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Three Major Factors Fueled Under Armour’s 30% Revenue Growth

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Under Armour Curry Two_screenshot from website

Under Armour posted its first quarter results Thursday, with revenue up 30 percent, and the company’s CEO pointed to three key contributing factors: China, Stephen Curry and e-commerce.

Net revenues at the sportswear company increased 30 percent to $1.05 billion in the quarter ended Mar. 31, and Under Armour Chairman and CEO Kevin Plank said those levels show no signs of abating.

“This year, we expect every quarter to top $1 billion in revenues,” Plank said on an earnings call.

Under Armour raised its full-year guidance for net revenues in 2016 to $5 billion, which would be 26 percent growth over 2015, with operating income expected in the $503 million to $507 million range.

The quarter marks the company’s 24th consecutive three-month period where net revenue growth was higher than 20 percent.

And that’s largely owed to its ability to adapt—namely with a new strategy for China and its e-commerce business, the key areas commanding global retail attention today.

Under Armour has been building its foundation in China in recent years to capture the growth in that market, and so far the strategies are starting to pay off.

“In this past quarter, we earned more revenue in China in 90 days than we did in the full year of 2014,” Plank said, adding that the company will open another 120 owned and partner brand stores in greater China throughout the rest of the year.

Stephen Curry also had a big part in helping Under Armour gain traction in China. The company took the Golden State Warriors star athlete—whom it has a contract with through 2024—on a tour of China, which had an immediate impact on brand recognition.

The athlete’s latest shoe didn’t hurt either.

Plank said growth in the quarter was most evident in footwear (revenues increased 64 percent to $264 million), with the Curry Two basketball shoe consistently topping sales charts. At the NBA Playoffs next month, Under Armour will release the Curry 2.5 (the same shoe Curry wore when the Warriors won their 73rd NBA title, and the one he’ll be wearing at the playoffs) through Foot Locker and its own e-commerce channel. The Curry 2.5 will launch globally on July 1, with the Curry Three to follow in the fall.

Apparel net revenues were up 20 percent to $667 million, led by growth in training and golf. Over the course of the year, Plank said Under Armour will see greater impact from some of its apparel innovations, like CoolSwitch, which optimizes performance by keeping the wearer cool, and Microthread, goods with a new elastomeric thread that dries 30 percent faster and is 70 percent more breathable than similar Lycra, Plank said.

“We’re focused on innovating at the yarn level and we’re focused on driving even bigger innovation in the years to come,” he added.

Under Armour women’s business is also winning, and considering the company has been called out fairly recently for losing favor with women, Plank didn’t hold back on emphasizing the fact.

“This year, our women’s business will surpass a billion dollars,” he said. “A billion dollars. That’s a billion-dollar women’s business. A milestone we are proud of that puts us among very select companies in a space that continues to attract a lot of interest and competition.”

Turning to e-commerce, Plank said adaptability has fueled success in that department too.

“For the first time, more than half of our U.S. traffic this quarter came through mobile devices,” he said. The importance of reaching the consumer when and how they shop isn’t lost on Under Armour and the company has plans in place to continue investing in its e-commerce experience.

Moving with retail’s changing tides, according to Plank, was a key factor in the company’s ability to deliver 30 percent revenue growth “even in a quarter where one of our largest partners, The Sports Authority, filed for bankruptcy.”

Under Armour’s operating income increased 26 percent in the quarter to $35 million, and net income jumped 63 percent to $19 million compared to the previous period’s $12 million.

“We are running a much different business than we were last year, and the change is perpetual,” Plank said. “We are transforming our company and doing so every 90 days. This is a velocity that growth companies need to maintain to be competitive in 2016.”

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