Under Armour raises 2011 outlook

28 Jan '11

5 min read

Under Armour Inc announced financial results for the fourth quarter ended December 31, 2010. Net revenues increased 36% in the fourth quarter of 2010 to $301.2 million compared with net revenues of $222.2 million in the fourth quarter of 2009. Net income increased to $22.9 million in the fourth quarter of 2010 compared with $15.2 million in the prior year's period.

Diluted earnings per share for the fourth quarter of 2010 were $0.44 on weighted average common shares outstanding of 52.0 million compared with $0.30 per share on weighted average common shares outstanding of 50.8 million in the fourth quarter of the prior year.

Fourth quarter apparel net revenues increased 32% to $254.0 million compared with $192.1 million in the same period of the prior year, driven by sustained momentum across each of the Men's, Women's, and Youth apparel businesses. Direct-to-Consumer net revenues, which represented 33% of total net revenues for the quarter, grew 56% year-over-year during the fourth quarter. Footwear net revenues in the fourth quarter of 2010 increased to $21.9 million from $8.7 million in the fourth quarter of 2009, primarily due to the introduction of basketball shoes and growth in baseball cleats.

Kevin Plank, Chairman and CEO of Under Armour, Inc., stated, "We completed a successful 2010, surpassing $1 billion in annual net revenues and generating EPS growth of 46%. Our results demonstrate the strength of our Brand and we will carry this momentum forward by broadening our consumer reach and delivering innovative product. Our multi-channel distribution platform, heightened by our Direct-to-Consumer strategy, continues to evolve and provides an effective vehicle both to reach new consumers and better service our current consumers. We are proud to be introducing the next chapter in Under Armour innovation as we introduce the world's first Charged Cotton T-shirt this spring."

Mr. Plank concluded, "We are proud of the results posted on the scoreboard in 2010. One billion dollars in revenue is a solid foundation and opportunities remain abundant both domestically and across the globe. We have assembled a winning leadership team and are making the right investments to enhance our near-term growth opportunities in wholesale apparel and Direct-to-Consumer, while continuing to build our long-term footwear and global platforms."

Gross margin for the fourth quarter of 2010 was 51.7% compared with 51.2% in the prior year's quarter primarily due to a higher percentage of revenue from our higher margin Direct-to-Consumer channel and lower footwear markdowns compared to the same period in 2009. Selling, general and administrative expenses as a percentage of net revenues were 40.0% in the fourth quarter of 2010 compared with 39.1% in the fourth quarter of 2009 as a result of continued expansion of the Factory House stores and higher performance bonus expense given strong results.

Marketing expense for the fourth quarter of 2010 was 11.1% of net revenues compared with 11.3% in the prior year. For the fourth quarter, operating income grew 31% to $35.2 million compared with $26.9 million in the prior year's period. EPS for the quarter benefited approximately $0.04 from a lower than expected effective income tax rate of 33.4%, primarily resulting from a research and development tax credit renewed in December 2010 and continuing tax planning strategies.

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