Under Armour Raises Guidance on Strong Direct Sales Growth

Diluted earnings per share for the first quarter of 2010 grew 75% to 14 cents on weighted average common shares outstanding of 50.9 million compared with 8 cents per share on weighted average common shares outstanding of 50.4 million in the first quarter of the prior year.

 

First quarter apparel net revenues increased 31% to $172.6 million compared with $132.2 million in the same period of the prior year, driven by strong growth in the Men’s, Women’s, and Youth apparel businesses.  Direct-to-Consumer net revenues grew 73% year-over-year during the first quarter driven by strong growth in both the Factory House stores and Web business. 

 

Footwear net revenues in the first quarter of 2010 were $43.0 million compared with $56.9 million in the first quarter of 2009.  The company had previously indicated that Running and Training footwear revenues were expected to decline in 2010 compared with 2009.

 

“We delivered solid top line growth of 15% in the first quarter as we continued to bring the performance story to new athletes across sports, gender and geographies,” said Kevin Plank, Chairman and CEO of Under Armour, Inc. “Our apparel net revenues increased 31% with strength in both the wholesale and Direct-to-Consumer channels, evidence the brand still has tremendous growth opportunities.” 

 

For the first quarter, operating income rose 72% to $13.6 million compared with $7.9 million in the prior year’s period.  Gross margin for the first quarter of 2010 increased to 46.9% compared with 44.6% in the prior year’s quarter primarily due to improved apparel margins and increased sales in the higher margin Direct-to-Consumer channel. 

 

Selling, general and administrative expenses as a percentage of net revenues increased to 41.0% in the first quarter of 2010 compared with 40.6% in the prior year’s period as a result of increased investments in product creation and supply chain as well as continued expansion of the Factory House stores.

 

Balance Sheet Highlights
Cash and cash equivalents were $166.0 million at March 31, 2010 compared with $65.6 million at March 31, 2009.  Inventory at quarter-end decreased 10% to $147.9 million compared with $164.4 million at March 31, 2009.  Net accounts receivable increased 4% to $110.3 million at March 31, 2010 compared with $106.0 million at March 31, 2009.

 

Outlook for 2010
The company had previously anticipated 2010 annual net revenues in the range of $945 million to $960 million, an increase of 10% to 12% over 2009 and 2010 diluted earnings per share for the full year to grow in line with net revenue growth. 

 

Based on the first quarter results and improved visibility for the full year, the company now expects 2010 annual net revenues in the range of $965 million to $985 million, an increase of 13% to 15% over 2009.  The company also expects 2010 diluted earnings per share in the range of $1.05 to $1.07, an increase of 14% to 16% over 2009. 

 

“The investments we are making in apparel and Direct-to-Consumer are paying off with strong growth, while we lay the foundation and build the infrastructure for our footwear and international growth engines,” said Plank.  “With our strong brand presence in the recent Winter Olympics, Winter X Games and the PGA Tour, we continue to move beyond football and baseball fields and take the Under Armour brand message to an ever-growing audience of athletes.”