Net revenues up 22% at Under Armour in Q3
Under Armour, Inc. announced financial results for the third quarter ended September 30, 2010. Net revenues increased 22% in the third quarter of 2010 to $328.6 million compared with net revenues of $269.5 million in the third quarter of 2009. Net income increased to $34.9 million in the third quarter of 2010 compared with $26.2 million in the prior year's period.
Diluted earnings per share for the third quarter of 2010 were $0.68 on weighted average common shares outstanding of 51.2 million compared with $0.52 per share on weighted average common shares outstanding of 50.7 million in the third quarter of the prior year.
EPS benefited approximately $0.05 from a lower than expected effective income tax rate of 37.7%, primarily resulting from federal and state tax credits and tax planning strategies.
• Net Revenues Increased 22% to $328.6 Million
• Diluted EPS Increased 31% to $0.68 from $0.52 in the Prior Year's Quarter; Includes $0.05 EPS Benefit from Taxes
• Company Raises 2010 Net Revenues Outlook to $1.030 Billion to $1.035 Billion (+20% to +21%) from $990 Million to $1.01 Billion (+16% to +18%)
• Company Raises 2010 EPS Outlook to $1.23 to $1.24 (+34% to +35%) from $1.11 to $1.13 (+21% to +23%)
• Company Expects 2011 Net Revenues and EPS Growth at the Higher End of the Company's 20%-25% Long-Term Growth Target
Third quarter apparel net revenues increased 28% to $276.7 million compared with $215.4 million in the same period of the prior year, driven by strong growth across the Men's, Women's, and Youth apparel businesses. Direct-to-Consumer net revenues, which represented 18% of total net revenues for the quarter, grew 47% year-over-year during the third quarter.
Footwear net revenues in the third quarter of 2010 declined to $26.5 million from $33.0 million in the third quarter of 2009. The Company had previously indicated that Running and Training footwear net revenues were expected to decline in 2010 compared with 2009.
Kevin Plank, Chairman and CEO of Under Armour, Inc., stated, "Third quarter results demonstrate our growth engines remain strong. Importantly, we see significant opportunities ahead to broaden our consumer reach, supported by continued growth in both our wholesale apparel and Direct-to-Consumer channels. We expect these businesses, along with bringing our licensed hats and bags business in-house and an expected return to growth in footwear, will continue to drive results through 2011."
For the third quarter, operating income rose to $56.7 million compared with $47.1 million in the prior year's period. Gross margin for the third quarter of 2010 was 50.9% compared with 49.5% in the prior year's quarter primarily due to lower sales returns and other reserves, a more favorable year-over-year impact of liquidations and inventory reserves, as well as a higher percentage of revenue from our higher margin Direct-to-Consumer channel.
Selling, general and administrative expenses as a percentage of net revenues were 33.6% in the third quarter of 2010 compared with 32.0% in the third quarter of 2009 as a result of continued expansion of the Factory House stores as well as increased investments in product innovation and supply chain. Marketing expense for the third quarter of 2010 was 10.9% of net revenues compared with 10.5% in the prior year.