Back to top

Analyst Blog

Under Armour Inc. (UA - Analyst Report) posted third-quarter 2013 earnings of 68 cents a share that beat the Zacks Consensus Estimate by a couple of cents and surged 25.9% from 54 cents earned in the year-ago quarter.

Aided by strong performance of the Apparel and Footwear categories, total revenue came in at $723.1 million, up 25.7% year over year and ahead of the Zacks Consensus Estimate of $709 million.

Category Performance

Under Armour’s largest product category, Apparel, once again witnessed strong sales. Apparel sales jumped 26.1% to $560.9 million, reflecting strength across Storm and Charged Cotton platforms, coupled with ColdGear Infrared technology, which has been recently introduced.

Footwear net revenue soared 28.3% to $81 million during the quarter. The company is witnessing strong demand of its Highlight cleats and UA Spine products.

Net revenue in the Accessories category rose 18.4% to $64.4 million during the quarter led by headwear and bags, while Licensing revenue elevated 29.4% year over year to $16.9 million.

Under Armour announced a 34% increase in direct-to-consumer net revenue during the quarter, representing 25% of the total revenue.

Margin Performance

Gross profit rose 24.9% to $350.1 million, however, gross profit margin contracted 30 basis points to 48.4% due to a rise in import duties. Operating income jumped 32.8% to $120.8 million, whereas operating margin expanded 90 basis points to 16.7%.

Stores Update

This Zacks Rank #3 (Hold) stock opened 6 new Factory House stores during the quarter, taking the store count to 112. The company now intends to add 4 more Factory House stores in the remainder year, thereby bringing the total to 116.        

Other Financial Details

Under Armour ended the quarter with cash and cash equivalents of $186.4 million, long-term debt dropped to $54 million from $72 million in the prior-year period, while shareholders' equity was $966.5 million.

Capital expenditures came in at approximately $23 million for the reported quarter. Management now expects 2013 capital expenditures to be $95 million, up from its earlier projected range of $85 million to $90 million.

Guidance

The company witnessed strong year-over-year performances across all its segments. Consequently, Under Armour raised its guidance for 2013. The company now expects net revenue of $2.26 billion, up 23% year over year. Earlier, it forecasted 2013 revenue in the range of $2.23 billion to $2.25 billion, representing growth of 22% to 23%.

Going forward, Under Armour forecasts a 50 basis points decline in gross margin during the fourth quarter. However, the company now projects operating income for 2013 to be $260 million, up 25% year over year. Earlier, the company projected operating income in the range of $258 million to $260 million, reflecting growth of 24% to 25% year over year.

However for 2014, management provided a cautious outlook with both net revenue and operating income to come in at the lower end of long-term growth targets of 20% to 25%.

Other Stocks to Consider

Until any further upgrade in Under Armour’s Zacks Rank, other stocks in the Apparel, Footwear & Accessories industry worth considering include Carter's, Inc. (CRI - Snapshot Report) and Brown Shoe Co. Inc. (BWS - Snapshot Report), both carrying a Zacks Rank #1 (Strong Buy) and Nike, Inc. (NKE - Analyst Report) sporting a Zacks Rank #2 (Buy).

Please login to Zacks.com or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research

Close

Are you a new Zacks Member or a visitor to Zacks.com?

Top Zacks Features

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Zacks.com. Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
SUPER MICRO… SMCI 27.00 +10.25%
CANADIAN SO… CSIQ 38.34 +8.18%
BANCO DO BR… BDORY 16.78 +8.05%
CENTURY ALU… CENX 26.97 +7.97%
WILLDAN GRO… WLDN 11.38 +5.86%