Under Armour Inc. is out to “create the wins” in footwear, which now represent about a tenth of group revenue, said company Chairman, President and CEO Kevin Plank.
In a call with analysts Tuesday, Plank said, “The arrows continue to point up as our third-quarter [footwear] business grew 97 percent to over $50 million. Our sell-throughs over the past six months give us the confidence that our footwear is resonating with consumers.”
He added, “The traction we are getting in footwear brings us to new consumers through key mall partners such as Foot Locker and The Finish Line. The key to the mall is footwear. And until we are a significant player in footwear, everything else there will be taking a back seat.”
Under Armour Inc. beat estimates in the third quarter and raised its fiscal 2011 revenue guidance to between $1.46 billion and $1.47 billion, representing a year-over-year increase of about 38 percent.
Its shares closed 5 percent higher on Tuesday on the news.
For the period ended Sept. 30, the Baltimore-based firm earned $46 million, a 32 percent increase over the same period a year ago. Earnings per share rose 29 percent to 88 cents and surprised analysts, who were looking for 83 cents, as polled by Yahoo Finance.
Net revenue surged 42 percent to $465.5 million, from $328.6 million a year ago.
Accessories performed most impressively, with revenues more than tripling to $40 million, primarily driven by the in-house transition of its previously licensed hats and bags business, the firm said.
Footwear was the next best performer and saw revenues double to $52 million, on the back of the introduction of new running footwear and earlier year-over-year shipments of basketball product.
Explaining the firm’s strategy of tiered price points on shoes — the Assert style retails for $70; the Split at $90; and the Charge RC at $120 — Plank said, “We’re doing OK with margins. When we launched in 2006, we had one factory. Today, we have nine or 10. The optimal level [is] 14 or 15.”
Direct-to-consumer revenue grew 73 percent from last year, to $102 million, while apparel revenue increased 31 percent to $363 million.
Gross margin for the company slipped to 48 percent, from 51 percent a year ago, primarily due to less-favorable apparel product margins and the ongoing impact of the hats and bags transition in 2011.
At quarter’s end, the firm’s inventories grew 63 percent, cash and cash equivalents stood at $68 million, and long-term debt was $80 million.