Story URL: http://news.medill.northwestern.edu/chicago/news.aspx?id=227359
Story Retrieval Date: 12/18/2014 8:26:02 AM CST
Under Armour is making more fashionable workout gear for its female consumers.
Cold-weather spell brutal for most, profitable for Under Armour
Under Armour has had 15 consecutive quarters of at least 20 percent growth in sales from the previous-year period.
Under Armour Inc. Thursday reported stellar fourth-quarter earnings as extreme cold weather swept the country in December, leading consumers to bulk up on the company’s fleece and ColdGear Infrared products. Shares of its stock spiked 23 percent Thursday.
In a conference call with analysts, company executives also touted several new partnerships that should boost results in 2014.
The Baltimore-based company acquired MapMyFitness in December, which allows athletes to track workouts and fitness goals using smartphones. CEO Kevin Plank told analysts the company’s first acquisition strongly positions it in the booming “connected fitness” industry.
The company, which has existing deals with Northwestern University, publisher of Medill Reports, also inked deals with the University of Notre Dame and the U.S. Naval Academy to outfit their athletes. Under Armour did not disclose specific numbers, but ESPN reported the Notre Dame deal is the largest in college sports history.
Under Armour’s CEO highlighted the “outstanding” results of its women’s business. He said female consumers are embracing the company’s more fashionable athletic wear, which includes printed leggings and bright colors.
“One of the reasons we are so bullish on our women’s business is there has been a quiet shift going on where women are wearing athletic products outside of the gym,” he said.
Fourth-quarter net income grew 28 percent to $64 million, or 59 cents per diluted share, from $50 million, or 47 cents per diluted share, in the fourth quarter 2012.
Earnings were significantly higher than the 53 cents per diluted share expected by analysts surveyed by Bloomberg LP.
Revenue increased 35 percent to $683 million from $506 million in the prior year’s period.
“The fact that they were able to generate 35 percent revenue growth is nothing short of remarkable,” said Camilo Lyon, an analyst at Canaccord Genuity Corp.
“The momentum across all categories is pretty undeniable. It’s impressive to say the least, especially with how challenging the holiday season was.”
The apparel category, which comprises the bulk of Under Armour’s revenue, had sales of $546 million in the last three months of 2013. It was a 35 percent increase from $405 million in the year-ago period.
The accessory category had the highest growth rate, driven by headwear and glove sales. Sales increased 52 percent to $65 million from $43 million last year.
Sales of footwear totaled $55 million, up 24 percent. On Thursday Under Armour began promoting the launch of its SpeedForm Apollo sneaker, which is scheduled for Feb. 28.
Despite Under Armour’s shining fourth-quarter results, analyst John Zolidis of the Buckingham Research Group is advising investors to hold the shares.
“We believe the company has created an aspirational brand and is developing a product pipeline and strategy that will allow it to continue to grow at robust rates over the foreseeable future,” he said in a research note. “However we believe this outlook is more than factored into the stock’s valuation at current levels.”
For the full year 2013, net income increased 26 percent to $1.6 million, or $1.50 per diluted share, from $1.3 million, or $1.20 per diluted share, in 2012. Net revenue jumped 27 percent to $2.33 billion from $1.83 billion in 2012.
Under Armour also raised its outlook for 2014. It expects net revenues of between $2.84 billion and $2.87 billion, which be an increase of more than 20 percent..
Under Armour shares closed at $104.77, up $19.54 or 23 percent.