Under Armour Inc. is suffering some growing pains — and finding it harder to meet skyrocketing expectations.

This story first appeared in the April 22, 2015 issue of WWD. Subscribe Today.

As founder and chief executive officer Kevin Plank described the firm as “growing up” Tuesday, investing in systems, infrastructure and acquisitions as well as product and marketing, the high-flying activewear brand reported a 13.4 percent dive in first-quarter profits that sent Under Armour shares down 4.8 percent to $83.52 in New York Stock Exchange trading. It was the largest decline for the stock on a percentage basis since shares fell 7.4 percent on April 24, 2014, when the company reported results for the first quarter of that year.

Buffeted by higher expenses from the acquisitions of two digital wellness platforms, expansion overseas, higher air-freight costs due to West Coast port disruptions and a higher tax rate, Under Armour saw earnings in the three months ended March 31 fall to $11.7 million, or 5 cents a diluted share, from $13.5 million, or 6 cents, a year ago.

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Under Armour’s shares also were pressured by its full-year outlook failing to meet analysts’ consensus estimates. The firm modestly raised its revenue guidance to $3.78 billion and operating profit guidance for the remainder of 2015 to between $400 million and $408 million.

Even with the first-quarter pressures, the company showed no signs of lessening demand, posting revenues of $804.9 million, 25.5 percent above the $641.6 million registered in last year’s quarter, above Wall Street’s $802.5 million estimate.

Footwear, led by the Curry One sneaker endorsed by NBA All-Star Stephen Curry of the Golden State Warriors, grew 41.1 percent to $161 million, while apparel was up 20.9 percent to $555.5 million. The Connected Fitness platform, supplemented in February by the acquisitions of Endomondo and MyFitnessPal, more than doubled in size to $8.4 million in revenues.

“We have already added over 10 million unique registered users to our platform since our initial February announcement, bringing the total Connected Fitness community to over 130 million unique registered users,” said Plank, chairman and ceo of the Baltimore-based company.

With its first stores in Brazil and the Middle East and Web site launches in the Philippines and the Netherlands in the first quarter, sales outside North America rose 74.2 percent to $96 million. At constant currency, sales were up 85.9 percent.

Plank said on a conference call with analysts Tuesday morning that China, where sales tripled in the quarter, “will be one of our largest countries in revenue outside North America by the end of the 2015.” The Japanese business is the largest outside the U.S., with sales approaching $300 million.

Even after Tuesday’s sell-off, shares remained nearly $10 above the $73.57 at which they closed on Feb. 4, when the company reported fourth-quarter results and announced its acquisitions of Endomondo and MyFitnessPal. The company paid $475 million for the two firms after buying Austin-based MapMyFitness for $150 million in late 2013, beginning its push into online fitness, wearables and related wellness technology.

Jefferies analyst Randal Konik was exuberant in his research note on the firm after the earnings release, but equally mindful of the roadblocks to stock appreciation.

“As far as we’re concerned, UA just needs to keep doing what it’s doing because the results are impressive,” he commented. “This quarter was no exception with solid growth across categories and upwardly revised earnings” for the full year.

“From a stock perspective, however, we see few near-term catalysts to drive share-price appreciation given lofty valuation, few near-term catalysts and increasingly high expectations that are getting harder and harder to beat.”

He maintained his “hold” rating on the stock while lifting his price target to $85 from $73.

Konik pointed out that more than 60 percent of the users of the Connected Fitness platform are women, aligning well with the company’s goal of building its sales to females, and that more than 40 percent live outside North America, helping to foster growth in the international arena.

Susan Anderson, analyst at FBR Capital Markets, told WWD, “With Under Armour’s record, anything below a 30 percent pickup in revenue was going to be a disappointment. Expectations are just way too high. But the company made huge strides in footwear, e-commerce and international, where they turned their first quarterly [operating] profit ever. And even with the ports problems and currency exchange, margins came in better than many expected.”

Gross margin was flat with a year-ago at 46.9 percent of sales, and a merchandise margin increase offset by air freight charges and currency effects.

She also noted that the company had scored yet another victory in media impressions less than two weeks ago when another one of its brand ambassadors, Jordan Spieth, led the Masters tournament in Augusta, Ga., from start to finish.

Direct-to-consumer revenues grew 21 percent, below the revenue growth rate, to about $201 million in the quarter as the firm expanded to 153 units, 19 of them adhering to its nonfactory “Brand House” format.

Brad Dickerson, chief operating officer, told participants on the conference call that e-commerce growth “far exceeded” retail growth during the quarter and that mobile accounted for 40 percent of traffic and 20 percent of e-commerce sales.

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