Back to top

Analyst Blog

Under Armour Inc. (UA - Snapshot Report), one of the leading developers, marketers and distributors of branded sports apparel, footwear and accessories, posted better-than-expected third-quarter 2012 results. The quarterly earnings of 54 cents a share exceeded the Zacks Consensus Estimate by a couple of cents and jumped 22.7% from the prior-year quarter.

Net revenue came in at $575.2 million, up 23.6% from the year-ago quarter, and marginally missed the Zacks Consensus Estimate of $576 million.

The company’s strong year-over-year performance came on the back of robust sales across all segments. The company now expects fiscal 2012 net revenues of almost $1.82 billion, up 24% year over year. Earlier, management had forecast revenue between $1.8 billion and $1.82 billion, reflecting a year-over-year growth of 22% to 24%.

Category Details

The double-digit jump in the top-line was driven by a 22.4% increase in apparel net revenue to $444.6 million, reflecting growth across men’s, women’s and youth apparel businesses, and innovative products such as Studio product and Armour Bra. Under Armour remains optimistic about a healthy market for Studio product and Armour Bra.

Footwear net revenue soared 21.4% to $63.2 million, due to the new running footwear introduced in 2012, which includes the strong performance of the UA Spine.

Accessories net revenue rose 37.1% to $54.4 million during the quarter, reflecting healthy performance by headwear and bands. Licensing revenue elevated 24.8% year over year to $13 million.

Baltimore, Maryland-based Under Armour announced that direct-to-consumer net revenue surged 31% during the quarter, representing 24% of the total revenue. Under Armour opened four new Factory House stores during the quarter under review, increasing the store count to 96. Moreover, the company expects to open five new Factory House stores during the fourth quarter.


Gross profit rose 24.6% to $280.4 million during the quarter, while gross profit margin expanded 30 basis points to 48.7%, reflecting lower input costs and positive contribution from North American region. Operating income jumped 21.4% to $91 million, whereas operating margin shriveled 30 basis points to 15.8%, reflecting a 60 basis point rise in the selling general and administrative expenses as a percentage of sales.

The company now expects gross margins to decline by 40 basis points year over year. Earlier, Under Armour projected gross margins to remain flat to marginally down compared with the prior year.

Operating income is now projected to be $207 million, up 27% year over year for fiscal 2012. Earlier, the company expected operating income in the range of $205 million to $207.

Other Details

Under Armour ended the quarter with cash and cash equivalents of $157 million, total long-term debt of $72.2 million and shareholders’ equity of $758.4 million. The company had no borrowings under its revolving credit facility of $300 million at the end of the quarter.

Capital expenditures were approximately $16 million for the quarter under review. Management now expects fiscal 2012 capital expenditures to be at the upper end of the previous guidance range of $60 million and $65 million.

Currently, Under Armour, which competes with Nike Inc. (NKE - Analyst Report) and Columbia Sportswear Company (COLM - Snapshot Report), holds a Zacks #3 Rank that translates into a short-term ‘Hold’ rating.

Please login to or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research


Are you a new Zacks Member or a visitor to

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 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
RPC INC RES 24.91 +8.35%
LITHIA MOTO… LAD 94.59 +4.60%
DELTA AIR L… DAL 39.15 +3.90%
FLAMEL TECH… FLML 14.51 +3.50%
SOUTHWEST A… LUV 28.87 +2.92%