Under Armour Apparel net revenues goes up for Q1

Under Armour Apparel net revenues goes up for Q1

April 30, 2008 (USA)

Under Armour Inc announced financial results for the first quarter ended March 31, 2008. Net revenues increased 26.6% in the first quarter to $157.3 million compared to net revenues of $124.3 million in the first quarter of 2007. Based on the seasonality of net revenues and the timing of marketing and other investments, the Company had previously indicated that earnings would be more heavily weighted to the back half of 2008 relative to 2007. First quarter net income was $2.9 million compared to $9.9 million in the same period of 2007. Diluted earnings per share for the first quarter of 2008 was $0.06 on weighted average common shares outstanding of 49.9 million compared to $0.20 per share on weighted average common shares outstanding of 49.8 million in the first quarter of the prior year. The Company's previous outlook was diluted EPS of $0.03 to $0.05 for the first half of 2008. Apparel net revenues rose 24.6% to $129.2 million in the first quarter of 2008 with strong growth across Men's, Women's, and Youth. Footwear revenues increased 40.2% to $16.6 million primarily due to a limited amount of Performance Training Footwear shipped during the quarter. "The Under Armour Brand continues to resonate with athletes," stated Kevin Plank, Chairman and CEO of Under Armour Inc. "Our apparel business grew 25% with Women's growing at an even faster rate at 36%, illustrating the strength of our Brand. By communicating an authentic message and developing innovative products to meet the needs of new prototype athlete, we continue to drive consumers to our Brand. We believe our message of performance enables us to reach both male and female athletes, to expand beyond team sports to individual sports, and to get the consumer to think of us not just as a great athletic apparel brand but a great athletic brand." Gross margin for the first quarter of 2008 was 47.6% compared to 48.7% in the prior year primarily due to an inventory reserve taken on excess gloves. Selling, general and administrative expenses were 44.9% of net revenues in the first quarter of 2008 compared to 35.8% in the prior year.

The Company had previously stated that it would be shifting a substantial portion of its full year marketing spend to the first half of the year.

Marketing expense for the first quarter of 2008 was 17.8% of net revenues compared to 11.1% in the prior year's period. The Company still expects to invest in its marketing budget at the high-end of the range of 12% to 13% of net revenues for the full year.

The Company's long-term growth targets are 20% to 25% for the top and bottom lines. Based on the continued strength of the Brand and the Company's performance in the first quarter, the Company is reiterating its 2008 net revenues outlook.

For 2008, the Company continues to expect annual net revenues in the range of $765 million to $775 million, an increase of 26% to 28% over 2007.

The Company had previously estimated a full year gross margin improvement of 40 to 50 basis points in 2008. However, based on the most recent estimates, full year gross margins for 2008 are expected to decrease 30 basis points year-over-year to 50.0%.

As a result, the Company is revising its 2008 income from operations outlook to $103.5 million to $104.5 million, an increase of 20% to 21% over 2007. The Company had previously estimated 2008 income from operations to be in the range of $108.5 million to $110.5 million.

"At Under Armour, we have a culture of growth balanced with a culture of profitability," stated Wayne Marino, Chief Operating Officer.

"As we map out the future growth of this Brand, we will continue to make the appropriate level of investment in our team and our infrastructure while continuously striving towards greater operational execution."

Mr. Plank concluded, "On May 3rd, we enter the next chapter of our growth story with the launch of our Performance Training footwear.

Whether it's creating the category as we did with compression or reinventing the category as we are doing with Performance Training, our proven ability to bring athletes someplace new and generate excitement for both our retail partners and our consumer is at the core of what we do.

We have invested much to get us to the point of launching our footwear this Saturday, and we must continue to invest if we are to realize the opportunities for growth in new categories and new regions. We continue to have confidence in the power of our Brand and our ability to execute against those opportunities."

Source: fibre2fashion.com