Shoes Speed Ahead for Under Armour

NEW YORK — After much speculation on the performance of Under Armour Inc.’s new running shoe, the company’s strong first-quarter results indicate its most recent footwear launch is off to a healthy start.

“The company’s footwear looks pretty promising,” said Thomas Shaw, an equity analyst at Stifel Nicolaus. “The running shoe is turning out to be a bigger category than we expected, within a competitive industry. It’s hard to find many negatives with [Under Armour’s] numbers or commentary.”

In fact, footwear sales — buoyed by both Under Armour’s running shoe, which launched in January, and its nearly year-old trainer — tripled during the first quarter, with sales hitting $56.9 million, from $16.6 million during the year-ago period.

The Baltimore-based company’s chairman and CEO, Kevin Plank, said during a conference call last week that the company’s “entry into running footwear has been welcomed by both our retailers and consumers. The opportunity in running footwear is significantly larger than cleat and training.”

He added, “With our entry into the running footwear category, footwear remains our largest revenue growth driver in 2009.”

Plank also discussed the launch of other footwear categories, including a $200 soccer boot, set for a limited debut in Europe and the U.S. next month. Under Armour continues to test its basketball shoes with product placement on college athletes, but has yet to designate a retail rollout date.

Even as the company highlighted the strides it has made within footwear, many analysts remain uncertain about the overall size of the shoe category.

“I don’t know that we have a true picture yet of how the running shoe performed,” said Mitch Kummetz, an analyst at Robert W. Baird. “We know the company’s footwear sales were strong in the quarter, but we don’t know what the overall size of the business will be or how many pairs of shoes they allocated to each quarter.”

Under Armour noted that the first quarter would likely be the largest in terms of revenue for its running shoe. In addition, Plank said that sales of the training shoe, which have seen some cannibalization from Under Armour’s running shoe, will likely be down for the year.

Kummetz was encouraged by the company’s expansion into soccer, though. “The soccer boot launch is not a meaningful category to the U.S. consumer, but it does help them establish their presence internationally,” he said. “They have yet to establish an international business, and we’d like to see more evidence that they’re going to capitalize on that opportunity.”

Under Armour reported a 38 percent boost in first-quarter profit last Tuesday, as net income for the period ended March 31 grew to nearly $4 million, or 8 cents a diluted share, versus $2.9 million, or 6 cents, in the year-ago quarter.

Net sales increased 27.1 percent to $200 million, from $157.3 million a year earlier.

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