Investors Selling Under Armour (UA) Shares as Q4 Mixed But Guidance Draws Concern
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Shares of Under Armour, Inc. (NYSE: UA) are trading down 3.5 percent following the release of better than expected fourth-quarter earnings but FY12 sales guidance which was slightly disappointing.
Net revenue increased 34 percent to $403 million compared with net revenue of $301 million in the prior year's period. This is inline with the Street’s consensus of $403.55 million.
Direct-to-Consumer sales represented 38 percent of total sales and grew 50 percent year-over-year. Apparel sales grew by 27 percent to $323 million, while Accessories sales rose by 149 percent to $37 million.
Net income increased 42 percent to $33 million compared with $23 million in the year-ago quarter. Diluted earnings per share were $0.62, topping last year’s figure of $0.44 and the Street’s consensus of $0.60.
Cost of goods sold totaled $195.22 million, about 48.4 percent of total sales.
Gross margin was 51.6 percent compared with 51.7 percent in the prior year's quarter.
Selling, general and administrative expenses made up for 37.9 percent of total sales, down from 40 percent in the prior year's period.
Cash and cash equivalents decreased 14% to $175 million at December 31, 2011 compared with $204 million at December 31, 2010.
The company repurchased roughly 700,000 shares in 2011.
Kevin Plank, Chairman, CEO, and President of Under Armour, Inc., stated, "We completed a very successful 2011, growing net revenues 38%, the highest overall growth rate since 2007. Our apparel business surpassed the $1 billion mark and we demonstrated our ability to broaden the addressable market for the Brand with the introduction of our premium cotton platform. The strength we continue to see in our apparel and Direct-to-Consumer businesses affords us the ability to continue to make strategic investments in other long-term growth drivers like footwear and international."
Mr. Plank concluded, "With the credibility we have built with our consumer, we upheld our premium positioning in the marketplace in 2011 by delivering compelling innovation through programs like Charged Cotton and our Charge RC running shoes. We remain focused on long-term profitable growth. This means continuing to target distribution where our consumer is looking for us and that is appropriate for our Brand. It also means balancing new, relevant innovation stories such as our ColdBlack apparel technology with re-invigorated product in our heritage baselayer programs. Finally, the operational discipline we continue to add across our organization will help maximize these drivers to our bottom line."
UA continues to expect 2012 operating income growth at the higher end of its 20 percent to 25 percent long-term growth target. The company expects 2012 net revenues growth at the low end of its 20 percent to 25 percent long-term growth target, compared to the prior guidance at the higher end of its 20 percent to 25 percent long-term growth target. The Street’s consensus calls for revenue growth of 24.7 percent.
Net revenue increased 34 percent to $403 million compared with net revenue of $301 million in the prior year's period. This is inline with the Street’s consensus of $403.55 million.
Direct-to-Consumer sales represented 38 percent of total sales and grew 50 percent year-over-year. Apparel sales grew by 27 percent to $323 million, while Accessories sales rose by 149 percent to $37 million.
Net income increased 42 percent to $33 million compared with $23 million in the year-ago quarter. Diluted earnings per share were $0.62, topping last year’s figure of $0.44 and the Street’s consensus of $0.60.
Cost of goods sold totaled $195.22 million, about 48.4 percent of total sales.
Gross margin was 51.6 percent compared with 51.7 percent in the prior year's quarter.
Selling, general and administrative expenses made up for 37.9 percent of total sales, down from 40 percent in the prior year's period.
Cash and cash equivalents decreased 14% to $175 million at December 31, 2011 compared with $204 million at December 31, 2010.
The company repurchased roughly 700,000 shares in 2011.
Kevin Plank, Chairman, CEO, and President of Under Armour, Inc., stated, "We completed a very successful 2011, growing net revenues 38%, the highest overall growth rate since 2007. Our apparel business surpassed the $1 billion mark and we demonstrated our ability to broaden the addressable market for the Brand with the introduction of our premium cotton platform. The strength we continue to see in our apparel and Direct-to-Consumer businesses affords us the ability to continue to make strategic investments in other long-term growth drivers like footwear and international."
Mr. Plank concluded, "With the credibility we have built with our consumer, we upheld our premium positioning in the marketplace in 2011 by delivering compelling innovation through programs like Charged Cotton and our Charge RC running shoes. We remain focused on long-term profitable growth. This means continuing to target distribution where our consumer is looking for us and that is appropriate for our Brand. It also means balancing new, relevant innovation stories such as our ColdBlack apparel technology with re-invigorated product in our heritage baselayer programs. Finally, the operational discipline we continue to add across our organization will help maximize these drivers to our bottom line."
UA continues to expect 2012 operating income growth at the higher end of its 20 percent to 25 percent long-term growth target. The company expects 2012 net revenues growth at the low end of its 20 percent to 25 percent long-term growth target, compared to the prior guidance at the higher end of its 20 percent to 25 percent long-term growth target. The Street’s consensus calls for revenue growth of 24.7 percent.
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