Price, Under Armour earnings jump

Sportswear maker's stock up 13% on tripling of profit


Shares of Under Armour Inc. rose more than 13 percent yesterday as the Baltimore sports apparel company reported that first-quarter profit tripled and also raised its earnings forecast for the year.

Under Armour said net income increased 248 percent to $8.7 million, or 18 cents a share, for the quarter that ended March 31, compared with $2.5 million, or 5 cents a share in last year's first quarter.

Net revenue increased 50.7 percent to $87.7 million, compared with $58.2 million during the corresponding period last year.

Analysts had expected the company to post a profit of 7 cents a share on revenue of $72 million, according to Thomson First Call.

The stock rose $4.29 to close at $37 yesterday on the Nasdaq.

"The scoreboard, as we call it, showed we had a solid performance on all fronts," Kevin A. Plank, the company's chairman, chief executive officer and president, said during a conference call with analysts yesterday.

The company boosted its revenue estimates for the year to between $380 million and $390 million and expects net income to increase 57 percent or more, to between $31 million and $32 million.

The showing was much better for the company than when it had its first earnings report as a public company in February. The share price that day dropped $8.26, raising questions about the stock being overvalued. The company went public in November with a 95 percent gain on its first day, the best for an American company in five years.

The first quarter this year was helped by an increase in sales of products outside the company's core market of compression T-shirts. The company recently introduced a new golf polo that has proved popular. A T-shirt that looks and feels like cotton, but is made from Under Armour's trademark moisture-wicking fabric, also helped propel sales.

Youth apparel led the company's growth in sales, increasing 119.7 percent to $7 million from $3.2 million. The company offered a wider variety of youth sizes. Plank also said the company recently hired someone to help increase youth sales, to 10 percent from 8 percent, of all sales.

"We haven't done a great job of focusing on this category," Plank said. "All we've really done with this business is really shrink the men's product down."

Sales of women's products increased 112 percent to $21 million from $10 million, while sales of the men's line grew 32 percent to $52.5 million from $39.8 million.

Plank said the company has begun to build its international market, focusing in France, Germany and the United Kingdom. It recently opened overseas headquarters in Amsterdam, Netherlands.

Under Armour intends to use the same word-of-mouth marketing that worked in the United States, with the help of athletes who may not be the best-known or most popular to promote the brand.

Several professional rugby and cricket players are wearing the apparel. French skier Antoine Deneriaz recently wore the product during the Winter Olympics. Deneriaz discovered the gear through a rugby player in his hometown, Plank said.

Under Armour also said that pre-sales of its new football cleat, to be launched June 3, have been doing well. Generally, people don't buy football cleats until the summer before practice for the fall season begins. To help fuel anticipation for the shoe, versions of which are priced between $45 and $120, samples have been showcased in displays at stores such as The Sports Authority and Dick's Sporting Goods.

"We're very pleased with what we're seeing out of the pre-sales," said Jeff Hennion, senior vice president and chief marketing officer at Dick's. "We have high expectations for what this cleat is going to do."

National Football League players will wear the shoe, although because of licensing agreements, the Under Armour logo will not be visible. College teams such as Texas Tech, Auburn University and University of Maryland will also wear the shoe, Plank said. Under Armour expects the shoe, which has microfiber fabric to keep feet dry, to bring $8 million in sales its first year.

Under Armour will launch its advertising campaign this weekend during coverage of the NFL draft on ESPN.

"It's the most requested item from our customer," Plank said about the football cleat. "We heard about it over and over again probably from the last three or five years. ... I think we also recognized that it's a relatively stagnant business that we could be successful in."

Baltimore Sun Articles
Please note the green-lined linked article text has been applied commercially without any involvement from our newsroom editors, reporters or any other editorial staff.