Under Armour Reports Revenues Increased 30 Percent in The Third Quarter to $938 Million

Under Armour, Inc. reported revenues increased 30 percent in the third quarter to $938 million compared with net revenues of $723 million in the prior year's period. Sales grew 26 percent in apparel, 50 percent in footwear, and 32 percent in accessories. Net income increased 22 percent to $89 million, or 41 cents a share, million compared with $73 million, or 34 cents, in the prior year's period.

Analysts polled by Thomson Reuters on average had expected earnings of 40 cents a share on revenue of $926 million.

Third quarter apparel net revenues increased 26 percent to $705 million compared with $561 million in the same period of the prior year, driven primarily by expanded offerings and platform innovations across training, golf, and outdoor.Third quarter footwear net revenues increased 50 percent to $122 million from $81 million in the prior year's period, led by new introductions in running and basketballThird quarter accessories net revenues increased 32 percent to $85 million from $64 million in the prior year's period, primarily driven by expanded offerings in headwear, bags, and gloves

Direct-to-Consumer net revenues, which represented 26 percent of total net revenues for the third quarter, grew 35 percent year-over-yearInternational net revenues, which represented 9 percent of total net revenues for the third quarter, grew 94 percent year-over-year.

Kevin Plank, chairman and CEO of Under Armour, Inc., stated, "Our strong third quarter results demonstrate the power of the UA brand. The momentum and growing confidence we outlined last quarter in Footwear and International were on full display in the third quarter with growth rates accelerating to 50 percent and 94 percent, respectively. Our Direct-to-Consumer business continues to drive our vision to Empower Athletes Everywhere with the debut of local E-Commerce sites in the United Kingdom, Germany, and France, as well as optimizing all global sites for mobile to stay ahead of where our consumers are going. And we were particularly excited about our I WILL WHAT I WANT global women's campaign, featuring Misty Copeland and Gisele Bundchen, which ignited a powerful new dialogue with our female consumer as we begin to bridge the gap between female athletes and athletic females."

Gross margin for the third quarter of 2014 was 49.6 percent compared with 48.4 percent in the prior year's quarter, primarily driven by higher import duties in the prior year's period and favorable year-over-year sales mix. Selling, general and administrative expenses as a percentage of net revenues were 34.0 percent in the third quarter of 2014 compared with 31.7 percent in the prior year's period, reflecting broad-based investments to support global growth initiatives as well as higher incentive compensation expenses. Third quarter operating income increased 21 percent to $146 million compared with $121 million in the prior year's period.

Balance Sheet Highlights

Cash and cash equivalents increased 34 percent to $249 million at September 30, 2014 compared with $186 million at September 30, 2013. Long-term debt including current maturities increased to $192 million at September 30, 2014 compared with $54 million at September 30, 2013. Inventory at September 30, 2014 increased 28 percent to $637 million compared with $497 million at September 30, 2013.

Updated 2014 Outlook

The company had previously anticipated 2014 net revenues in the range of $2.98 billion to $3.0 billion, representing growth of 28 percent to 29 percent over 2013, and 2014 operating income in the range of $343 million to $345 million, representing growth of 29 percent to 30 percent over 2013. Based on current visibility, the company expects 2014 net revenues of approximately $3.03 billion, representing growth of 30 percent over 2013, and 2014 operating income of approximately $348 million, representing growth of 31 percent over 2013. The company anticipates an effective tax rate of approximately 40.0 percent for the full year, compared to 37.8 percent for 2013, and fully diluted weighted average shares outstanding of approximately 218 million for 2014.

Plank concluded, "Our plans of crossing $3 billion in net revenues and achieving 30 percent growth this year represent significant milestones for the Brand, but we believe we are just getting started. We are delivering consistent top line results while making the right investments to support both the near- and long-term opportunities of the Brand. This includes investments to build world-class design and innovation capabilities for all of our products, accelerate our international footprint, and expand our 30 million users under our Connected Fitness platform. We believe this balanced approach will continue to drive our global ambitions and long-term value for our shareholders. We are proud of what we have built and continue to see ourselves as a much larger brand than the $3 billion in revenues we are projecting for 2014."