Strong reaction to a number of new product introductions led Under Armour Inc. to post first-quarter results that beat Wall Street estimates.
For the three months ended March 31, net income fell 46.7 percent to $7.8 million, or 7 cents a diluted share, from $14.7 million, or 14 cents, a year ago. The company said the decline reflected “planned timing of marketing expenditures.” Analysts were expecting earnings per share of 3 cents. Net revenues rose 22.7 percent to $471.6 million from $384.4 million.
Apparel sales rose 22 percent to $345.5 million from $283.3 million, and were driven by strong results from the HeatGear Sonic base layer; fleece programs for men and women, and strong sales of youth apparel and Alter Ego superhero merchandise from the company’s new partnership with Marvel Entertainment and DC Comics. The company also said net revenues for accessories in the quarter rose 22 percent to $36.1 million from $29.6 million, while direct-to-consumer net revenues rose 31 percent year-over-year.
Kevin Plank, chairman and chief executive officer, told analysts in a conference call Friday: “It’s safe to say that we’ve never had the breadth of new products in the market as we do right now. Even on our most basic business like tech Ts, we’ve brought stripes and more colors into the line and are flowing them into the market faster. This focus enables us to build multiple expressions for the athletes and make it available faster and in more ways than ever before.”
When the company went public in 2005, it was primarily a compression brand known for moisture wicking and cold-weather protection, Plank added. But Under Armour now offers a broader range of lighter-weight product and fabrics to drive traffic in what has historically been a slower time of the year for the company. “We’ve seen great success with this program at retail so far and believe there are other opportunities throughout the year for this type of transitional product,” he said.
The Alter Ego line, which embellished core Under Armour product with superhero characters such as Superman and Batman, “was the most successful product launched ever on our e-commerce site, and we just started shipping it late in the quarter to our wholesale accounts,” he said.
In footwear, where the company has stumbled in the past, sales in the period rose 27 percent, thanks in large part to the launch of a technical running shoe line, the UA Spine.
Plank said the company’s first full-line retail store, which opened in its hometown of Baltimore in February, has been performing well so far, and the company hopes to open one additional store before the end of the year.
Outside the U.S., Plank said, the plan is to “set priorities, go where the opportunities are most evident and invest in new markets to see future growth.” He singled out Europe, China and Brazil as the locations that are “establishing that pathway for growth internationally.”
In the quarter, international sales rose 41 percent to $31 million and now represent 6 percent of total revenue.
Shares of the Under Armour rose 1.3 percent to $56.41 in trading Friday on the New York Stock Exchange.
Investors liked the company’s updated projections of 2013 net revenues in the range of $2.21 billion to $2.23 billion, a growth of 21 percent to 22 percent over 2012. Previously, the company had expected a revenue range of between $2.20 billion and $2.22 billion.