SBD/October 27, 2010/FinancePrint All
Under Armour reported yesterday that its Q3 profit rose 33% compared to the previous FY, "fueled by strong apparel sales and prompting the sportswear maker to again boost its outlook for the year," according to Ryan Sharrow of the BALTIMORE BUSINESS JOURNAL. Under Armour posted a profit of $34.9M, or $0.68 per share, in the quarter, compared to $26.2M, or $0.52 per share, in the year-ago Q3. Revenue increased 22% from $269.5M last year to $328.6M. Under Armour's performance "beat Wall Street expectations." Apparel continues to be a "big growth engine for the company," with Q3 apparel revenue up 28% to $276.7M. Shoe sales, however, "continue to be slow" as footwear revenue dropped 20% to $26.5M for the quarter. Still, Under Armour "raised its 2010 revenue outlook" to $1.03B, up 20-21% from '09, and raised its earnings outlook 34-35% to $1.23-1.24 per share (BIZJOURNALS.com, 10/26). At presstime, Under Armour shares are trading at $46.86, down 2.33% from yesterday's close of $47.98 (THE DAILY).
NEW COTTON LINE: Under Armour Chair & CEO Kevin Plank on yesterday's earnings call confirmed that the company is "introducing a cotton line that may be more appealing to those of us with softer physiques." Plank said that the line, "with the same 'sweat wicking' capabilities as its other apparel, would come out next year, ending months of industry speculation." In Baltimore, Andrea Walker notes the cotton line is the "latest product evolution for the company as it realizes not all athletes are built the same." This winter Under Armour is "marketing a new cold gear line called Evo-ColdGear, which has a fitted silhouette with a looser fit." Plank said, "We're confident this innovation will expand both the reach and equity of our brand." UBS Securities analyst Michael Binetti said the cotton line could be a "longtime growth driver for the company" (Baltimore SUN, 10/27).
OUT OF HIS REACH? Plank has intimated that Under Armour wants to surpass Nike as the top brand in basketball, and former Reebok Int'l President & COO Jay Margolis said, "He's worked on new technologies. He's most likely tested and had all kinds of focus groups and got all the ballers out there thinking about this product. But I think when he goes to market he's going to find that Nike is the toughest competition I ever faced. ... I wish Kevin the best, but it's a tough challenge." Nike controls approximately 95% of the basketball shoe market, and Margolis said "it's hard to move them from that space." He said if Under Armour "can get a 10% share, it would be great." Margolis also recalled meeting Plank "at the very beginning" of Under Armour and said, "We realized that he had the beginnings of a great brand and has done an amazing job of putting together a wonderful apparel company" (Bloomberg TV, 10/26).