Under Armour, Inc. (UA), one of the leading developers, marketers and distributors of branded sports apparel, footwear and accessories, recently posted better-than-expected second-quarter 2010 results buoyed by the strong demand for athletic apparel that registered the highest sales growth rate since third-quarter 2007.
Quarterly Discussion
The quarterly earnings of 7 cents a share outstripped the Zacks Consensus Estimate by 4 cents and rose more than twofold from 3 cents delivered in the prior-year quarter.
Under Armour’s net revenues for the quarter came in at $204.8 million, up 24.4% from the year-ago quarter breezing past the Zacks Consensus Revenue Estimate of $189 million.
The double-digit growth in top-line was driven by a growth of 34.1% in apparel net revenue of $150.2 million and an increase of 26.3% in accessories net revenue of $8.9 million, but was partially offset by a 4.5% decline witnessed in footwear net revenue of $35.8 million. Under Armour had earlier informed that footwear revenue is expected to decline in 2010 compared with 2009 but remains optimistic about 2011. Licensing revenue climbed 22.3% to $9.9 million.
Baltimore, Maryland-based company, under Armour, said that direct-to-consumer net revenue surged 60% during the quarter, reflecting new Factory House store growth, healthy retail same-store sales and robust Web business.
Under Armour opened six new Factory House stores during the quarter under review, increasing the store count to 45. The company expects its Factory House store base to be between 52 and 54 units by the end of 2010, reflecting a 50% year-over-year growth.
Despite a 15.3% increase in cost of goods sold, gross profit jumped 35.5% to $99.9 million, whereas gross profit margin expanded 400 basis points to 48.8%, reflecting sustained growth in higher-margin direct-to-consumer business, encouraging apparel gross margin and lower markdowns. Operating income more than doubled to $6.9 million during the quarter compared with $3.4 million in the prior-year quarter.
Other Financial Details
Under Armour ended the quarter with cash and cash equivalents of $156.1 million, total long-term debt of $15.6 million, shareholders’ equity of $423.1 million and a revolving credit facility of $200 million. Capital expenditures for the quarter were approximately $8 million. Management anticipates capital expenditures of $35 million to $40 million in fiscal 2010.
Guidance
Riding on the back of the stronger-than-expected results and improved outlook for the remaining year, management has raised its fiscal 2010 guidance.
The company now expects fiscal 2010 net revenue between $990 million and $1,010 million, representing an increase of 16% to 18% over the prior year. Earnings per share are expected in the range of $1.11 to $1.13, reflecting an increase of 21% to 23%.
Previously, Under Armour had forecasted fiscal 2010 net revenue between $965 million and $985 million, representing a jump of 13% to 15% over the previous year and earnings between $1.05 and $1.07 per share, reflecting an increase of 14% to 16%.
Quarterly Discussion
The quarterly earnings of 7 cents a share outstripped the Zacks Consensus Estimate by 4 cents and rose more than twofold from 3 cents delivered in the prior-year quarter.
Under Armour’s net revenues for the quarter came in at $204.8 million, up 24.4% from the year-ago quarter breezing past the Zacks Consensus Revenue Estimate of $189 million.
The double-digit growth in top-line was driven by a growth of 34.1% in apparel net revenue of $150.2 million and an increase of 26.3% in accessories net revenue of $8.9 million, but was partially offset by a 4.5% decline witnessed in footwear net revenue of $35.8 million. Under Armour had earlier informed that footwear revenue is expected to decline in 2010 compared with 2009 but remains optimistic about 2011. Licensing revenue climbed 22.3% to $9.9 million.
Baltimore, Maryland-based company, under Armour, said that direct-to-consumer net revenue surged 60% during the quarter, reflecting new Factory House store growth, healthy retail same-store sales and robust Web business.
Under Armour opened six new Factory House stores during the quarter under review, increasing the store count to 45. The company expects its Factory House store base to be between 52 and 54 units by the end of 2010, reflecting a 50% year-over-year growth.
Despite a 15.3% increase in cost of goods sold, gross profit jumped 35.5% to $99.9 million, whereas gross profit margin expanded 400 basis points to 48.8%, reflecting sustained growth in higher-margin direct-to-consumer business, encouraging apparel gross margin and lower markdowns. Operating income more than doubled to $6.9 million during the quarter compared with $3.4 million in the prior-year quarter.
Other Financial Details
Under Armour ended the quarter with cash and cash equivalents of $156.1 million, total long-term debt of $15.6 million, shareholders’ equity of $423.1 million and a revolving credit facility of $200 million. Capital expenditures for the quarter were approximately $8 million. Management anticipates capital expenditures of $35 million to $40 million in fiscal 2010.
Guidance
Riding on the back of the stronger-than-expected results and improved outlook for the remaining year, management has raised its fiscal 2010 guidance.
The company now expects fiscal 2010 net revenue between $990 million and $1,010 million, representing an increase of 16% to 18% over the prior year. Earnings per share are expected in the range of $1.11 to $1.13, reflecting an increase of 21% to 23%.
Previously, Under Armour had forecasted fiscal 2010 net revenue between $965 million and $985 million, representing a jump of 13% to 15% over the previous year and earnings between $1.05 and $1.07 per share, reflecting an increase of 14% to 16%.
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