Under Armour's Q1 profits rose 63%, "boosted by strong apparel and footwear sales and prompting the company to raise its outlook for the year," according to Ryan Sharrow of the BALTIMORE BUSINESS JOURNAL. UA reported net income of $19M during the quarter, up from $12M in the prior-year period. Revenue increased 30% to $1.05B, up from $805M a year ago. UA "now expects" revenue in FY '16 of $5B, representing growth of 26% over last year. During Q1, apparel revenue rose 20% to $667M, "led by growth in training and golf." Footwear revenue increased 64% to $264M, driven by Warriors G Stephen Curry's basketball line and "expanded offerings in running." International revenue -- a "key component" of UA's next growth phase -- grew 56% and represented 14% of the company's total revenue in Q1 (BIZJOURNALS.com, 4/21). REUTERS' Ramkumar Iyer notes golf shoes endorsed by Jordan Spieth also "were a big hit" (REUTERS, 4/21). UA Founder, Chair & CEO Kevin Plank said that company "has had 24 consecutive quarters" of sales growth of more than 20%. In Baltimore, Lorraine Mirabella notes UA's "sales to wholesale customers, stores such as Dick's Sporting Goods," grew 28% to $744M, while sales to consumers "through branded stores and websites" grew 33% to $266M (BALTIMORESUN.com, 4/21). At presstime, shares of UA were trading at $46.98 per share, up 6.89% from the close of business yesterday (THE DAILY).
SOME GOOD NEWS: THE STREET's Brian Sozzi writes under the header, "Under Armour's Earnings Should Quiet Wall Street's Bears." The company's "solid quarter and guidance boost may help quiet concerns among some on Wall Street that the business was headed for a slowdown." UA's stock "plunged about 6% on April 11 following a bearish note" from a Morgan Stanley analyst (THESTREET.com, 4/21). FBR Capital Senior VP, Equity Research Analyst Susan Anderson said of UA, "Footwear can contribute about 12% of the growth going forward and international about 10%. So you really don't need the 20% growth in apparel going forward, really just mid-teens would do it.” Cowen & Co. Senior Retail Analyst John Kernan said of inventories being higher, “Ultimately, inventory is going to come down. It is elevated now, but I don't think Under Armour has a problem since they clearly don’t have a demand problem” (“Squawk on the Street,” CNBC, 4/20).
SLOW YOUR ROLL: FORBES' Darren Heitner writes there is "little surprise" that UA has "topped its earnings estimates, as it has beat those estimates every single quarter" since Q1 of '01. And "despite many positives," UA may "need to shift some focus in catering to a female demographic" (FORBES.com, 4/21). Morningstar Equity analyst Paul Swinand said of UA, "Even though it's beating the printed numbers, sometimes those expectations are already in the stock." Swinand: "I’m a fan of the company. I like that Kevin is making a big bet on connected fitness too, but they're also spending a lot to do that, so the operating margin is down. That has got to pick up at some point." UA also tells a "great brand story in their branded houses" ("Squawk Box," CNBC, 4/21). Kernan said of UA, “Apparel in the U.S. wholesale channels is probably slowing a little bit off an incredibly high base. We don't think they're losing market share, but certainly the growth drivers for the stock and investors is shifting to other categories and regions” (“Squawk on the Street,” CNBC, 4/20).
