Under Armour, Inc. reported revenues jumped 23.5 percent in the third quarter, to $575.2 million from $465.6 million in the prior year's period. Net income increased 24.5 percent in the third quarter of 2012 to $57.3 million, or 54 cents a share, compared with $46.0 million, or 44 cents, in the prior year's period.
Third quarter Apparel net revenues increased 22 percent to $445 million compared with $363 million in the same period of the prior year, driven by strength across Men's, Women's, and Youth apparel businesses. Third quarter Footwear net revenues increased 21 percent to $63 million from $52 million in the prior year's period, primarily driven by new 2012 running styles, including UA Spine. Third quarter Accessories net revenues increased 37 percent to $54 million from $40 million in the prior year's period, primarily led by headwear.
Direct-to-Consumer net revenues, which represented 24 percent of total net revenues for the third quarter, grew 31 percent year-over-year.
Kevin Plank, Chairman, CEO, and President of Under Armour, Inc., stated, “The third quarter marks our twelfth consecutive quarter with apparel growth in excess of 20 percent and our tenth consecutive quarter of net revenues growth surpassing 20 percent. This growth reflects our core belief that when we innovate and add value for the athlete, we win. Our recent expansion of the UA Storm platform is a great example of our unwavering pursuit of innovation. The Women's category remains a major focus and huge opportunity for us as a brand and the strong sell-throughs we are seeing in new products such as Studio and ArmourBra give us confidence that we are resonating with our consumers. Our success in innovation extended to Footwear with the successful launch this past quarter of UA Spine running footwear and will continue with our upcoming UA Spine extension into basketball and our December introduction of the UA Cam Highlight trainer.”
Gross margin for the third quarter of 2012 was 48.7 percent compared with 48.4 percent in the prior year's quarter, primarily reflecting more favorable North American apparel product margins. Selling, general and administrative expenses as a percentage of net revenues were 32.9 percent in the third quarter of 2012 compared with 32.3 percent in the prior year's period, primarily reflecting the timing of marketing expenses. Marketing expenses for the third quarter of 2012 were 11.4 percent of net revenues compared with 10.4 percent in the prior year's quarter. Third quarter operating income grew 21 percent to $91 million compared with $75 million in the prior year's period.
Balance Sheet Highlights
Cash and cash equivalents increased to $157 million at September 30, 2012 compared with $68 million at September 30, 2011. The company had no borrowings outstanding under its $300 million revolving credit facility at September 30, 2012. Inventory at September 30, 2012 decreased 2 percent to $312 million compared with $319 million at September 30, 2011. Long-term debt, including current maturities, decreased to $72 million at September 30, 2012 from $80 million at September 30, 2011.
Updated 2012 Outlook
The company had previously anticipated 2012 net revenues in the range of $1.80 billion to $1.82 billion, representing growth of 22 percent to 24 percent over 2011, and 2012 operating income in the range of $205 million to $207 million, representing growth of 26 percent to 27 percent over 2011. Based on current visibility, the company now expects 2012 net revenues of approximately $1.82 billion, representing growth of 24 percent over 2011, and 2012 operating income of approximately $207 million, representing growth of 27 percent over 2011. The company now expects an effective tax rate of approximately 37.0 percent, compared to an effective tax rate of 38.2 percent for 2011. The company continues to anticipate fully diluted weighted average shares outstanding of approximately 106 million to 107 million for 2012.
Plank concluded, “I am proud of what our team has accomplished so far this year and we are well positioned for growth in 2013 and beyond. I emphasize 'team,' as we continue to make great strides with the additions of seasoned leadership in Supply Chain, Women's, and International. These investments illustrate our commitment to realizing our long-term vision of one day having our Women's business larger than Men's, Footwear larger than Apparel, and our International business larger than our U.S. business.”