US Under Armour reports first quarter Net Revenues growth of 30 %
Under Armour, Inc. announced financial results for the first quarter ended March 31, 2016
Net revenues increased 30 % in the first quarter of 2016 to USD 1.05 billion compared with net revenues of USD 805 million in the prior year’s period. On a currency neutral basis, net revenues increased 32 % compared with the prior year’s period. Operating income increased 26 % in the first quarter of 2016 to USD 35 million compared with USD 28 million in the prior year’s period. Net income increased 63 % in the first quarter of 2016 to USD 19 million compared with USD12 million in the prior year’s period and diluted earnings per share for the first quarter of 2016 were USD 0.04 compared with USD 0.03 per share in the prior year’s period. Diluted earnings per share calculations for both periods reflect the Company’s Class C Stock Dividend effective April 7, 2016, which has the same effect as a two-for-one stock split.
During the first quarter, wholesale net revenues grew 28 % year-over-year to USD 744 million compared to USD 579 million in the prior year’s period, while Direct-to-Consumer net revenues grew 33 % year-over-year to USD 266 million compared to USD 200 million in the prior year’s period. North America net revenues for the first quarter grew 26 % year-over-year, or 27 % on a currency neutral basis. International net revenues, which represented 14 % of total net revenues for the first quarter, grew 56 % year-over-year, or 65 % on a currency neutral basis.
Within product categories, apparel net revenues increased 20 % to USD 667 million compared with USD 555 million in the same period of the prior year, led by growth in training and golf. Footwear net revenues increased 64 % to USD 264 million from USD 161 million in the prior year’s period, primarily reflecting the ongoing success of the Curry signature basketball line and expanded running offerings. Accessories net revenues increased 26 % to USD 80 million from USD 63 million in the prior year’s period, driven primarily by growth in headwear and bags.
Kevin Plank, Chairman and CEO of Under Armour, Inc., stated, “For the past 24 consecutive quarters or six years, we have driven net revenue growth above 20 % and we are incredibly proud of our start to 2016 with first quarter net revenue growth of 30 %. The strong results posted this quarter truly demonstrate the balanced growth of our brand across product categories, channels and geographies. It also showcases our heightened focus on providing better service across our distribution channels, ensuring that our consumer consistently finds the newest, most premium product from us wherever they shop. In footwear, this includes the remarkable success of the Stephen Curry signature basketball line, as well as the exciting launches of our first smart running shoe and our new line of Jordan Spieth inspired golf shoes. Combined with the introductions of premium apparel technologies like Microthread and CoolSwitch, we will continue to drive elevated innovation and excitement to the athlete throughout the remainder of 2016.”
Gross margin for the first quarter of 2016 was 45.9 % compared with 46.9 % in the prior year’s period, primarily reflecting negative impacts of approximately 100 basis points from higher liquidations and approximately 70 basis points from foreign currency exchange rates, partially offset by approximately 60 basis points from improved product cost margins. Selling, general and administrative expenses grew 27 % to USD 446 million compared with USD 350 million in the prior year’s period, primarily driven by investments in Direct-to-Consumer and overall headcount to support the Company’s strategic initiatives.
Plank concluded, “This year marks our 20th year in business, which is a great milestone for our company. Our robust growth this quarter demonstrates the power of our brand with growth coming from every part of our business. Our ability to adapt in a rapidly changing environment has been a critical part of our success and fuels our inspiration to create game-changing products that solve problems and enrich consumers’ lives. With this unrelenting consumer focus and ongoing investment, we are setting the foundation for our growth story over the next 20 years.”
Based on current visibility, the Company expects 2016 net revenues of approximately USD 5.0 billion, representing growth of 26 % over 2015 and 2016 operating income in the range of USD 503 million to USD 507 million, representing growth of 23 % to 24 % over 2015. Below the operating line, the Company expects interest expense of approximately USD 35 million, an effective full year tax rate of approximately 38.5 %, and fully diluted weighted average shares outstanding of approximately 446 million for 2016 reflective of the Class C Stock Dividend.