Facebook Pinterest Search Icon SourcingJournal_horiz Tumbler Twitter Shape photo-camera graph-trend Shape latest-news icon / user

Successful Marketing Drives Under Armour Q2 Sales Up 29%

Rivet's 2020 Denim Circularity report takes a deep dive into how the global denim industry is plotting its circular future amidst a worldwide pandemic.

Athletic apparel and footwear maker Under Armour (UA) announced better-than-expected second-quarter financial results on Thursday, sending its stock soaring in early morning trading.

The results represent the company’s twenty-first consecutive quarter of net revenue growth over 20 percent as it enters its twentieth year in business.

For the three months ended June 30, net revenues increased 29 percent to $784 million from $610 million in the prior year period, beating analyst estimates of $762 million. On a currency neutral basis, the increase was 31 percent.

Sales of apparel increased 23 percent to $515 million, or 66 percent of the total, driven primarily by enhanced product offerings in baselayer and training. Footwear net revenues increased 40 percent to $154 million, or 20 percent of the total, from $110 million in the prior year period, or 18 percent of total sales, primarily reflecting continued product expansion across the running category and ongoing excitement around Stephen Curry signature product. The company expects footwear growth to continue to outpace overall revenue growth for the remainder of the year.

Accessories revenue increased 39 percent to $83 million from $60 million in the prior year’s period, driven primarily by new introductions across the bags category.

Direct-to-consumer, which represented 32 percent of total revenue in the quarter, grew 33 percent year-over-year. As of June 30, the company operated 139 Factory House doors, up from 125 at the same point in 2014, and 21 Brand House stores, up from 10 the prior year.

International sales, which represented 11 percent of the total in the period, grew 93 percent year-over-year. Under Armour now operates 17 regional offices around the world, the most recent of which is the office opened this week in Munich, Germany.

Gross margin for the second quarter of 2015 declined 80 basis points to 48.4% compared with 49.2% in the prior year’s period, primarily reflecting the impacts of foreign exchange rates and air freight expenses incurred to smooth out the effects of the West Coast port slowdown. These impacts were partially offset by gains in factory house margins.

SG&A expenses as a percentage of revenues were 44.3% in the second quarter of 2015 compared with 43.5% in the prior year’s period, primarily reflecting investments to support Connected Fitness and the opening of global Brand House stores in the quarter.

Second quarter operating income decreased 8 percent to $32 million compared with $35 million in the prior year’s period.

Net income decreased 17 percent to $15 million, or $0.07 per share, from $18 million, or $0.08 per share in the prior year’s period and diluted earnings per share for the second quarter of 2015 were $0.07 compared with $0.08 per share in the prior year’s period, including the impacts of the Endomondo and MyFitnessPal acquisitions. The results beat Wall Street expectations of $0.05 per share.

Chairman and CEO Kevin Plank said in a statement, “In the second quarter of 2015, we witnessed historic performances and accolades from our incredible portfolio of athletes including the NBA’s MVP and World Champion Stephen Curry, PGA Tour pro Jordan Spieth who won this year’s Masters & U.S. Open and the American Ballet Theatre’s first-ever African American female principal dancer Misty Copeland. Leveraging these unprecedented successes for our brand remains critical as we continue to align our strategy to attack key growth categories and drive deeper connections with the athlete.”

The company increased its revenue guidance for 2015 to $3.84 billion from the previous level of $3.78 billion, with the current estimate representing growth of 25 percent over 2014, and operating income now in the range of $405 million to $408 million, representing growth of 14 to 15 percent over 2014. The 2015 guidance continues to reflect the net dilutive impact from the Connected Fitness acquisitions, as well as the effect of the strong dollar negatively impacting operating margin within the company’s international businesses.

COO and CFO Brad Dickerson commented, “The ongoing strength of our brand and execution of our business plan give us confidence in raising our full year top line outlook. In addition, the confluence of our sports marketing success stories has provided a unique opportunity to drive investment toward areas that we see are key to long-term sustainable growth and we plan to take advantage of this dynamic in the back half of 2015. At the same time, we are increasing our focus on developing sustainable business process improvements and better connecting the components of our value chain to more fully capitalize on our brand’s momentum each season going forward.”

Related Articles

More from our brands

Access exclusive content Become a Member Today!