Under Armour Earnings Fall

Second-quarter profits took a dive as sales shot up 30 percent.

Under Armour Inc.’s second-quarter earnings took a smaller-than-expected hit, and the active brand raised its outlook for the year after posting higher revenues thanks to its performance footwear launch.

This story first appeared in the July 30, 2008 issue of WWD.  Subscribe Today.

For the three months ended June 30, net income declined 76 percent to $1.4 million, or 3 cents per diluted share, from $5.7 million, or 11 cents.

Under Armour had previously warned that earnings would shift to the second half of the year because of seasonality and the timing of marketing and other spending. Tuesday’s announcement beat earnings per share expectations from the company by 3 cents and analysts’ consensus by 2 cents.

Revenues for the quarter rose 30 percent to $156.7 million from $120.5 million, thanks to the May 3 introduction of performance training footwear, the brand’s first noncleated offering.

“The response to our performance trainer launch has been tremendous from both a consumer acceptance and retail sell-through perspective,” said Kevin Plank, Under Armour chairman and chief executive officer. “It is that success that gives us the confidence to enter the running footwear business in the first half of 2009.”

Thanks to the launch, footwear sales more than doubled to $46 million from $20.1 million. Apparel revenues climbed 10 percent to $96.2 million for the quarter, and Under Armour indicated it is still confident it will achieve more than 20 percent growth in apparel for the year.

For the first half, earnings fell 73 percent to $4.2 million, or 9 cents per diluted share, from $15.7 million, or 31 cents. Sales for the period grew 28 percent to $314 million from $244.9 million.

The Baltimore-based firm maintained its annual revenue projection, but raised its outlook for income from operations for the year to $104.5 million to $105.5 million, after reducing its forecast after the first quarter to a range of $103.5 million to $104.5 million from $108.5 million to $110.5 million.

Under Armour’s stock closed up $1.77, or 7 percent, to $28.40 on the New York Stock Exchange Tuesday.