Baltimore—Under Armour Inc. reported today a stellar first quarter where profit jumped more than 70% as well as a 36% increase in sales, thanks to its expanding international business.
But shares of the athletic wear, footwear and accessories company fell about 10% in trading today due to what analysts felt was a conservative outlook ahead.
Accessories Sales Rise 43%
For the quarter ended March 31, UA posted net income of $13.5 million, or 6 cents a share, compared with income of $7.8 million, or 4 cents a share, a year ago. That beat analysts’ average estimate for 4 cents a share.
Net sales were up 36% to $642 million, ahead of analysts’ estimate for $599 million in sales.
By category, UA said apparel net sales were up 33% to $459 million “including expanded offerings in categories such as golf, hunting, training, studio, and basketball.” Footwear sales rose 41% to $114 million led by new introductions in running including SpeedForm Apollo.
Accessories net revenue increased 43% to $52 million primarily driven by headwear. Direct-to-Consumer net revenues, which represented 26% of total net revenues for the first quarter, grew 33% year-over-year. International net revenues, which represented 9% of total net revenues for the first quarter, grew 79% year-over-year.
Chairman/CEO Kevin Plank called the earnings report a “great start” to 2014 across all categories. “Our formula for driving newness and innovation in Apparel continues to resonate with consumers and helped deliver over 30% growth for our largest product category,” Plank said. That same model is contributing to success in Footwear, where we accelerated growth in running and brought award-winning product to the marketplace with the SpeedForm Apollo. Finally, we enhanced our ability to reach the global athlete, including the recent expansion of our brand in key Latin American markets, as well as strong gains across Europe and Asia.”
SoHo Brand House Opens
Gross margin widened to 46.9% compared with 45.9% in the prior year’s quarter, primarily driven by supply chain enhancements and a favorable sales mix in the Factory House outlet business. Selling, general and administrative expenses as a percentage of net revenues were 42.7% in the first quarter of 2014 compared with 43.1% in the prior year’s period.
Looking ahead to its full year, UA said it expected net revenue in the range of $2.88 billion to $2.91 billion, representing growth of 24% to 25% over 2013. That was up from the $2.84 billion to $2.87 billion it forecast in January. Analysts’ average estimate expects $2.89 million.
“This strong start to 2014 illustrates the unlimited potential that still lies ahead for our Brand, whether it is today’s opening of our Brand House in New York City or our product hitting shelves for the first time in Brazil,” Plank said. Our opportunity requires that we remain focused on building powerful product platforms that service athletes at home and abroad, on and off the playing field.”