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Under Armour raises 2011 outlook
28 Jan '11
5 min read
Review of Full Year Operating Results
For the full year 2010, net revenues increased 24% to $1.064 billion compared with $856.4 million in the prior year, ahead of the Company's prior outlook of $1.030 billion to $1.035 billion. Diluted earnings per share for the full year increased 46% to $1.34 per share on weighted average common shares outstanding of 51.3 million compared with $0.92 per share on weighted average common shares outstanding of 50.7 million in the prior year, ahead of the Company's prior guidance of $1.23 to $1.24.
Apparel net revenues increased 31% to $853.5 million compared with $651.8 million in the prior year, driven by strength across the Men's, Women's, and Youth apparel businesses. Direct-to-Consumer net revenues, which represented 23% of total net revenues for the year compared to 18% in 2009, grew 57% over the prior year. Footwear net revenues declined 7% to $127.2 million during 2010 compared to $136.2 million in 2009.
Gross margin for 2010 was 49.9% compared with 47.9% in 2009 primarily due to a higher percentage of revenue from our higher margin Direct-to-Consumer channel, lower sales returns and markdowns, and a more favorable year-over-year impact of inventory reserves. Selling, general and administrative expenses as a percentage of net revenues were 39.3% for 2010 compared with 37.9% for 2009, reflecting the continued expansion of the Factory House stores, increased investments in product innovation and supply chain, and higher corporate services costs.
Marketing expense for 2010 was 12.0% of net revenues compared with 12.7% in the prior year. Operating income grew 31.8% to $112.4 million in 2010 compared with $85.3 million in the prior year.
Balance Sheet Highlights
Cash and cash equivalents increased 9% to $203.9 million at December 31, 2010 compared with $187.3 million at December 31, 2009. The Company had no borrowings outstanding under its $200 million revolving credit facility at December 31, 2010. Inventory at year-end increased 45% to $215.4 million compared with $148.5 million at December 31, 2009. Net accounts receivable increased 29% to $102.0 million at December 31, 2010 compared with $79.4 million at December 31, 2009.
Updated 2011 Outlook
Based on current visibility, the Company now expects 2011 net revenues in the range of $1.33 billion to $1.35 billion, representing growth of 25% to 27% over 2010 and ahead of prior guidance of growth at the higher end of its 20% to 25% long-term growth target.
The Company expects operating income in the range of $143 million to $147 million, representing growth of 27% to 31% over 2010. The Company expects an effective tax rate of approximately 40.0% for the full year compared to an effective tax rate of 37.1% for 2010. Finally, the company anticipates fully diluted weighted average shares outstanding of approximately 52.3 million to 52.5 million for 2011.
For the full year 2010, net revenues increased 24% to $1.064 billion compared with $856.4 million in the prior year, ahead of the Company's prior outlook of $1.030 billion to $1.035 billion. Diluted earnings per share for the full year increased 46% to $1.34 per share on weighted average common shares outstanding of 51.3 million compared with $0.92 per share on weighted average common shares outstanding of 50.7 million in the prior year, ahead of the Company's prior guidance of $1.23 to $1.24.
Apparel net revenues increased 31% to $853.5 million compared with $651.8 million in the prior year, driven by strength across the Men's, Women's, and Youth apparel businesses. Direct-to-Consumer net revenues, which represented 23% of total net revenues for the year compared to 18% in 2009, grew 57% over the prior year. Footwear net revenues declined 7% to $127.2 million during 2010 compared to $136.2 million in 2009.
Gross margin for 2010 was 49.9% compared with 47.9% in 2009 primarily due to a higher percentage of revenue from our higher margin Direct-to-Consumer channel, lower sales returns and markdowns, and a more favorable year-over-year impact of inventory reserves. Selling, general and administrative expenses as a percentage of net revenues were 39.3% for 2010 compared with 37.9% for 2009, reflecting the continued expansion of the Factory House stores, increased investments in product innovation and supply chain, and higher corporate services costs.
Marketing expense for 2010 was 12.0% of net revenues compared with 12.7% in the prior year. Operating income grew 31.8% to $112.4 million in 2010 compared with $85.3 million in the prior year.
Balance Sheet Highlights
Cash and cash equivalents increased 9% to $203.9 million at December 31, 2010 compared with $187.3 million at December 31, 2009. The Company had no borrowings outstanding under its $200 million revolving credit facility at December 31, 2010. Inventory at year-end increased 45% to $215.4 million compared with $148.5 million at December 31, 2009. Net accounts receivable increased 29% to $102.0 million at December 31, 2010 compared with $79.4 million at December 31, 2009.
Updated 2011 Outlook
Based on current visibility, the Company now expects 2011 net revenues in the range of $1.33 billion to $1.35 billion, representing growth of 25% to 27% over 2010 and ahead of prior guidance of growth at the higher end of its 20% to 25% long-term growth target.
The Company expects operating income in the range of $143 million to $147 million, representing growth of 27% to 31% over 2010. The Company expects an effective tax rate of approximately 40.0% for the full year compared to an effective tax rate of 37.1% for 2010. Finally, the company anticipates fully diluted weighted average shares outstanding of approximately 52.3 million to 52.5 million for 2011.
Under Armour Inc
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