First-quarter sales at Under Armour grew by 15 percent to $229.4 million, comprising a 13 percent increase in apparel sales to $172.6 million and 30 percent in accessories to $7.5 million. Footwear sales, however, dropped by 25 percent to $43.0 million.
Net income rose by 81 percent to $7.2 million for the period, ended March 31. Operating income was 72 percent higher at $13.6 million, and the gross margin grew by 2.3 percentage points to 46.9 percent.
Direct-to-consumer sales rose by 73 percent to approximately $41.3 million, and the company intends to open 16-18 additional U.S. factory outlet doors in the current fiscal year. Sales outside the U.S. increased by $6 million to $14 million. Management says that new geographies are the brand’s biggest untapped opportunity. The company wants to duplicate the success it has had in Japan, where its wholesale business is about $100 million with its local partner, Dome Corporation of Tokyo. Initial investments in China have already been made. Under Armour’s presence in Europe, where its message as a young, athletic brand has centered on its Coldgear products, remains minimal, however.
While compression, base layer and underwear apparel drove the company’s success in clothing in the first quarter, the company intends to expand beyond that scope with loose and fitted wear for athletes. The brand also intends to enter additional sport categories at retail in a bigger way — football, basketball and others — to gain shelf space at traditional brick-and-mortar retail.
On the footwear side, Under Armour doesn’t anticipate getting into the toning category popularized by Skechers and Reebok, but intends to make a play for “significant market share” in the basketball category, which is 90 percent dominated by Nike and Adidas. Football has been limited to seeding $150-and-up boots on key teams thus far, but the category will be commercialized in the near future. Meanwhile, Under Armour has been making personnel investments that will enable it to take its sport bag and headwear business, currently licensed out, in-house in 2011.
Under Armour, which is targeting capital expenditures of $35-40 million in this fiscal year, is now forecasting sales growth of 13-15 percent this year to a range of $965-985 million.
