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Strong performance in the Apparel category led Under Armour Inc. to post robust fourth-quarter 2012 results. The quarterly earnings of 47 cents a share came a penny ahead of the Zacks Consensus Estimate and surged 51% from the comparable year-ago quarter. 

Total net revenue was also strong at $505.9 million, up 25.5% year over year and ahead of the Zacks Consensus Estimate of $498 million.

The company witnessed strong year-over-year performances across all its segments. Consequently, Under Armour now expects 2013 net revenue to be in the range of $2.20 billion to $2.22 billion, up 20%–21% year over year.

Category Performance

The company's largest product category, Apparel, witnessed a 25.1% increase in revenue to $404.5 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 revenues soared 42.7% to $44.7 million, including the sturdy performance of the UA Spine. Moreover, the company witnessed strong growth in the 2013 line of new baseball cleats.

Net revenue in the Accessories category rose 15.8% to $42.6 million during the quarter, while Licensing revenues elevated 20.7% year over year to $14 million.

Baltimore, Md.-based Under Armour announced that direct-to-consumer net revenues surged 29% during the quarter, representing 39% of the total revenue.

Margins

Gross profit rose 22.3% to $254.2 million during the quarter, while gross profit margin contracted 130 basis points to 50.3%, reflecting unfavourable sales mix and rise in air freight costs. 

Operating income increased 47.5% year over year to $81.6 million, whereas operating margin expanded 240 basis points, reflecting lower marketing and selling costs. Operating income is now projected to be in the range of $255 million – $257 million for 2013, up 22%-23% year over year.

Stores Update

Under Armour opened 5 new Factory House stores during the quarter, increasing the store count to 101. Going forward, the company intends to add 15 new All-American and 20 blue-chip shopping shops at Dick's Sporting Goods Inc. . Moreover, with strong performance across its Women's, Youth and Underwear segments, the company is witnessing growth in its floor space at its key department store distribution partners like Macy's Inc. , Dillard's Inc. and Belk department stores.

Other financial Details

Under Armour ended the quarter with cash and cash equivalents of $341.8 million, total long-term debt of $62 million and shareholders’ equity of $816.9 million. The company had no borrowings under its revolving credit facility of $300 million at the end of the quarter.

Capital expenditures were approximately $23 million for the quarter under review. Management now expects 2013 capital expenditures to be in the range of $80 million – $85 million.

Currently, Under Armour holds a Zacks Rank #4 (Sell).

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