Comfort is the main criterion for an athlete before choosing any apparel. Athletic-apparel giants are, therefore, constantly innovating more and more new products to create a niche with customers. Founded in 1996 by Kevin Plank, Under Armour Inc (UA, Financial) is an American sports clothing and accessories company. This Baltimore-based company develops sportswear, casual apparel, footwear and a number of sport accessories. Under Armour has its European headquarters in Amsterdam and other additional controlling centers are in Toronto, China, Hong Kong and in Guangzhou, China. The company also sponsors a number of high-level and professional athletes.
Strong First Quarter Results
On April 21, 2015, UA reported its first quarter results. Net revenues increased 25% in the first quarter of 2015 to $805 million. On a currency neutral basis, net revenues increased 27% compared with the year-ago period. Diluted earnings per share for the first quarter of 2015 were $0.05.
Revenues from Apparel
Apparel revenues increased by 21% and stood at $555 million. Apparel revenues during the same period in 2014 were $459 million. Apparel sales contribute to around 75% of UA’s revenues.
Revenues from Footwear
Footwear revenues during this period increased by 41% and were $161 million.Â
Miscellaneous Revenues
First quarter accessories net revenues increased 23% to $63 million from $52 million in the prior year's period.
Direct-to-Consumer net revenues, which represented 25% of total net revenues for the first quarter, grew 21% Y-o-Y. International net revenues, which represented 12% of total net revenues for the first quarter, grew 74% Y-o-Y.
Cash and cash equivalents
During the first quarter of 2015, cash and cash equivalents stood at $232 million.
UA has been performing consistently over the last five years. 2015 marked their 20th straight quarter above 20% net revenue growth. Gross margin remained unchanged at at 46.9% during the quarter.
Outlook for 2015
Analysing its current performance, UA has anticipated that net revenues in 2015 will be approximately $3.78 billion. Previously, the company anticipated its revenues to be around $3.76 billion.
Expectations
UA is currently trying to raise this to 12% by the end of 2016. The company is currently working on increasing the number of stores throughout the world. It is gaining fast results in international markets. It opened a 30,000 square foot Brand House store on the Magnificent Mile in Chicago, while also debuting in Brazil and the Middle East which contributed to the 74% international growth for the quarter.
It has invested around $700 million in fitness genre in the last three years. The company is surely going to reap benefits from this investment in the future. Footwear and apparel sales are growing consistently. This will go on to add to the company’s better future.
Health and wellness segments are fast growing and UA has more room to grow in these genres. The company plans to take women’s business to around $1 billion by the end of 2016. It is constantly innovating and expanding its women’s segment.
To End
Nowadays, activewear is becoming a hot fashion statement. The wearables market is expected to be at $6 billion by the end of 2016. Under Armour is capitalizing on this growing trend by offering highly technical activewear products for men, women and youth. It is emerging as a big player in the sports apparel industry.
Under Armour has huge revenue growth followed by strong financial position. It also has an impressive record of earnings per share growth, compelling growth in net income, and solid stock price performance. Through the Acquisitions of Endomondo and MyFitnessPal, combined with the company's existing MapMyFitness Community, it created the world's largest digital health and fitness community with over 120 million unique registered users. UA has always been a great stock and though it is expensive when compared to its peers, it has still more room to grow in the near future.
It has a strong historical performance and is constantly building on its reputation. UA reported incredible first quarter results in 2015 with revenues constantly increasing in different departments. The athletic apparel industry has always been amongst the hot picks. UA has plenty of room to grow and is in a better position to offer increased shareholder returns. There is a lot of potential in this company.
