Under Armour Inc. is in growth mode, and it’s paying off on the bottom line.
The Baltimore-based activewear company reported Thursday that for the three months ended March 31, net income jumped 73.3 percent to $13.5 million, or 6 cents a diluted share, from $7.8 million, or 4 cents, a year ago. Net revenues rose 36 percent in the period to $641.6 million from $471.6 million. Apparel net revenues rose 33 percent to $459 million from $346 million, boosted in part by expanded offerings in categories such as golf, training and basketball. Apparel is the company’s largest category, and the firm said it expects 2014 net revenues in the range of $2.88 billion to $2.91 billion, or 24 to 25 percent growth over 2013.
In a conference call with analysts, Kevin Plank, chairman and chief executive officer, said the company sees “boundless opportunities” for the brand in the U.S. and overseas. The three biggest growth drivers, he said, are in the running, golf and outdoor categories.
“Of the three categories, running represents the biggest revenue opportunity for us given the size of both the footwear and apparel components, as well as the fact that it’s an important category across all geographies,” Plank said.
In February, the company introduced a new SpeedForm Apollo footwear collection, which he said puts Under Armour “on a trajectory to become a significant player in the global running marketplace.” Strong footwear sales also “help ignite our entire apparel business,” he added. “We believe our opportunity to grow running in an integrated way with footwear, apparel and accessories truly positions our running business as a key building block of our global growth story for the foreseeable future.”
In golf, Plank pointed to Under Armour-sponsored Jordan Spieth, the 20-year-old phenom who came in second at the Masters earlier this month, as a catalyst to continue to grow this category, which hit nearly $100 million in sales in 2013.
Turning to the outdoor division, which includes products for hunting and fishing, Plank said the company has expanded into new items including outerwear and boots.
Looking outside the U.S., Plank said “building our brand globally” remains a key initiative. Overall, international revenues rose 79 percent in the quarter, he said, and Under Armour “continues to gain traction” in Europe where the U.K., Germany and France are its primary focus. The company has transitioned from a distributor in Mexico to a wholly owned subsidiary, and has launched in Brazil and Chile, where it signed several sports marketing agreements in global football. Overall, international sales are now $55 million, which represents 9 percent of total revenues.
Under Armour, which opened its largest Brand House store in New York’s SoHo district on Thursday, said it will continue to “evolve” its full-price retail strategy and also added another seven factory outlets during the quarter, bringing the total to 12. There are five full-price stores.
Shares of Under Armour fell 7.4 percent to close at $50.42 in trading on the New York Stock Exchange. Shares fell as low as $48.78 in early morning trading before recovering slightly by the close, possibly in reaction to the company’s guidance for 2014. Matthew McClintock, an analyst at Barclays, said he believes that the guidance provided by the company “remains conservative.” In addition, investors also may have taken some profits in Thursday’s trading session, given that 12.3 million shares changed hands, compared with a three-month average trading volume of 3.4 million shares.
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