Under Armour, Inc. reported second-quarter revenues increased 23 percent, to $455 million compared with net revenues of $369 million in the prior year's period. Net income jumped 163 percent to $18 million, or 16 cents a share, compared with $7 million, or 6 cents, in the prior year's period.
Second quarter apparel net revenues increased 23 percent to $310 million compared with $253 million in the same period of the prior year, primarily driven by new baselayer product and the expansion of the Storm and Charged Cotton platforms. Second quarter footwear net revenues increased 21 percent to $82 million from $67 million in the prior year's period, led by the Highlight football cleat and the UA Spine platform. Second quarter accessories net revenues increased 30 percent to $51 million from $39 million in the prior year's period, primarily driven by headwear. Direct-to-Consumer net revenues, which represented 30 percent of total net revenues for the second quarter, grew 29 percent year-over-year.
Kevin Plank, Chairman and CEO of Under Armour, Inc., stated, “We continued to create great excitement in the marketplace during the second quarter through innovative design across all platforms apparel, footwear and accessories speaking loudly to the next generation of Under Armour athletes. While we continue to see great momentum in our apparel business, we are demonstrating share gains in footwear on the field with baseball and football cleats, as well as building upon our momentum in running footwear with foundational platforms like UA Spine. This continued execution against our athlete's demanding expectations helped drive net revenues growth in excess of 20 percent for the 13th consecutive quarter.”
Gross margin for the second quarter of 2013 was 48.3 percent compared with 45.9 percent in the prior year's quarter, primarily reflecting lower year-over-year North American apparel and accessories product costs and favorable year-over-year sales mix. Selling, general and administrative expenses as a percentage of net revenues were 41.2 percent in the second quarter of 2013 compared with 42.7 percent in the prior year's period, primarily reflecting the timing of marketing expenses. Second quarter operating income increased to $32 million compared with $12 million in the prior year's period.
Balance Sheet Highlights
Cash and cash equivalents increased 57 percent to $224 million at June 30, 2013 compared with $143 million at June 30, 2012. Inventory at June 30, 2013 increased 29 percent to $491 million compared with $381 million at June 30, 2012. Long-term debt decreased to $55 million at June 30, 2013 from $74 million at June 30, 2012.
Updated 2013 Outlook
The company had previously anticipated 2013 net revenues in the range of $2.21 billion to $2.23 billion, representing growth of 21 percent to 22 percent over 2012, and 2013 operating income in the range of $256 million to $258 million, representing growth of 23 percent to 24 percent over 2012. Based on current visibility, the company now expects 2013 net revenues in the range of $2.23 billion to $2.25 billion, representing growth of 22 percent to 23 percent over 2012, and 2013 operating income in the range of $258 million to $260 million, representing growth of 24 percent to 25 percent over 2012. The company now anticipates an effective tax rate of 40.0 percent to 41.0 percent for the full year, compared to prior full year guidance of 39.0 percent to 39.5 percent and 36.7 percent for 2012. The company continues to anticipate fully diluted weighted average shares
outstanding of approximately 108 million to 109 million for 2013.
Plank concluded, “We are set up a for a strong second half of the year which we recently kicked off through the debut of our Global Brand Holiday, 'Ready for August.' This is the second chapter in the three Brand Holidays we will deliver this year and tells the story of high school football in the U.S. and futbol globally. In conjunction with this global campaign, we debuted Speedform, a revolutionary running shoe actually built in a bra factory that features a non-traditional seamless heel cup that will help redefine fit in the category. We are also building on our leadership position in baselayer this fall with our latest innovation, ColdGear Infrared, allowing athletes to stay warmer, longer. These exciting product introductions, along with the existing platforms we continue to build, highlight the ongoing strength of our product pipeline and increase our conviction in achieving our long-term global ambitions.”