Under Armour Inc. handily topped analysts’ estimates in the third quarter.
For the period ended Sept. 30, the company’s net income surged 33 percent to $34.9 million, from $26.2 million in the same period a year ago. Earnings per share rose 31 percent to 68 cents, from 52 cents.
Net revenue at the Baltimore, Md.-based firm increased 22 percent to $328.6 million. Analysts were looking for EPS of 60 cents on revenue of $322.2 million, as polled by Yahoo Finance.
Under Armour’s sales growth was mainly driven by the apparel and retail sectors, said a company statement.
Revenue from apparel increased 28 percent to $276.7 million, while sales from the direct-to-consumer business surged 47 percent year-over-year during the third quarter.
In fact, the firm will bow a new store in New York City early next month as part of its efforts to expand its retail network.
“We think there [are] a lot of places where frankly we’re still under-penetrated. [When we] consider a direct-to-consumer business as a whole, that includes both retail as well as our web business,” said Kevin Plank, chairman and CEO of Under Armour, in a conference call.
The company cited strong growth across the men’s, women’s and youth divisions. However, footwear sales suffered in the third quarter, declining 20 percent to $26.5 million on the back of weak sales for running and training footwear.
Despite this, Plank said he believes “the opportunity in footwear can someday be greater than apparel for [the firm].”
“2011 will mark our fifth year of making footwear. Our challenge is to invest and win outside the [cleats] business because while our core consumers [are] down in the football turf and baseball diamond, the bigger dollar opportunity remains a growth category such as running and basketball,” added Plank.
Looking ahead, Under Armour’s CFO, Brad Dickerson, said footwear’s gross margin could decline by about 1,000 basis points going into 2011 as labor issues in China continue to exert cost pressures.
For the quarter, selling, general and administrative expenses rose 28 percent to $110.7 million. Gross margins inched more than a percentage point up to 51 percent, thanks to lower sales returns, an improved liquidation and inventory reserve situation and a higher percentage of revenue from the firm’s direct-to-consumer channel.
Under Armour’s cash and cash equivalents stood at $133.9 million at the end of the quarter, up 43 percent from $93.4 million as at Sept. 30, 2009, with no borrowings outstanding under its $200 million revolving credit facility.