SBD/April 25, 2014/Finance

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  • Under Armour Sees Big Gains In Profit, Sales During Q1, But Stock Falls

    Under Armour saw "profit and sales soar in the first quarter, beating analysts' estimates, but the market punished the athletic wear brand's stock, which fell" more than 7% on Thursday, according to Lorraine Mirabella of the Baltimore SUN. UA attributed its "strong performance" in Q1 to "demand for its 'performance-based' athletic gear, the brand's appeal among youth and the growing success of its forays into outfitting hunting and fishing enthusiasts." UA said that its Q1 profit jumped 73% to $13.5M. Sales rose 36% to $642M from $472M in Q1 of '13. However, UA shares "slipped" on the NYSE after the company "offered what some analysts saw as a conservative annual sales outlook." UA said that it expects '14 net revenues "in a range" of $2.88-2.91B, a 24% increase. Sterne Agee analyst Sam Poser in a report wrote that that is "likely a conservative outlook." The brand stands to "benefit from accelerating international sales growth, more floor space at major retailers to accommodate more women's, children's and hunting products and stronger footwear sales." Poser wrote that the "future looks bright." He added UA "is becoming the predominant brand in youth footwear and apparel." UA said that sales were "strong across apparel, footwear and accessories categories." The company said that in apparel, a 33% increase was "led by expanded offerings in areas such as golf, hunting, training, basketball and the women's studio workout line." The int'l market made up just 9% of UA's sales in Q1 "but jumped nearly" 80% on a year-over-year comparison (Baltimore SUN, 4/25). At presstime, shares of Under Armour were trading at $49.22, down 2.38% from the close of business on Thursday (THE DAILY).

    HIT THE GROUND RUNNING: UA Founder, Chair & CEO Kevin Plank said that the running category "will be the biggest revenue opportunity" for the company in the future. The WALL STREET JOURNAL's Sara Germano notes UA "unveiled its first running shoe in 2008 and makes footwear in the basketball and training categories, in addition to cleats for football, baseball, lacrosse, softball and soccer." But SportsOneSource analyst Matt Powell noted that UA still had "just a 2.33% share" of the $7B running-shoe market last year, "slightly better than its overall presence in footwear but well behind market leader Nike." The company has been "ramping up its marketing and product development in the category, introducing the SpeedForm Apollo shoe earlier this year and becoming the official apparel and footwear sponsor of next month's Bay to Breakers 12-kilometer road race" in S.F. Data from road-racing tracker Running USA shows that last year's race "drew more than 22,000 finishers, making it one of the largest nonmarathon races in the country." Germano notes as more companies like UA and Skechers "make serious plays in running footwear, they may meet with resistance from some specialty running retailers who work with limited inventory space" (WALL STREET JOURNAL, 4/25).

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  • Callaway Golf Posts Strong Financial Results For Q1, But Momentum Not Likely To Last

    Callaway Golf saw "market share gains across nearly all of its club and ball product lines," which propelled the company to "strong financial results for the first quarter, but concerns that the momentum won’t last sparked a sell-off" of its shares on Thursday, according to Mike Freeman of the SAN DIEGO UNION-TRIBUNE. Sales came in at $352M, up 22% "over the same quarter last year." Analysts predicted sales of $314M. Callaway during Q1 "gained market share with the release of new products, including the latest generation" of Big Bertha drivers. But Big Bertha "wasn’t the only hit." The company "sold more irons, fairway woods, golf balls and accessories such as golf gloves and bags as well." That left competitors "with too much unsold inventory on store shelves" and they are expected to "fight back in the current quarter." Compared with Q1, Callaway thinks that sales "will be flat to down" 5% in Q2 -- typically the "strongest three months in the golf business." It expects to "break-even or be slightly profitable for the quarter" (SAN DIEGO UNION-TRIBUNE, 4/25). At presstime, shares of Callaway Golf were trading at $8.70, down 2.41% from the close of business on Thursday (THE DAILY).

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