Under Armour's gross margin moved up by 0.3 percentage points to 45.9 percent in the first quarter, but its net income declined by 47 percent to $8 million, largely due to higher marketing costs connected to its “I Will” campaign and other operating expenses, which jumped by 25.7 percent to $203.1 million. The operating margin went down to 2.9 percent, as compared to 6.3 percent in last year's first quarter.
Net revenues were up by 23 percent to $472 million, with solid growth across all product categories. The growth in total revenues was in excess of 20 percent for the 12th consecutive quarter. While North American sales increased by 21.6 percent during the quarter, sales outside North America jumped by 40.6 percent, but were still relatively low at $30.7 million. Much of the growth took place in Latin America, where the company is setting up a Brazilian subsidiary. The management indicated that its investments in Europe may start to pay off soon and that there is still potential in Asia. Revenues from licensing, mainly in Japan, were up by 18.8 percent to $9.2 million.
Apparel sales increased by 22 percent in the quarter to $346 million, mainly driven by higher sales of fleecewear and the Alter Ego product lines. Footwear sales grew by 27 percent to $81 million, lifted by the company's new Spine running products. Accessories also recorded a double-digit sales growth, with revenues up by 22 percent to $36 million.
Looking ahead, the company has raised its expectations and now expects sales to be in the range of $2.21 to $2.23 billion, compared with its previous forecast of $2.20 to $2.22 billion. The company also expects operating income to be between $256 million and $258 million, against earlier guidance of $255 million to $257 million.
