Under Armour, Inc. reported revenues increased 36 percent in the first quarter to $312.7 million from $229.4 million a year ago.  Net income surged 68.1 percent to $12.1 million, or 23 cents a share, from $7.2 million, or 14 cents, a year ago. The strong results prompted the company to raise its revenue and EPS guidance for the year.

First quarter apparel net revenues increased 34 percent to $230.5 million compared with $172.6 million in the same period of the prior year, driven by strength across each of the Men's, Women's, and Youth apparel businesses and the company's initial launch of Charged Cotton apparel. 

Direct-to-Consumer net revenues, which represented 20 percent of total net revenues for the first quarter, grew 53 percent year-over-year. 

First quarter footwear net revenues increased 20 percent to $51.4 million from $43.0 million in the prior year's period.  First quarter accessories net revenues increased 213 percent to $23.5 million from $7.5 million in the prior year's period, primarily driven by the transition of the previously licensed hats and bags business in-house commencing January 2011.

“First quarter results underscore the substantial opportunities that remain in taking our Brand to new consumers,” said Kevin Plank, president, CEO and chairman of Under Armour, Inc.. “The launch of Charged Cotton to date shows that we can change category expectations, while broadening the overall market opportunity for the Brand.  At the same time, we continue to see opportunities to better meet consumer demand through enhanced execution with our existing retail partners as well as through our own Direct-to-Consumer channel.”

Gross margin for the first quarter of 2011 was 46.4 percent of sales compared with 46.9 percent of sales in the prior year's quarter primarily due to less favorable apparel product mix and footwear sourcing costs, partially offset by a higher percentage of revenue from our higher margin Direct-to-Consumer channel.  Selling, general and administrative expenses as a percentage of net revenues were 39.6 percent of sales in the first quarter of 2011 compared with 41.0 percent of sales in the first quarter of 2010, primarily reflecting leverage of corporate services costs and an approximate $2 million shift of retail marketing spend into the second quarter.  Reflecting this shift, marketing expense for the first quarter of 2011 was 13.3 percent of net revenues compared with 13.6 percent in the prior year's quarter.  For the first quarter, operating income grew 56 percent to $21.1 million compared with $13.6 million in the prior year's period.  

Balance Sheet Highlights
Cash and cash equivalents decreased 33 percent to $110.8 million at March 31, 2011 compared with $166.0 million at March 31, 2010.  The company had no borrowings outstanding under its new $300 million revolving credit facility at March 31, 2011.  Inventory at March 31, 2011 increased 68 percent to $248.6 million compared with $147.9 million at March 31, 2010, reflecting the company's efforts to better service anticipated consumer demand in 2011.  Net accounts receivable increased 48 percent to $163.4 million at March 31, 2011 compared with $110.3 million at March 31, 2010, largely based on the timing of wholesale apparel shipments later in the first quarter.  

Updated 2011 Outlook
The company had previously anticipated 2011 net revenues in the range of $1.33 billion to $1.35 billion, representing growth of 25 percent to 27 percent over 2010, and 2011 operating income in the range of $143 million to $147 million, representing growth of 27 percent to 31 percent over 2010.  Based on current visibility, the company now expects 2011 net revenues in the range of $1.37 billion to $1.39 billion, representing growth of 29 percent to 31 percent over 2010, and 2011 operating income in the range of $149 million to $153 million, representing growth of 33 percent to 36 percent over 2010.  The company continues to expect an effective tax rate of approximately 40.0 percent for the full year compared to an effective tax rate of 37.1 percent for 2010.  Finally, the company anticipates fully diluted weighted average shares outstanding of approximately 52.5 million to 52.7 million for 2011, slightly ahead of the prior range of 52.3 million to 52.5 million.

Plank concluded, “Our growth story remains strong, as demonstrated by the success we are seeing across both Apparel and Direct-to-Consumer.  Our momentum into 2011 and beyond affords us the patience needed to let our Footwear investments develop and build foundations for long-term International success.”
































































































































































































































CONSOLIDATED STATEMENTS OF INCOME





Three Months Ended


March 31,





2011


% of Net
Revenues



2010


% of Net
Revenues












Net revenues


$  312,699


100.0%



$  229,407


100.0%




Cost of goods sold


167,648


53.6%



121,776


53.1%




      Gross profit


145,051


46.4%



107,631


46.9%












Selling, general and


 administrative expenses


123,909


39.6%



94,047


41.0%








=





      Income from operations


21,142


6.8%



13,584


5.9%












   Interest expense, net


(579)


(0.2%)



(546)


(0.2%)




  Other expense, net           


(510)


(0.2%)



(685)


(0.3%)












      Income before income taxes


20,053


6.4%



12,353


5.4%




Provision for income taxes


7,914


2.5%



5,183


2.3%












      Net income


$    12,139


3.9%



$    7,170


3.1%












Net income available per common share








Basic


$        0.24




$        0.14





Diluted


$        0.23




$        0.14













Weighted average common shares outstanding







Basic


51,444




50,419

About The Author

Thomas J. Ryan

Thomas J. Ryan Senior Business Editor | SGB Media tryan@sgbonline.com | 917.375.4699

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