Nike and Under Armour Corporation approaches to competition are diverse. Under Armour Company perceives that it counters competitors by establishing the brand image and gaining recognition from the clients. The firm also notes that they have different retailing methods from the other corporations in the market. Under Armour continues to utilize advanced technology to make fabrics. The consumers’ purchase fabrics from Under Armour Company which increases their market share (Under Armour Inc, 2019) . The firm has a diversified portfolio to grow and establish supply chain networks to enhance customer satisfaction by delivering products on time. The organization is empowering the employees to develop a client-oriented and information-based strategy. Under Armour Corporation improves customer loyalty by offering high-quality and unique products to the target market (Under Armour Inc, 2019) . The company has gained a competitive edge by incorporating unique strategies.
Nike Corporation notes that the endorsements and high-quality products have increased their success in the market. The corporation gets approval and scholarships from different organizations. Also, the firm establishes relationships with the customers to counter competition. The primary strategy of the company is based on culture. Nike Company focuses on advocating for equality by using the sporting activities to establish fairness in each community (Nike Company, 2018). The organization partners with each community to facilitate access to sportswear.
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Net Income Margins
The net profit for Nike Company in 2018 was $ 1,933 million, but that of Under Armour Company was $ 50,520 thousand (Under Armour Inc, 2019; Nike Company, 2018) . Nike Corporation has a higher income as compared to Under Armour.
| Item | Nike | Under Armour |
|
Net Revenue |
$36,397 | $ 3,803,205 |
|
COGS |
$20,441 | $2,087,961 |
|
SG& A |
$11,511 | - |
|
Interest |
$ 54 | $26,266 |
|
Other |
$66 | $9,475 |
|
Taxes |
$2,392 | $691 |
The net revenue of Nike Corporation is more than of Under Armour by 32 million. The expenditure of Under Armour Company is higher than that of Nike. However, Nike Company pays more taxes than Under Armour Corporation. Under Armour makes low sales but the interest rates are high.
Inventory Management
Under Armour Company had a high stock level proportional to the number of days in 2018. The DSI establishes the firm’s performance which guides the investors in making decisions. There are two costing methods used in determining the stock value which include LIFO and FIFO. Nike and Under Armour Companies use the FIFO technique to determine the stock value.
Cash is King
Under Armour Corporation earned $ 50,310 thousand in 2018 but Nike Company generated $ 4, 379 million (Under Armour Inc, 2019; Nike Company, 2018) . Nike has a higher income than Under Armour. Nike Company uses its finances to buying short-term securities including stocks and bonds. Under Armour Company utilizes its funds to acquire businesses and projects. Thus, Nike has a high buying power due to the investment returns.
Liquidity
Three-year Trend for the Current Ratio
| Year | Nike | Under Armour |
| 2016 | 2.8 | 2.87 |
| 2017 | 2.9 | 2.21 |
| 2018 | 2.5 | 1.99 |
The two companies have a high current ratio. The current ratios for the two corporations have met the industry standards because they are more than one. The high value of the CR indicates that the firms are unable to manage the working capital. However, the two companies cannot be insolvent because they can meet the current financial needs.
References
Nike Company. (2018). 2018 10-K Form. Retrieved from https://s1.q4cdn.com/806093406/files/doc_financials/2018/ar/docs/nike-2018-form-10K.pdf
Under Armour Inc. (2019). Under Armour Reports Third Quarter Results; Updates Full Year 2018 Outlook. Retrieved from https://www.prnewswire.com/news-releases/under-armour-reports-third-quarter-results-updates-full-year-2018-outlook-300739892.html
