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SBD/January 28, 2011/FinancePrint All
Under Armour's profit "rose by nearly" 51% in Q4 and the company's revenue "reached $1 billion for the first time" in FY '10, according to Ryan Sharrow of the BALTIMORE BUSINESS JOURNAL. Under Armour posted a profit of $22.9M, or $0.44 a share, during the quarter, up from $15.2M, or $0.30 per share, in the same quarter during '09. Revenue for the quarter was $301.2M, up 35% from $202.2M. Wall Street analysts had expected earnings of "37 cents per share on revenue" of $274.5M. Footwear sales in the quarter grew to $21.9M, up from $8.7M, "primarily due to the introduction of basketball shoes and growth in baseball cleats." Sharrow noted Under Armour for the full year posted a profit of $68.5M, or $1.34 per share, up 46% from $46.8M, or $0.92 per share, in '09. The company's revenue of $1.06B in '10 was up 24% from $856.4M in '09. Meanwhile, UA Thursday announced that it will "introduce March 12 its first line of cotton apparel," known as "Cotton Charged." The line "includes men's and women's shirts and shorts as well as capri tights for women." A cotton shirt "will cost $25," and UA Chair & CEO Kevin Plank said the launch of the shirt "will expand both the reach and equity of our brand." Sharrow noted UA for FY '11 expects a profit of $143-147M, a 27-31% increase, and the company also expects revenue of $1.33-1.35B, a 25-27% increase (BIZJOURNALS.com, 1/27). At presstime, Under Armour shares are trading at $59.48, down 0.52% from yesterday's close at $59.79 (THE DAILY).
ENEMY NOW THEIR FRIEND: Plank said cotton used to be "the enemy" for the company, but the "change in fortune here is that this opens us up to a whole new consumer ... and we haven't sold out or changed our distribution." Plank added the cotton shirt is a "game-changing product" because there is "nothing like it in the market." Plank: "What this changes for Under Armour is a lot of people say you've done it on-field, well it's time for you now to take that to maybe being a little more leisurely" ("Strategy Session," CNBC, 1/27). He added, "We never had a problem with cotton as much as we had a problem with the fact that cotton never performed. ... Now we've made cotton perform and we've created a new market ... so the revenue opportunity is very large" ("Fast Forward with Lisa Murphy," Bloomberg TV, 1/27). Plank added that it "wasn't necessarily cotton the company was adverse to but the fact that the material could be come so heavy with sweat." He said that the company's cotton shirt "will still have the same 'sweat wicking' qualities of its compression and performance wear, drying five times faster than the average cotton shirt." Analysts said that the cotton line "will help the company broaden its customer base." UBS Investment Bank indicated that compression wear is a $2-3B market, while athletic cotton wear is a $12B market (Baltimore SUN, 1/28).
STILL GROWING TO DO? CNBC's Gary Kaminsky noted Q4 of '10 marked the "eighth consecutive quarter" UA has beaten earnings forecasts, but he wondered if the company can "continue to grow." Plank said, "We are still telling the story of our company. ... We've been very successful demonstrating that we are a very good North American wholesale apparel company, but the next opportunity for us as we move into new categories like footwear, new distribution channels like the mall, and of course, new geographies like going international, that story will be told. But we're much more about the Under Armour 2020 story than we are about Under Armour 2011 or 2012" ("Strategy Session," CNBC, 1/27). Meanwhile, Plank said of taking market share away from Nike, "We want to be smart, we want to be prudent, we want to make sure that we're not in some game of Keep Up with the Joneses as much as do the things that make the most sense for us" (Fox Business, 1/27).
ISC Thursday reported ’10 year-end results that showed a decline in net income driven by continued revenue declines due in part to significant decreases in ticket sales. Net income for the year ending Nov. 30, excluding discontinued operations, depreciation and other accounting methods, was approximately $73.2M, or $1.52 per share. That was down from $90.7M, or $1.86 per share, for the ’09 fiscal year. ISC Vice Chair & CEO Lesa France Kennedy said, "We do believe conditions are getting better. Most importantly, the fundamentals of our business remain sound." Ticket sales revenue in ‘10 dropped to $160.4M, an 18% decrease from the $195.5M generated in ‘09. Motorsports-related revenues declined by 2.6% to $420.9M and concession and merchandise revenues declined by 6.9% to $52.5M. ISC cut total expenses to $523.1M, a 4.1% decrease from ‘09. ISC President John Saunders: "We are still seeing challenges in consumer spending but remain encouraged by many corporate spending trends." Saunders said ISC will not adjust ticket prices in ‘11. Advance ticket sales for ‘11 Sprint Cup races at ISC tracks are 5-6% below ‘09 sales in both volume and revenue. The retention rate for season-ticket holders is in the 50 percentile range, Saunders said. Saunders: "We expect our customer to make purchasing decisions late in the buying cycle." ISC has five race entitlements open or not announced for Sprint Cup races this year, and four for Nationwide Series races. It had four and three open or not announced for those series, respectively, in ‘10. Saunders said sponsorship prices would be flat with ‘10. Saunders: "We have a lot of confidence these entitlements will get sold."