Strong spring signals: Another quarter of double-digit revenue, profit growth for Under Armour

Under Armour beat Wall Street expectations with more than 20 percent growth in revenue and profit. SNEWS has the results, plus what they might signal for outdoor and fitness public companies reporting earnings next week.
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Under Armour (NYSE:UA) extended its stretch of double-digit profit and revenue advances in the first quarter with increased sales across the board.

The Baltimore-based sportswear and footwear brand reported first-quarter revenue up 23 percent to $384 million with its net income rising 21 percent to $15 million, versus $12 million a year ago.

The results represent the company’s eighth consecutive quarter of revenue growth above 20 percent, and its ninth consecutive quarter of double-digit percentage profit increases.

Under Armour’s apparel revenue rose by 23 percent to $238 million, led by introduction of products using ColdBlack technology. Sales of Armour Bra also increased amidst a broader gain in women’s products, officials said.

The company’s footwear category grew by 24 percent to $64 million in revenue, fueled by new running styles, including Under Armour’s $120 Charge RC running shoe. Accessory sales increased 26 percent to $30 million. Direct-to-consumer sales rose 49 percent to represent 25 percent of total revenue.

“As we look at the rest of 2012, we will continue to emphasize innovation and design throughout our product spectrum, including a sharp focus on our baselayer and footwear platforms," CEO Kevin Plank said in a statement with the earnings release.

Company officials narrowed the company’s full 2012 revenue outlook, saying they expect 21 to 22 percent growth versus a previous projection between 20 and 25 percent. Net income is expected to grow between 25 and 26 percent.

Investors, who had expected slower growth from Under Armour, cheered the news Friday, sending the company's stock up 5 percent. The results exemplify what could be a very positive spring for the sportswear and fitness apparel and footwear markets with continued warmer-than-normal temperatures and pleasant weather across much of the United States.

The question for fitness retailers is if the greater interest in apparel and footwear in the sector will echo to indoor equipment. A hint will come next week with earnings reports from Cybex and Life Fitness parent Brunswick.

Looking ahead for outdoor, the trend should benefit brands that are well-diversified with spring and summer product. However, some outdoor retailers have reported having less open-to-buy dollars available for spring/summer product due to leftover inventory from the weak winter.

A clearer picture for outdoor will emerge next week with earning reports from the parent companies of brands such as Merrell, Marmot, Coleman, Columbia, Mountain Hardwear, Teva, The North Face, Timberland, Arc’teryx and Salomon.

--David Clucas

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