the retail vision, that I will give clarity to my team and to the organization about what that is, and that you have the commitment of every ounce of energy I have to get out there and inspire this organization in the field to make all of those successful. Love to be in here today. Now, I would like to introduce to you my e-commerce partner, John Rogers.
Thanks, Dan. Thanks for collecting those 1.3 million emails. Keep them coming, and we'll keep mailing them. John Rogers, GM of E-commerce. Kevin introduced me early, talked about 10 years I was at Orvis. Usually, when people find out about the conversation, it goes something like this, you know. Orvis, yeah, fly fishing? Or yeah, I think we have one of your dog beds. Or, oh yeah, my father-in-law has those obnoxious pink Bermuda shorts with little martini glasses on them. You know. Very shortly after that, sometimes in the same breath, they go, do you really fly fish? The answer to that is, yes, I do fly fish. I actually come from three generations of fly fishermen. One of the things I learned at a very young age in that sport, to be successful, you need to fish with a fish arm.
It's one of those guiding principles that I actually use beyond just fly fishing. I use it in some career decisions, too. It's worked out pretty well. Fourteen years ago, I made the decision to leave brand management at Hasbro to join the e-commerce space. About a year ago, I chose to leave the world premier fly fishing company to join a much, much smaller division here at Under Armour. It's been working out pretty well, too. Enough about me. Let's get into the business. I'd like to show you what's going on with e-commerce. First of all, Dan shared a very similar slide with you earlier. I won't spend a lot of time here. You see a really nice ramp on the direct-to-consumer business. 6% of the pie in 2005, almost 1/4 of the pie in 2010.
You heard earlier, we're going to be 1/3 of the pie with [Heat Black]. Direct-to-consumer business is growing at a nice ramp. I also can assure you, while we're not allowed to break out the details, Brad won't let me, e-commerce is a big part of that growth story, both online and with some very healthy contribution margin. The other thing about the web, I believe, it's probably the best platform we have to tell a brand story and also expose consumers to the breadth and the depth of our line. A lot of the stuff you were seeing from Gene and Henry this morning, we can tell that story very, very well on the website. Growth factors, growth drivers, there's really three biggies for us that's really making us have success and really driving the momentum that we've enjoyed over this last year. The first one is brand strength.
Brand is just white hot right now. That really helped our business. Direct marketing fundamentals, we've put a lot of rigor, a lot of discipline in place. Talk to you a little bit more about that. Third, innovation and removing barriers from purchase. We've been working very hard to make the website a lot more fun and a lot more shoppable for our customers. Keep those themes in mind: brand strength, direct marketing fundamentals, and innovation, just making the site fun. I'll start to talk a little bit more about those as we get a little bit further into the business. Brand strength, Kevin talked about the sports marketing wins we were having, we've been enjoying over the last year. You saw what Henry's been doing, what Gene's been doing with the product and the innovation stories. This drives a lot of interest, a lot of excitement in the brand.
We're on the receiving end of that. ua.com benefits from that tremendously with traffic. One way to look at that is just sort of looking at brand searches on Google. It's one of many. You can see in 2011 year to date, we're up 31% over the same period last year when people go into Google and search on the brand Under Armour. Just for comparison, some of those in our space are reporting single-digit, low single-digit jumps in their brand searches. The brand is driving a lot of heat. That heat's coming our way. It's good stuff. Another way to look at it, fun way to look at it, and this is just one of many examples, but you know we could say the same thing around Charged Cotton or UA Basketball. Or you could talk about Cam Newton's Heisman or Auburn's race to the national championship.
We've been seeing spikes and increased traffic around these events and around these product stories. One particular one to share is E39 because it was such an acute lift over a very short period of time. It's a fun one to look at. The graph you're seeing there is the blue line is 2010 traffic during that first part of the year. The yellow line is what we were projecting for growth and traffic into the site. That dotted red line you're seeing there is the spike we saw right around E39 in Combine when that was introduced. That's just halo effect for us. That's not only is it traffic, but incremental sales. Plus, we were catching people as they were coming into the site to learn more about E39. We were collecting their email address.
It actually poured customers into our database, saying that they wanted to hear more about the product. By all means, make sure that they know about it when we're ready to launch it live and actually sell it. It's not only we're getting traffic, we're also getting sales because they're buying other things. Plus, we're building on our database. This is really cool stuff. The most important way that we look at how the brand is impacting our business in a positive way is around this thing we call direct load traffic. Direct load is when someone goes to a browser and types in the URL www.underarmour.com or ua.com. We didn't do any marketing touch. We didn't do any marketing spend to drive that awareness. They're just coming in there on their own. We credit the brand and all of the great stories that we're telling with this incremental traffic.
Direct load has got quite a story to tell over the last three years. If you see that, we're at 2.6 million direct load visitors in 2009, almost doubled in 2010, and then we're up another 55% on top of that spike in 2011. That's good stuff. That's big sales and that's even bigger contribution margin. The cool thing about this is it's not only traffic, but we're actually not seeing any dilution in the quality of these customers. In my space in direct marketing, what happens is when you add volume, especially when you see exponential growth like that, the quality of the traffic falls off. What I mean by that, it's just harder to turn those visitors into buyers. We're not seeing that.
The traffic we're seeing in 2011 is actually converting into dollars or into customers at the same rate it was in the first half of 2010. Again, it's juicy stuff. The second theme was around direct marketing fundamentals. I put up a number of, you know, I put this word cloud up there talking about personalization, about lifetime value, and measuring retention rates. I wanted to get, I was thinking about going through all that. I think the net of it is marketing is bragging a lot. We've been bragging a lot about what the brand has been doing for us. We're also helping ourselves. We're making sure we're getting even better return on our investment. The online marketing traffic is ramping up faster than the direct load I just shared with you.
What the cool thing is about the online marketing traffic is we're actually converting 50 basis points higher than we were on that traffic over the last year at this time. We had a 50 basis points jump in conversion. The business is responding really, really well to the investments we put in place. Just keep in mind, all this momentum and all these gains I'm talking about are on the backs of a website that was built four years ago. Four years ago is an eternity in the e-commerce world. This fall, we can do something about that. We're bringing out an entirely new website, one that we're very excited about. We think it's going to raise the bar on online shopping, not just Under Armour online shopping, but online shopping as an industry. I really think we're going to be unrivaled here. I've got a few slides.
It's not going to do it justice. We're in development. We've been working hard for a while. These are static slides, but it'll give you a sense for some of the themes and where we're going with the new website. This is the men's gender page. This is the men's category page. If you were to come into the website, let's say you came to the home page and you clicked on men's and you're shopping for men's products, this is the page you would land on. This will rotate through, and you can see some animation here, seeing how the site aesthetically has changed and some of the selling power and the storytelling power that this site's going to have. While you're looking through that, let me just tell you about some underlying strategies and things we're looking to accomplish for the entire site.
First of all, we want this website to be much, much more relevant to a much wider array of our consumers that are coming into our site. Whether you're a football player or you're a yogi, if you come to the site, you're going to feel comfortable and you're going to feel welcome. Secondly, the site is going to be smart. An example of that is the site's going to know where in the country you're coming from. We're also going to know the weather forecast in that area. We'll take those data points and be able to serve up products and promotions and really talk to you based on where you're coming from and what the weather's like in that region. It'll be far more compelling, far more relevant for the folks that are coming in. Third, we're going to be device agnostic.
Whether you're visiting us from a desktop, you're on your smartphone, or you're coming to us on a tablet, the shopping experience is going to be excellent. That's the men's category page. It gives you a sense of it. This is just a tabled setting. This is the current product page on our website. If you go there right now, that's what you'd see for a product page. Here's where we're going. You click that to the next one. I hope you see right off the bat there that we're working very hard to get a lot closer to get the customer a lot closer to the product. We're also going to exploit user-generated content like we haven't before, really bring those reviews and those insights from consumers forward on the site. We're also going to leverage social media and really tap into Facebook's open graph.
What you'll see here in this demonstration is that the photography is far more aspirational to today's athletes. You notice it's head to toe. We're shooting head to toe where we can feature outfits. We can feature, if someone's looking at a top, like on this product page, we're also going to show them the hookups for the pants. We're also going to take that apparel and show them the accessory hookups. Most importantly, we're going to wrap it all up with showing the footwear that goes along with that item. Anywhere on the site where you encounter a product, regardless if you're coming in looking for a top, you're coming in looking for shorts, we're going to sell you the whole outfit. You're going to be able to shop outfits from any product page anywhere where we're featuring product. We're excited about that. That's powerful stuff.
We're excited about the stories we're going to be able to tell with this new site. You saw some samplings of it there. I'm really excited about the incremental gains we're going to get out of it from a sales standpoint. This site is going to be a far more powerful selling tool for us. Last but not least, we built out the team to ensure success continues. I got here last May. Since my arrival, we've doubled the size of the team. We've actually built out an entire web merchandising department where there was none before, just so we can keep up and get aligned with Henry, Gene, and Edward's stuff and sort of celebrate the product and the innovation we're bringing to the market. We're matching up very well with those merchandising teams now to tell that story. We also added a layer of senior leaders.
You see these folks up here, some of the best direct marketing companies in the business, LL Bean, REI, Crate & Barrel, Crutchfield. We brought some real pros in to the team. We've also done a nice job of recruiting some real good talent internally. We have a guy from operations that's been here since the beginning. One of our lead brand guys has joined us. He's been here for 10 years. We've got a really great leadership team there. If you were to take the number of years they've been in the e-commerce space, throw me in the mix as well, the average number of years is 11 years dedicated in e-commerce. That's a pretty tenured team, given how long has e-commerce been around? 14 years, arguably 13, 14 years. You've got some folks that were there, if not in the beginning, very close to it.
We've got a real good team. In closing, the business is in a really good place. We're doing very well this year. We also have a very clear vision on where we want to take it in the future to get it to the next level. We've got the horses in place to get us there. Thanks for your time. Wayne Marino is going to take you through international. Thanks.
Thank you, John. If you don't mind, can you plant some flags internationally with the website? I could use it right now. Good afternoon. My name is Wayne Marino. I'm Chief Operating Officer. I've had many functions and roles throughout my career at Under Armour. One of the roles I do right now is to support our international team. What I'd like to do today is share with you Under Armour's point of view on international. I think the first thing I'd like to share with you is when I was on the IPO in 2005, we said something very simple. We said our international business would be as large as our domestic business one day. We remain committed to that. In the last five years, there's been some lessons and learnings.
Probably the first learning, which is the most obvious, is that any market that we enter outside of the U.S., we will not have first mover advantage. We know that. We recognize that. The second thing we've learned is competition, once we enter a market, will tend to overspend on performance categories. We think that's a positive. Probably the biggest learning that we've done, and this has been through insights, not just observations, but insights, consumer insights, is regardless of geography, consumers who consider themselves serious athletes share a certain mindset. They like to compete. They are committed to training. They're always looking for a way to get better. Finally, they are willing to invest disproportionately in products that they believe give them an edge. This common thread among consumers creates the opportunity for us to tell a performance story. Throughout the day, you've heard a theme: innovation, innovation, innovation.
With that innovation, we'll be able to tell that story globally. That'll introduce for us our products outside the U.S. In the last five years, we have not been silent. When we sold our first shirt in the U.K. until opening our first store in Shanghai this April, Under Armour products are now sold in over 50 countries. We have expanded our global footprint. There are several models that we use. They're very common models. They're a direct, a license, and a distributor model. We use the direct model when we feel that there is a large scalable opportunity within several years. We use that model and sell direct in the U.K., Ireland, Germany, France, and of course, China. We have a licensee model in Japan. Most recently, we've expanded the territory of Japan's licensee to Korea. We have distributor models in all other territories.
Regardless of model, the foundations are being built throughout the globe for us to tell that performance story. Japan, you probably hear us talk about Japan often. It's one of our most successful international markets. In 1999, a local Japanese entrepreneur, Mr. Shuichi Yasuda, Shu for short, played American football in Japan. He wanted to take the Under Armour product and introduce it to his consumer. When we were entering China, I went to him and asked him what was his philosophy as he built this market, as you can see, a very successful market. Here's what he said. He said, in 1998, I met Kevin. After speaking to Kevin, he came away believing that Under Armour was very special and would offer products for his market. In 1999, he started his business. He began selling to athletes, one athlete at a time.
In 2000, it's still early on, Japanese baseball players suddenly became aware of this compression shirt when they saw the U.S. team at the Sydney Olympics. In his words, in the year 2000, it was still unfavorable for him as a business person. In 2001, again, the U.S. baseball players played a big part in driving that grassroots demand in Japan. His business was still in the red. He spent almost nothing in marketing in 2001. In 2002, finally, he opened up a wholesale account. He began to manufacture locally. He spent 10% of his revenues in 2002 on marketing. I think the rest is silly. You could see what happened. The point I want to make in that is the philosophy in Japan was go slow, win the consumer, create authenticity. Once you have that, invest to go fast.
What I'd like to show you now is a brief video. You may not recognize the athletes. What they have done, our partners in Japan, is they have taken our messaging and they have converted it to their consumer. You'll see authenticity in this video, much like you saw today in ours. Our brand translates outside the U.S. very well. In Europe, today, we are featured in over 500 Greengrass locations, including 82 of U.K. and Ireland's top 100 rated golf courses. Our standing in U.K. golf has us as a clear number two in golf apparel revenue, with the opportunity to be number one. What's worth noting about Europe is that the volume that Japan reached in nine years, Europe has reached within six. Our confidence in our position in Europe led us to make an investment to reach that U.K. consumer as well as our global consumer.
That is our investment in Tottenham. Tottenham, as Kevin mentioned earlier, is our commitment to international. It is a five-year deal that begins in 2012. Of the 20 million Tottenham fans, a majority of them are outside the U.K.. One of our first employees in Europe, his name is Tony O'Neill. We had him narrate a video about Tottenham and global football. What I think is important about this message, it's a message to us in the United States through his lens.
Attention, people of America. My name is Tony O'Neill. I have got the British accent. Contrary to what you might believe, soccer, or football, as everyone else on Earth calls it, is not just a game for a seven-year-old girl, an aging underwear model. It is, in fact, the single most popular sport on the planet. With an audience of 3.5 billion, the English Premier League is the world's most watched sports league. North London's Tottenham , Under Armour's newest team, has 20 million fans worldwide. Their website gets 1.2 million unique visitors a month. Why is this good news for us, you ask? Simple. While Americans dress like this, British people dress like this. In the last four years, first merchandise has upshifted since. It's rising fast.
Tottenham has been called the team of firsts, the first British team to win in Europe, the first to win the League Cup double in the modern era. In 2012, they'll be the first to grace the beautiful game, hit it out in Under Armour. Protect this house.
Cheers.
Go slow to grow fast. We've discussed Japan and Europe, both markets that we've been in for some time. There are certainly many countries that either we have not entered yet or have just entered. Similar to Japan, our approach in China and future key emerging markets will be to go slow and grow fast. What does that mean? Go slow means that we have to invest the time to connect with that consumer. I go back to the research that we've done. Consumers outside the U.S. globally will disproportionately spend on performance products if they believe it makes them better. That is not just U.S. That is a global finding. Our job is simple: target that consumer with the innovation and the story that you've heard today. In China, we took our first step this April by opening our first shop-in-shop in Shanghai.
A call out to the team who is in here today, many trips over, hard work, tough negotiation, but they opened it. We have one simple goal in mind for the shop. One, test and refine the Chinese consumer's acceptance of the Under Armour brand. Test and refine. In the meantime, we'll drive awareness and interest in the brand through the tone that we set. We will be the athlete's brand for China's next generation. That is our positioning. To help drive our storytelling, we've built a partnership with DMG, a full service agency. It begins with building our brand relationship with the consumer. Once we have that, we will invest. We will grow rapidly. We believe in this philosophy: go slow to grow fast. This will allow us to maximize our investments as we grow globally.
As I wrap up today, I'd like to leave you with a few key takeaways. Go slow, grow fast. You've heard me say that many times. Consumers who believe they are serious athletes will overspend on products that they believe give them an edge, help them perform better. Our foundations are being built today in Europe, the Americas, and Asia. The recent investments that we've made in Tottenham and our minority interest in Japan reflect our confidence in those markets. Finally, the most obvious one is we remain committed to building this international business to be as large as our domestic business one day. It's also worth noting that our international business will continue to become a greater part of our overall mix. However, it will remain a small part of the mix in the near term, mainly due to the pace of our domestic growth. Thank you.
Now, to round out the day, and I know you're waiting for this, I'm going to ask Brad Dickerson, our Chief Financial Officer, to come up here and take us through the numbers.
Good afternoon. We're almost there at the end here. An opportunity today to meet the great leadership team here at Under Armour. They've taken you through a lot of our growth drivers. I want to put it all together now and tell you basically how that relates to a few key specific financial items. First, let's start where we usually do with our scoreboard of where we've been. First, net revenue. From 2005 through the midpoint of our current guidance for 2011, we've achieved a 30% compound annual growth rate on our top line. As Kevin said before, it took us 15 years to reach our first $1 billion in annual net revenues. It will take us just three years to reach the next billion.
On the operating income side, we've achieved a 26% CAGR from 2005 to the midpoint of our 2011 guidance, even with taking into account the challenging economic environment in late 2008 and 2009. We achieved operating income in 2010 at $112 million. Our operating margin of 10.6% remains below some of the earlier operating margins we received shortly after going public. This margin is partially reflective of our need to continue to invest in the businesses to drive near and long-term growth in both top and bottom line dollars. Inventory churns have been inconsistent. We are working to become a consistent three-churn company in the near term. I will have much more on this in a few minutes. Our number one financial metric we look at is pre-tax return on invested capital.
Although heading in the right direction, it was impacted in 2008 and 2009 from some of the economic pressures in the environment at that time, along with our desire, obviously, to continue to invest in our business to drive longer-term growth. We expect continued growth in operating income dollars. Stabilizing inventory churns will continue to drive this metric higher in the future. Post-tax ROIC follows the path of pre-tax ROIC and should benefit from some of our international tax structuring projects we've been putting in place over the last few years. Now, a quick summary of our first quarter results and guidance for 2011. In the first quarter, we grew net revenues 36% to $313 million, driven by apparel growth of 34% and direct-to-consumer growth of 53%.
Operating income increased 56% to $14 million as we were able to offset 50 basis points of gross margin contraction with nearly 140 basis points of leverage, led by our corporate services SG&A line item. For 2011, we currently expect net revenues to increase 29% - 31% in a range of $1.37 billion- $1.39 billion. Top line results include a mid-single-digit growth contribution from both the addition of Charged Cotton and the transition of hats and bags in-house, as well as a return to our growth in our footwear business. Operating income is expected to grow faster than sales, up 33% - 36%, to $149 million- $153 million, implying operating margin expansion of 30 basis points- 40 basis points to 10.9% - 11%. We will cover additional margin details in a little bit.
Now, let's go back and summarize some of the growth drivers we talked about on the top line over the course of the day. Specifically, let's look at where we're going in the next three years. As Kevin mentioned to start the day, we plan to double our revenues over the next three years, implying a compound annual growth rate from 2010 through 2013 of approximately 26%. As we've discussed today, this growth is largely predicated on momentum in apparel and direct-to-consumer, stories that are largely unchanged recently for our brand. In apparel, we continue to see potential for women to be as big as men longer term. The total apparel mix has already shifted about 700 basis points toward our female consumer since 2005. That being said, as Henry Stafford and his team discussed earlier, we remain confident in our ability to meaningfully grow all of our segments.
Innovation will lead the way for our men's, women's, and youth business as we continue to better fill out existing sporting goods pads and incremental floor space with existing accounts and begin to look at future distribution solutions, whether it's through new accounts like the mall-based retailers or through our own direct-to-consumer distribution. Earlier, Dan Sawall and John Rogers discussed our growth over the next years in direct-to-consumer, which includes our factory house stores, our specialty stores, and our web business. We will continue to fill out our factory house distribution over the next couple of years from roughly 80 locations at the end of 2011 toward our vision of 110 -1 20 U.S. outlet locations. At the same time, we'll explore and test new concepts like the hybrid model in an effort to better reach our consumer.
We see tremendous opportunity in e-commerce and expect this fall's new platform will be an important step in delivering more relevancy and intelligence to our site, as John Rogers discussed earlier. Pulling this all together, we see direct-to-consumer increasing to approximately 30% by 2013, as it's expected to continue to grow faster than our overall business. Now, below the top line, let's spend a few minutes summarizing some of the most significant gross margin factors in 2011, 2012, and 2013. As we had previously indicated, 2011 results are being adversely impacted by three near-term factors. Lower footwear margins are driven by both raw material inflation and our high exposure to coastal China, where labor inflation has been a big story. Our introduction to Charged Cotton and exposure to oil-based materials creates additional pressures as the year progresses.
Finally, as we've talked about before, our hats and bags transition, while generating incremental operating income dollars, impacts gross margin comparisons in the first year as we transition from a licensing model to a wholesale retail model. We continue to expect these three factors will be partially offset by our direct-to-consumer growth and result in about a 100 basis point total decline in 2011 gross margins. Starting in spring 2012, we are taking a much broader view at retail price increases to help combat escalating costing pressures. We are optimistic that some of the apparel cost pressures will begin to abate by fall/winter 2012 season, particularly in cotton, which is somewhat eased from levels earlier this year. We believe core footwear margins will stabilize, though the mix impact of footwear will likely work a bit against us in 2012.
Again, we expect direct-to-consumer will serve as an important offset for us during 2012 as it's expected to grow faster than our overall business. We believe 2013 is a year for opportunity in gross margins, specifically due to anticipated easing of product costing pressures, continued expansion of our higher margin direct-to-consumer business, and supply chain initiatives we are putting in place. Let's take a closer look at some of these supply chain initiatives that will not only focus on margin improvement but also inventory management. All of these initiatives are based around process, systems, and people. On the planning side, we are looking to add leadership and other key positions to enhance the current team. Added focus at the beginning of the design process around SKU rationalization and adding more discipline around integrating our merchandise and sales planning function, while more closely aligning these plans with inventory and financial forecasts.
On the sourcing strategy side, the goal for our sourcing group in the near term is to significantly improve our fill rate. For the long term, certain areas have been identified to begin to implement process and structural improvement. It first starts with our organization. As many of you are aware, we have made several key adds at the senior level to our sourcing team, both of which are here today with us. Janet Fox has 28 years of retail and sourcing experience and is well recognized in the sourcing industry. Peter McGrath retired from JC Penney after a 38-year career with the company and has signed a one-year working agreement with us. Peter is also well recognized in the sourcing community. Between Janet and Peter, they collectively share 75 years of experience. Janet and Peter, can you stand up real quick? I know you stood up first.
Up and stand up again. People weren't looking. As SVP of Sourcing, Janet will be dealing with day-to-day challenges that face the sourcing organization. Peter's role is a strategic assessment of the organization. Their focus will be mostly around two key areas of fabric and supplier capacity. With approximately 50%- 60% of garment costs found in fabric, we have separated the current organization into fabric sourcing and innovation. Currently, we're looking to streamline and improve process, roles, and responsibility, as well as the timing and method on how we will manage the sourcing of fabric. Although our source base is adequate for today's business, we are looking for the right strategic partners that will take us well into our future plans of capacity needs.
On the inventory management side, the planning teams working with our sourcing and production teams will focus on shortening lead times in order for us to maintain optimum flexibility. Laser focus on how we manage our auto replenishment business, which makes up approximately 40% of our apparel business, will be paramount. The shortening of lead times here will be critical in managing our safety stock levels. More discipline around planning and sourcing will inherently help the management of excess inventory. Forecasts are never perfect. Where we do see issues, we will control liquidation through our factory house footprint, which will increase from the 72 doors today to more than 100 by 2013. As we move to SG&A, it is important to note that we will continue to make important investments, which will drive current and future growth for the brand.
We will continue to target marketing expenses at approximately 12% of net revenues. While holding the rate constant, we would expect incremental dollars, obviously, in future years. This is an area where we will continue to be opportunistic in our spend. Selling expenses relate to all of our costs around direct-to-consumer businesses. With DTC revenues continuing to outpace overall net revenues, we continue to expect de-leverage on this line as we sustain investments in the web and around new retail concepts. We will continue to invest in product innovation and supply chain to help support our long-term growth. Frankly, this line item, along with marketing, is the driver for growth. Everything starts with our product and story. This will include innovation, apparel, footwear, and international.
While certain quarters may show modest leverage, we would not expect this to be an area of any consistent leverage over the next few years as we look to drive growth. Our biggest leverage opportunity in SG&A remains in corporate services, particularly where we have already established some of the back-office functionality needed to support our growth. Although in total, a leverage item for us, some areas of corporate services, such as IT, and in certain years, facilities will remain investment priorities for us as we continue to support our growth trajectory. Putting it all together, we expect to make progress toward our long-term target of achieving operating margins of 13.5% - 15%. However, it must be acknowledged that we are more focused on driving operating income dollar growth and that benefit it has to our return on invested capital.
The anticipated operating margin improvement, we balance with the need to continue to invest to drive growth, along with operating in a challenging product cost environment in 2011 and 2012. Taking this into account, operating margin improvement pace should be somewhat similar to our progress from our current 2011 outlook as compared to 2010. Below the operating line, we see opportunities to reduce our effective tax rate from the 40% level expected in 2011. We continue to develop and implement our tax planning strategies by first taking advantage of our sourcing infrastructure that we have developed overseas to support our supply chain. Second, build the foundation to take advantage of growth in revenues and profits generated overseas at more favorable tax rates. We also plan to consistently pursue additional tax credits similar to the state tax credit received in 2010.
Now, on the balance sheet, our primary focus will be on stabilizing our inventory churn at a 3x forward churn rate, balanced with a customer fill rate desire of 90% - 95%. As you can see on this chart, the pendulum has swung too wide for our inventory churns over the last few years. More recently, in 2010, our churns topped out at nearly 3.6 x, while we noticed challenges to our service levels. In 2011, although our forward churn rate has declined from 2010 levels, it is still within reach of the 3x churn rate we are looking to achieve at this time. Much of the inventory growth rate we have discussed recently is simply based on comparisons against inventory levels last year that we feel was too low.
As we get back to the back half of the year this year, the comparison growth rate should be more favorable and more in line with net revenue growth rates. As we continue to enhance processes, improve utilization of systems put in place over the last few years, and supplement our current teams with expertise and leadership in this area, we are confident that after achieving our near-term goal I just mentioned, there is a longer-term opportunity to become much more effective in this area, which will have obvious benefits to longer-term cash flows and obviously gross margins. Our core capital expenditures are expected to remain at similar levels as percentage of net revenues over the next couple of years as we continue to support our retail expansion efforts and make continued infrastructure improvements across our business units.
2011 will show elevated capital expenditures beyond core CapEx as we look to close the purchase of the Tidep oint Complex. This purchase will be fully financed and will have minimal impact to both net income and cash flows in the current and future years. We maintain an untapped access to capital from our $300 million revolver, which we expanded from $200 million in March of this year. In summary, we believe we have a highly compelling growth story, specifically if we talk about the next three years with the same building blocks that drove our results in 2010. We plan to double our revenues in just three years to over $2.1 billion, driven by continued momentum in apparel and direct-to-consumer. At the same time, we expect our financial discipline will deliver an even faster EBIT growth despite near-term challenges with product cost inflation.
On the footwear side of our business, Gene talked you through the building of the team and the focused point of view that exists today. We are confident in the footwear business ability to grow the next few years, but are afforded the patience in the level of our expectation until 2013. International will remain a foundation-building mode for us. We are confident that the success we have seen in Japan and the U.K., along with the investments we are making like Tottenham, will translate into additional markets. The innovation we create on the field will remain paramount to telling international stories and driving us to a true multi-billion dollar performance brand. That concludes our prepared presentation for today. I'll now ask Kevin to come back up on stage with me. We'll be happy to take some of your questions. Thank you. Great.
Don't be afraid to clap. Come on.
All right, Brad, good job. Good job.
Now, if we don't like any of the questions, Steve here, who can lift that podium like it's two pounds, will do the same thing to any of the other questions. With that, very exciting for us to have the opportunity to tell you a little bit of our story and, again, to show and, of course, let you feel some of our brand. As you can see, we're very passionate about what we've built to date. As you can see, we also have a pretty good plan as to how we're going to take that into the future going forward. We feel really great. Without further, we have, as well, in addition to Brad and myself, all the presenters are available and spread throughout the room. If there's any questions that you want directed directly at them, we would just toss them to us.
We'll make sure we move the microphones around the room. With that, let's get going. First question.
Hi. Michele Benetti with UBS. I think there's been a lot of conversation today about maybe getting some help with the components of the revenue growth through the $2.1 billion in 2013. You walked us through the DTC outlook. In particular, the footwear's contribution to that, maybe some idea of where you expect footwear to be when you get to that.
Michael, I think an important part of the message of today really was what are the main growth drivers through 2013. I think the story we really want to get across today is apparel and DTC. Obviously, apparel is going to be the growth driver within DTC itself, too. It is a real story here through 2013. That's where our focus is in the near term. That's where the focus has been really in our investments over the last few years, to drive apparel and DTC growth.
I think as Kevin and a lot of your team mentioned, that opportunity we see in the near term and that growth we see in the near term enables us to be a little bit more patient on the footwear side and not necessarily put out an expectation on the footwear side in the next few years as much as Gene's team came out today, which is build the team, get a strong point of view, and really position footwear to be one of our growth drivers for us beyond 2013. We are not really here today to talk about necessarily how international and footwear plays a part in that growth. They are more foundation building in the next few years.
As you were walking us through the components of the gross margin, it looks like footwear doesn't really start to contribute as a positive gross margin driver, even though we'll be placing a new product. It sounds like in early 2012, 2013 is when the expectation is for profitability improvement. Is there a chance for upside for that in 2012? How are you thinking about that?
I think the footwear mix will always kind of work against us a little bit because inherently footwear's gross margins are lower than apparel's gross margins. I think on the footwear business long term, the opportunity is with the higher price points, higher ASPs in footwear, you do have this chance to leverage some of your SG&A a little bit better longer term when you're in all the categories. That business should, in the long term, look somewhat similar to our apparel business, but with a lower gross margin. I think when you look at the near term now, 2012, 2013, we still see some pressure, especially early in the year in 2012, on apparel and footwear. We do think we're still trying to get some visibility around fall, winter, 2012.
As many of you know, a lot of the commodity markets have moved favorably in the last few weeks, months, and so forth in that respect. We're still trying to get some visibility around how that impacts not just our footwear business, but our apparel business in the back half of 2012. We do think we have the ability to improve footwear margins to the back half of 2012 into 2013. Obviously, those margins will still be below our apparel margin.
All right. One last question. What were the supply chain initiatives that you listed as a positive gross margin impact in 2013 on that slide?
Any visibility on those?
The only two visibilities we have there, one visibility would be, again, the trend we currently see in commodity price and the pressures around that. As I said, we see some of that starting to bake towards the back half of 2012. I think that will continue in 2013, especially as you're comparing spring/summer 2012 and spring/summer 2013. I think the leadership we talked about bringing in place is a big initiative. That was a big part of bringing 75 years of experience in. I think their early indication in talking with me is we think we have some opportunity in gross margin longer term.
Let's go on and move the mic over here. Yeah.
Thanks. This is Brian McGough at Hedge ye Risk Management. Just a couple of questions about the footwear business. I guess specifically, this whole outsource and offshore model has been in place for, I don't know, I think since the mid-1960s or so. Probably half this room wasn't even alive yet. It's still incredibly inefficient. I'm wondering, as you guys start from scratch, what you can kind of ditch from that whole legacy model as to how things have been done for the past however many years and just be more efficient, either you take your lead times down or you just take working capital out of the business where the people are still putting it in.
Sure. I'll let Gene and the team jump on that in a second. Let me begin by saying that our job is not necessarily the opportunity we have is to reinvent the model. You're right. We do have a blank canvas. In doing that, the first thing you want to do when you looked at Gene's plan as to how are we going to get healthy and how do we put ourselves in position to start looking forward, we need to put points on the board with footwear. We've been very focused on doing that with what we've demonstrated our ability to do included. As now we've entered these other categories, we're not continuing to launch additional new categories. We're going to become excellent in the categories that we are in.
I think we're looking at what some of the ways that you can think of a little bit faster and cut down on some of the lead time because it's extraordinary. The one thing we've asked you for is patience. Decisions that we made and you say you need new footwear, six months to identify talent, six months to recruit talent, six months for talent to get comfortable, and then an 18-month product calendar. Decisions that we're making take as long as three years for us. Things we've implemented even 18, 24, 36 months ago, you'll just start seeing. I think that was what we wanted to convey to you today is that we have been listening. This isn't we don't get it or we don't know how to make footwear.
What you're going to see is a new vision and I think a new reality of Under Armour as a very competitive player in footwear. Gene?
Right. It's a good question. You're right. It's an archaic model. However, if you look at footwear today, where it was back in the day when it was autoclave and then it went to cup sole stitching, there have been other companies out there who have pioneered different types of manufacturing on the strength of their brands. One of the conversations we had with you today was taking our apparel DNA, which isn't just materials, it's also in the construction of footwear. Because we have a low base right now, but we have a big brand, we have a lot of influence with our factory partners who are willing in the future to grow with us on these new manufacturing methods. We take it upon ourselves to revolutionize not just the revenue-driving part of the industry, but also the manufacturing side. It's daunting. It doesn't happen overnight.
Neither did autoclave go to cup sole overnight. We are looking at that as our long-term view.
We are a brand. The issue for us, you know, when we say it's margin, when we get the product right, the consumer has no reluctance to pay. We don't, while I feel we have a need and a requirement as our brand DNA is to reinvent categories, I'm not sure we need to reinvent the process. What you'll see us do is you'll see us get in market, and you'll see us do it efficiently, focusing on great product that's all the athletes need. I think there's enormous opportunities that exist probably within the supply chain. We're going to make sure we get to the first base, and then we're going to worry about the second base and third base and so on.
OK. Just one add-on there. This is way out there. I think right now about half your product, the cost of your product is yuan denominated, but I think about less than 5% of your revenue is yuan denominated. If we see the currency rise over time, which it probably will, there would be a natural margin hit. I think yours is far less than anybody else out there, maybe with one or two exceptions. Is that something, I guess, Brad, maybe how do you think about that, either from a hedging standpoint or from a shift in either the capital that you put into actually growing a revenue organization in China versus maybe shifting any kind of sourcing out of China? Yeah.
I think the one thing about our source base that's beneficial for us is it's pretty spread out and pretty diversified from a geographic perspective and from a currency perspective. Although we do have some of our business like footwear and accessories, which is a little bit more heavily into China, when you look at our biggest business, apparel, we don't manufacture that much in China. Less than 10% of our manufacturers are in China. I think from a currency perspective, we're a little more diversified than maybe a lot of other companies. That gives us a little bit more protection there. The whole hedging thing is one of those things that as we grow as a brand, we have to get more sophisticated in across the board, not just from a sourcing perspective. We are always looking at bringing people in to have some expertise around that.
Let's hear it from Janet as well, if that's OK. Just jump on the end of that, jump on the end of that, too.
Please forgive my voice. I've been yelling at the suppliers to get better costs. No, I've been, you know, it's been interesting. I've been here about 90 days now. People ask me, did you have any aha moments? The aha moments are the opportunity here. One of the things in regards to looking at the gross margin and where we think that we can leverage that is obviously leveraging a country of origin strategy. We are not in China in the apparel side at all, really. I mean, very small, maybe a little bit of the outerwear business. We want to leverage the partnerships that I've developed over a 25-year history and really leverage that plus the growth of Under Armour. In doing that, we're going to take Under Armour sourcing kind of in a different direction. It's going to go into the big leagues of sourcing.
Where we've been up to this point, it's gotten us to $1 billion. I'm blown by Kevin's $2 billion number. Right now, we're in the process of building the supply chain and bringing partners on board to have a supply chain that's going to support $5 billion. When you have a supply chain like that, your country of origin strategy is key. It's all about risk mitigation. Risk mitigation can be anything from political but also the currency. You have to watch that carefully.
Hi.
[Crosstalk].
[Bring a mic ]. Kate McShane from City Investment Research. My question was on the marketing expense as a percentage of sales and the fact that it's still staying at around the 12% level. I wondered if you could give a little bit more context with all these additional initiatives that are going to be growing the top line by 2x over the next few years, how you're comfortable with that still staying at the same percentage.
Yeah. I'll go ahead and throw a hand. Obviously, as I've said in my remarks, the idea here is our top line doubles. That 12% of that top line will also double, too. I think it gives us the ability to spend a lot more dollars. If you look back three or four years ago, what we were spending in marketing from a dollar perspective versus what we're spending today, it enables us to sign someone like a Tom Brady and so forth. I think going forward, that additional dollar puts us in a different league of what types of things we can look at from a marketing spend perspective.
We've had a lot of conversations just around the ability for us to leverage the business in growth because if we're delivering, like this year, looking at roughly 30% growth, we're obviously making 30% more money, too.
What is the emphasis that we should have on leveraging the business? The fact is, not unlike the way we view our supplier base, there is a tremendous amount of opportunity. We've gotten to this point that allows us to reset a little bit, to look and say, you know, we've said one of the sayings we use here is that we believe in revolution, not evolution. Every year we justify every dollar that we're spending. You try to look and begin with zero-based marketing, where we say, is this not just a deal that we had a couple of years ago and it's the right thing for us to sell, to have for our company as a, you know, maybe a $600 million or $700 million company that now is term, and we're looking at $1 billion, $1.3+ billion , from the size of revenue growth of the company now.
Can we afford to spend more, but not just adding on to that deal, but getting the right deal? Maybe getting in a bigger league, maybe finding a bigger athlete. I don't know if there's any perfect formula to the marketing, but we feel very comfortable that we'll be able to deliver that, and more importantly, with the help that we'll get from the margin side, with the help that we'll just see in general operating leverages, we become more efficient because we got big. We grew up and all of a sudden we crossed $1 billion. Now it's about us becoming comfortable with being here and finding those ways for us to operate. The short answer is I would love more than 12%. Brad won't let me have it. We will make it work. I think we can do it while meeting all of our goals as well.
That's Jim Lamar from Gilder Gagnon. I've got two boys, a 12-year-old and an 8-year-old who won't wear anything else on their bodies other than your brand. The reason why they wear your product is because of the brand. To be blunt, on their feet, they wear the competition, and they wear the competition not because of a swoosh, but because of the Kobe or a LeBron. They love their LeBron, they love their Kobe. Is there any thought in, as you build out the shoe business, to spend more dollars on endorsement to get those stars and sort of more star quality around the shoe brand?
When you think about the shoe business, it immediately goes to basketball and thinking about those athletes. That is a very important, important category for us. I'm going to let Ryan and Drew jump in on the end of this question too. I think one thing we found in the basketball business is that having a marquee athlete is very important. Where we've relied on the brand in a lot of different instances, we see that as we enter footwear, it's different than apparel. You know, we got into apparel and we made great stuff and athletes wore it and other athletes wanted to wear it too. Footwear has been a little bit different. This is part of that maturation as we're ending our sixth year in the business. We're learning lessons every day.
At the same time, we don't want to get caught up in trying to keep up with the Joneses. We don't believe that there's one model that's out there that's right. We went out on a little bit of a limb when we signed Brandon Jennings, and we took a chance, and more importantly, Brandon took a chance on us. Looking into our deal now, three years into it, I think we're both extremely happy, and more importantly, we're both very excited about what that's going to mean. Now, you can't have, I don't believe you can support a basketball business with just one athlete. We will continue to add and build and find the right athletes that need that. We don't think we, we don't have to pay a ransom for it. We think that we'll find the right athlete.
There's another draft that's coming up here in just a couple of weeks on the basketball side. More importantly, I think what you're seeing is that there's an acceptance by athletes for what Under Armour represents to them. On field, on court, there's a trust. Now what we need to do is continue to develop that. They don't mind when you look at boys and girls who won the New York City basketball tournament at Madison Square Garden and the championship at Madison Square Garden. Those kids loved and thrived wearing our apparel, wearing our footwear. The issue that we didn't have is they weren't walking home in the shoes yet. That's part of our challenge, and more importantly, that's part of our opportunity, right?
Yeah, we've had a three-pronged approach to sports marketing. Kevin alluded to high school, college, and then NBA. We're targeting all the top players in the draft. I think as we look out into the future, the thing that's a little bit different than when we started in the business is we're now getting the calls. The top players who are coming out of their shoe deals, whether they've had a shoe deal for two or three years, they're now calling us in anticipation of making a change. Whereas before it was just us knocking on the door. NBA athletes is important. It's important to selling shoes. It's part of our strategy, and we're looking at adding the best guys that can represent the brand.
[Dan].
Dave, I'm sorry.
Oh, thanks.
Dan.
Oh, thanks.
Kevin, it's [Dan Leroy] at [Braman James]. I had two questions on retail. The first, the commentary from Under Armour and your competitors on the ability to pass through price increases without pushback from the customers has been fairly positive. Unfortunately for most families, it's not just sporting goods where they're seeing inflation, it's gasoline, it's cost of education, it's cost of food. Yet not every household is getting a 5% increase in their household income. I was curious on the forecast you laid out for the next few years. Are you creating a possibility that at some point the consumer will have to say no and that your retail customers accordingly will have to pare back on their store growth rate, pare back on their inventory investments, and this could have some impact on your revenue opportunities?
First of all, the mission of Under Armour is I want us to be an affordable luxury brand. I want us to be an aspirational brand. We haven't met any reluctance from the consumer when we've pushed price. Now we've walked into traditional models where there's certain categories where buyers may have an expectation of what the limits to price are. I think what we've seen in selling another $25 t-shirt like Charged Cotton, in selling things like with Storm Cotton will be a $60 fleece, and I'm not sure that we'll be able to keep up with some of the capacity that will be there for us in the first year. I don't know if the rules have been written as to where the acceptance from the consumer will be in terms of where the Under Armour brand can go. Frankly, I don't feel like we've pushed that yet.
At the same time, I've watched a single mom with two kids shopping in a sporting goods store and thinking, what are we doing to make sure that we're not gouging that consumer, but we're giving them great quality? Frankly, our margin makeup is the same, or that we make on a % basis is the same on a $20 t-shirt as it is on a $200 jacket on a percentage basis. We do that because I think we want to build that trust with the consumer. With the growing expenses that we're all feeling from a manufacturing basis, I think that we have room from that consumer, and we haven't tried to push that yet, but you're going to see more of that coming from us, though.
Just to follow up on that, on the outlet stores, in my experience, your retail pricing's about 30% lower than your retail customers. I mean, they're just ideally positioned for what's happening with the customer and the economy nowadays. I also recognize that this direct-to-consumer channel could reach about $600 million in revenues for Under Armour within about three years. That $600 million in revenue is not taking place at DICK'S or Sports Authority or Hibbett. I was kind of curious with the tone of your conversations or the nature of your conversations with the CEOs of these retailers and if they're concerned that you're grabbing potentially too much, you know, part of their market share.
Like the day that we started, we said that there was no room in the pie for Under Armour, so we made our own pie. The worst thing that we could do was cannibalize our own distribution. Again, when we have these conversations, we're very deliberate as to being thoughtful ab out the location where we're putting these stores. The great examples I use is Sevierville, Tennessee, and we looked at a 90 mi radius where there's one or two stores within a 90 mi radius of our store in Sevierville, Tennessee. That'll be a $7+ million store for us too. Dan, I'm going to let you jump on this, but I think the philosophy that we've taken isn't one that is combative with our accounts. It's actually in tandem with our accounts. We still view outlet as its liquidation for us.
It's the ability to remove product, but it also is the ability for us to tell a great brand story. We haven't seen any direct influence where from one retailer to another, where we've opened a store and we've absolutely torpedoed sales. It's actually been complimentary in many instances. You hear those stories, and I think that's the theory that a lot of people give on one side. Frankly, we believe we're a pretty undistributed brand. We believe there's a lot of places that are seeking out our product, and the direct-to-consumer serves as that last line of defense for us where we're very fortunate to have it in place. Dan, I'll come back to you afterward.
Mitch Cummins, Robert Baird. I guess I got a few questions. Just maybe a follow-up on a DTC question. You guys talked about in your 2013 outlook, 30% of revenues. I think you'd said, you know, 80, 80, 80 factory out stores this year, 100 + by 2013. Can you talk a little bit on, I guess I'm not really clear on the hybrid model. You're opening one store this year. I think you'd identify 20 - 25 opportunities. Where would you see that go by 2013? Also on the full price side, I know you've been at four stores for a while. Kind of what do you see there? Lastly, on the direct, is there any comp assumption that's kind of into that guidance of 20 or 30% sales by 2013?
Let me start. Daniel, jump in, and then Brad will give you the third. The way that we're thinking about our ability to grow is that I think there's extraordinary opportunity for us. What we've found is when we go into some of these markets and take it, when you look at the map and you see Branson, Missouri, I believe there's one or maybe now we have two outlets in the whole state of Missouri. Frankly, there's a lot of places like Branson. There's a lot of places like Sevierville, Tennessee, where they don't have access to our distribution or our distribution in a meaningful way. We think that there's an opportunity for some more full-price product there. Again, we're very thoughtful and we're very sensitive about what this means and how this looks and not trying to discount the brand.
We are a full-price brand, and the only place you can buy discounted Under Armour is frankly in one of our stores. The hybrid model is something that we do want to test in markets where we currently have no brand representation whatsoever. When you look from a penetration standpoint, we are, depending on who you would model us against, we are a fraction of it in the number of doors, and excluding the mid-tier, excluding department stores, excluding many of the places that we are not sold today. The list is much longer where we are not sold versus where we are. Dan, maybe just a little more color on that hybrid model?
Sure. I think, Kevin, I appreciate what your comment is because the significance of the hybrid model is getting into markets that are currently underpenetrated in Under Armour, and specifically the opportunity to service that consumer. The idea behind the hybrid model is we've got a box out there that's attractive and where the consumer experience is significant and above industry standard. We have an opportunity to take that to these underpenetrated Under Armour markets and now add to that some of the product assortments and initiatives behind the company to make that a better experience.
Great. We'll have questions on the comp, I believe.
Maybe just to add to that, is there a certain hybrid number that's baked into the 2013 outlook or?
No.
Okay. Is there a comp assumption that's baked into that as well?
Yeah, we don't really break out our comp numbers, but I think, and I imagine you're talking about all of DTC, not just retail, but also e-commerce. You know, obviously that's a big part of how we forecast our business. The comp piece on DTC, especially around retail, is a little bit difficult for us right now, only because you have a whole evolution of a made-for strategy over the last couple of years to get a better consumer experience in those doors. You have some doors going from smaller size to bigger size doors, so it's a little difficult. All I'll tell you is that there is a comp assumption obviously baked in those numbers that we feel confident enough to put out there in the marketplace.
Just a second question. On the apparel growth, you're talking, you know, essentially 30% apparel CAGR over the next, you know, through 2013. I think you'd said for Charged Cotton this year it's a mid-single-digit contribution to the growth. Just to clarify, does that include Storm in the back half, Storm Fleece, or is that a separate piece of this year's growth?
That includes the back half.
Okay. When you.
The 30% CAGR was the CAGR we're seeing currently within apparel.
Okay.
In our 26% CAGR going forward, obviously apparel, apparel and DTC are going to be the major drivers of that 26% growth going forward.
Is there any way to kind of rank the drivers of apparel in terms of order of magnitude as you look at the business today, whether it's women's, whether it's new innovation that you kind of have in the pipeline today rolling out over the next couple of years, the expansion of, you know, Charged Cotton?
Yeah, let me take that first and Kevin can jump in. I think the key word you mentioned was innovation. You've seen a lot of innovative products today. Charged Cotton, Cold Black. It's our job as a brand to keep innovating. To try to quantify exactly where some of those growth numbers will be in some of those categories is a little difficult right now. I think that the thing to take away is that we obviously feel good about that 26% growth rate, in our guidance through 2013 here. Apparel will be the driver of that from a product category perspective. DTC will be a big driver of that. On the apparel side, Henry and his team walked you through innovation, women's, youth, retail experience. I think those are the drivers of our apparel business in the near term. Innovation encompasses a lot of different things.
It would be difficult to kind of pinpoint one or the other that's going to drive that.
Great. Yeah.
Hi, thanks. It's Omar Saad from ISI Group.
Hi.
Brad, you mentioned looking at some price increases for next year, a little bit more broadly, I think is the term you used. Can you get a little bit more specific in terms of how you're seeing your costs and what the pricing strategy will be? Maybe Kevin, how you think about where you take price at different channels at certain product categories?
Yeah, on the price increase side, for 2013, or 2012, spring 2012, we took a much broader-based approach to that, like I said before. What that was, is first looking at some products that are out there that truthfully we probably felt we had some price room to begin with. Those were the products that consistently, we were chasing demand on over the last few years, and tough to kind of meet consumer demand on. I think there was some aspect of this that says, with costing pressures in the industry, those were the first items we looked at and said we probably have some room here with the consumer anyway, because we're having a hard time meeting their demand with this.
Above that, I think again, we just kind of looked at where we could maybe move and transition some lower margin products to somewhat similar higher margin products on the apparel side too. Last, obviously just looked at where did that get us to, to kind of offset some of those costing pressures and then look at more broader-based, across the board. As we look at spring, summer, 2012, the retail price increases, for the most part, are making up our costing pressures that we see. For spring, summer, 2012, we feel pretty good about being able to offset most of those pressures in that year.
Now, to my comments, we see some of that abating towards the back half of 2012, and I think our Fed chairman used this word yesterday, the day before, transitory, which is kind of an interesting word, but I think it's going to the point of there's a lot of noise around commodity right now, but the marketplace does see this kind of abating and starting to become less of a story towards the back half of 2012. To Kevin's point before, we want to look at the ability for us to raise retail prices in the back half of 2012 too, but we want to wait until we get some more visibility on the approach we take with that based on what commodity pricing is doing.
You know, before Under Armour, the t-shirt market was a $10 - $12 cotton option, and maybe a 4 for $20 option that you saw in the mall. We came in and we changed that. We built a $25 price point with the Heat Gear 0039 full t-shirt, and we built a $50 price point with our Cold Gear mock turtleneck. Those really became the foundation of our business. Even as we've, throughout our history, as we've built and the product is the same styles, the products are drastically different. There's antimicrobial, there's more stretch, there's better fabrics. We've constantly passed that on to the consumer. Frankly, as volumes have gone up where theoretically margin would increase or price would increase, we continue to put more into the product.
I use that because I think we changed the market at one point, and we didn't find reluctance from the consumer saying, "My gosh, I'm not going to pay $25 for a t-shirt." We won through that. I think we have the ability to reset right now, and that's why I want to reemphasize, instead of the short-term outlook of what could be, from a commodity standpoint, we didn't price Charged Cotton in sort of a zero to 12-month outlook. We probably could be more aggressive when we look to reset. Believe me, we're going to consider everything. I think that, again, as a brand, as a brand that is in demand, we have the luxury to do that in a much easier acceptance rate than maybe other people would face. It's not something that keeps us up, but it is something that makes sure we sharpen our pencils.
We're very opportunistic. We're not gouging the consumers. We'll continue to consider that single mom shopping with the two kids, and we become that premium affordable luxury for the consumer. I think that we have probably an easier opportunity than most, and we will be opportunistic and we'll be very thoughtful as we look at the places that we'll increase price because there are places that we absolutely will.
Thanks. Can I ask just one other question on the apparel market, maybe for you, Kevin, and Henry, if he's still here? You talked about the broader kind of opportunity across apparel. You've got the synthetic and the performance market and then the bigger activewear market, and there's an even bigger market than that. As you think about the balance between performance and style, do you need to become more casual and have more casual products out there to kind of capture that bigger market? Do you need to go into new channels? I thought it was kind of interesting that you're going to do underwear in department stores. Would you mind commenting on that?
Yeah, so I want to make sure when we say things like we're launching Charged Cotton, launching Charged Cotton wasn't launching a SKU. We are big believers of putting products out there and driving them and driving volume. That Charged Cotton basic men's t-shirt will be a multi-million unit program for us, but there's a lot more behind it than that. What you see on the wall here as we began and we just started rolling out for accounts spring 2012, where Henry and the team are taking this line is much broader and much bigger than that. I don't want any of these opportunities to be characterized as, you know, success or failure with one in particular product as much as we've entered an entirely new market segment. That creates enormous opportunity for us.
When we look at something like our underwear business, it's currently, it's a roughly $30 million business for us. We look at underwear and we had sort of these old things, which are the most dangerous things in growing companies. You get to the, I always say the only, the one thing that will get you fired from Under Armour is someone who says that's the way we've always done it. We have things where we say, like, we won't sell, you know, underwear to department stores. We don't sell department stores. You think about that at three or four years ago and saying, not that it's wrong, but most of the underwear is actually sold in department stores. To John's point, if we're going to go where the fish are, let's be thoughtful about that. It's not to say we're declaring we are or we're not.
It's just declaring that we continue to call it remove the plaque and make sure that we're looking at things through revolution, not through evolution. Everything is on the table for us. That doesn't mean it's strictly distribution-driven. It means that as our brand matures, as we become wanted and desired by the consumer for an experience beyond just the gym or the playing field, we expect to be there to answer those needs. We are very fortunate to have a good distribution base who supports us with that, but we believe that there's additional opportunities. We'll continue to push that distribution base as well as find ways to satisfy that consumer.
The only thing that I would add is everything we do is going to perform. That's to some extent or another. I don't like the word casual, but what we are going to do is have better styling. If you think about that from a women's perspective, advantages and opportunities that we can have versatility in styling, a woman can wear our yoga pants to the gym or to go out, to go out and get a cup of coffee or go to lunch. That styling is what we lack, and that's what we're building in 2012 and beyond. Think about it from a color, print, pattern perspective, the versatility there. You know, Ryan talked about basketball. Styling is so important in basketball, in men's, in men's apparel and men's footwear. We'll have the best short. We'll have the best lightweight short there is.
We'll have the best short in the market, and it's going to look really cool. That is the aspiration of what we're building from an apparel perspective.
Thank you. We have time for two more questions.
Great.
Hi, Leslie Bunim with RS Investments. The first video you showed was very hard charging, very typical Under Armour, and the women's videos you showed, as you put it, were much more cheeky. The feelings of the two were very, very different to me. I wonder, strategically, how do you marry those two? Do you need to, and is that a goal of yours?
Yeah. I think the first video was meant to speak to athletes. All athletes, men and women, and I think everybody, if you didn't feel that, you know, in your core when you watch that video, then, you know, something's not working. It doesn't mean we change who we are, but it does mean we continue to open up the aperture of what and how people define Under Armour. We are not just limited to what we've sold on field or in-game. While that is our foundation, and as Henry said, everything we build will, of course, perform, we have room to go much farther than that. Frankly, we're at a point in our 16th year now as a company that it's okay to smile every now and then. It's okay to laugh.
Our transition to doing that is, I always use a statement that says, you know, every great brand is like a great story, and every great story has a beginning, middle, and end. Our job, and every interaction we have with the consumer, every product, every commercial is like a chapter in the book of our story. We want to be mindful of that. We don't want to go from chapter one to chapter 30. We need to create this transition that takes place. The fact is, the company is much more than one voice today too. We are one consistent brand voice, but there's a lot of dialects that go with that.
That's where we want to make sure that we're not just having to speak to everything that's compromising, because what concerned us in the beginning was that we would put off some of our male consumers when we got into the women's market. We found it was absolutely not the case. The fact is that people like to get excited and they like to get charged up for a game, but they also like to laugh. They also like to smile. What you will see us from an Under Armour moving forward is you'll see a consistent brand tone, a consistent brand message, but you'll hear it in many different voices too. Let me maybe just let Adrienne and Gwyn jump on that one too. Adrienne?
Yeah, I think it's a great question and a great point. It's something the women's brand team spends a lot of time thinking about. The first thing that I looked at when we came to the brand about three years ago was how sort of aggressive and strong this brand was, and that's a part of what makes women like the brand. It's unique, it's different. We also know females need to hear their voice as well. We also know females need to be spoken to directly. It's one-to-one versus sort of us shouting at you. The thing that we've learned is it's a really tight line between the powerful performing brand that we are. We talk about fierce and feminine on the women's side. That fierce is that swagger, is that, you know, we are going to be the best at everything that we do.
We've got Lindsey Vonn, who is the best downhill skier in the world, bar none. We have a ton of female athletes that are the best at what they do all day, all night. We also know females want to know what is Jennifer Aniston doing to work out? What is Jessica Biel doing to get those arms? Females are complex, and we want a lot. We are going to, as a female brand, and this is serious, and we talk about this every single day at work, between Gwyn and myself and the footwear team, it's about showing them that we are a performance brand first, to Henry's point, but we're going to give you products and stories that you could take into your life. That's how you get into a female's heart, and that's what we're going to do.
You're going to see a little bit of both, that hardcore, hardworking Lindsey Vonn, Monica Hargrove, and then you're going to see real women in Under Armour living everyday life. It's that delicate balance that we're going to introduce that's going to really win over the female consumer.
Great.
All right.
Great, great.
Yeah.
Sam Poser with Sterne Agee. Just a couple of things. You participated in the Olympics last winter, or whenever it was, regarding the bobsled team. Do you have any plans in 2012 around the European Championships and the Olympics?
We had the UF Ski team, and we had bobsled last year in the Olympics. We actually were the official [base layer] for the Austrian ski team as well, who has currently been one of the best skiers in the world. When we look at field of play and we look at where we want to play, particularly, you know, world championships and things, we want to be out there 12 months of the year. It's the thing that has us very, very prudently deciding between things like Olympic spends, which are two or three weeks a year, but of course global, versus what we can do to activate locally. We've learned our lessons of going global and going international. It doesn't happen all at once. It happens country by country. I think we're very thoughtful about that. Of course, Lindsey will be there. Of course, we'll have the U.S.
team, and of course we'll have as well the Austrians.
Plug in in London, though. I'm talking about the summer.
You know, Michael Phelps, we have an expansion with Michael Phelps that's run through the next two Olympics as well. We have the greatest, most decorated Olympian of all time, who trains in our gear every day. You'll see us continue to activate Michael from now up through the Olympics. We have Monica Hargrove, who's one of our great sprinters out there. You'll see various teams of us, but I think, Sam, we're very, the reason that it is 12% is because of the discipline. It's the reason that we'd like to do a lot of things, but we can't do a lot of things. It's this constant process of let's reach, let's push ourselves, but let's be realistic with who we are.
I think there's going to be a lot of noise around the Olympics, and I think there's going to be a lot of clutter, maybe a better word for it. While we will look to activate our brand new partnership that kicks in in June 2012 with Tottenham in North London, you'll hear Under Armour, but I don't think we'll write the biggest check, but I think we'll have one of the biggest booms.
Thank you. Lastly, as you grow over $1 billion and beyond, and you still aren't doing business, your international business is quite small still, you're not doing business with arguably half of the places some of your competitors do business with within the U.S. In the story of where you're going, when you look out five years from now and look at what the brand can be, getting into that league of let's say $5 billion or whatever, where do you think the brand will play? How do you see the evolution? Because I doubt you're just thinking about 2013 right now.
I think we're testing a lot of different models. I think that the hybrid model is one that helps us with this as well. Number one is our job, as our mission statement says, and you'll see it painted all over our building, it says to make all athletes better, make all athletes better. We need the ability to reach those athletes. I don't know if we're sitting here today with a perfect picture of exactly what that strategy will look like, but I want you to know that we're considering everything. That, of course, means appreciating and protecting our base, protecting our existing and our core distribution, and making sure that we show up first and foremost there because consumers know that we have great partners and great partnerships. I think we're very open to what the world will look like.
Frankly, I don't think there's another, there's no yellow brick road. There's no such thing as a right answer or a wrong answer either. There's just us making decisions and then doing everything we can in our power to make those decisions right and to prevent them from being wrong. Hopefully that's the trust that we're able to unveil for you today, to lay out the depth that we have, that this isn't the gut of a couple of college buddies sitting around a dorm. These are charged professionals that absolutely have done this before and that the collective vision that this team is capable of putting together to ensure that not only 2x by 2013 is something that happens for this company, but more importantly, a foundation, a big broad foundation is in place for us for 2014 and beyond.
We have visions to be the next great athletic brand. I believe we have the DNA. I believe we have the marks. I believe we have the name. I believe we have the stuff. Execution can get in our way. Again, the same thing worries me today that worried me in 1996, ourselves. It's our ego. It's our getting caught up. It's our conviction in maybe the wrong things. That's why we keep smart people around us. That's why we keep bringing people to our team. That's why we keep trying things, and we're not perfect. As we've always promised you, we are absolutely, you know, we are going to make mistakes, no question. We promise to make mistakes, and we promise that we'll never make the same one twice.
Hopefully that we've demonstrated our ability to do that through all the issues we've seen of watching us grow from a $280 million company into more than a billion dollars, and as we see into a couple of billion dollars. I think this company has a great road in front of it. I think we have great opportunity, but that's up to us. That's up to just some of the people that you heard a little taste of present to you today. With that, I appreciate you all coming here, taking the time out of your busy days to visit us in Baltimore. It's a great pleasure and honor and privilege for us to have the ability to present to you. I wish you all very safe travels home. Next up.
Thank you.
All right, thanks again, everyone. Let's keep our timing here. I promised everybody out here at 4:00 P.M. to get transportation. We've got two options here. First, if you guys need to catch a train or catch a plane, please go back to the front entrance. We'll have shuttles waiting to take you to the train station or BWI. Second off.