In the money: Innovation boosts growth at Under Armour
Performance apparel and footwear maker Under Armour attributed its fourth-quarter profit growth to innovation and product expansion - and said this focus on innovation is set to continue in 2013.
The Baltimore-based company saw net income jump 54% to US$50m during the quarter to 31 December, from $33m in the same period of the prior year. Revenue increased 25% to $506m, which was driven primarily by fleece, and a broader expansion of the Storm platform across the category.
Commenting on the results, founder, chairman, CEO and president Kevin Plank said: "2012 was another outstanding year for Under Armour. And as we enter the new year, 2013 holds great promise.
"We've got a lot of great things in the pipeline and it's a competition. It's a competition to be a featured product from Under Armour. So it's our job to edit, it's our job to make that decision for the consumer. And hopefully we'll build and continue to build that trust with the consumer, that it's great product at a fair value. More importantly it's something that works," Plank added.
Looking back on the last 19 months when Under Armour promised to double revenues to $2.13bn by 2013, Plank said growth has come through the diversity of its products.
During the period, the company moved into product categories such as Charged Cotton and Storm Fleece. It also introduced its Studio and Armour Bra products into its women's division, helping apparel sales to jump 25% to $405m.
"Developing these large-scale apparel platforms has not only enabled us to take a bigger share of closet with our core men's consumer, but it has helped us grow an even faster rate in women's and youth. The results of this diversification are quite clear."
"The path for our continued growth in footwear is clear," Plank stressed.
The company said it aims to build a "new wave footwear culture" to gain market share in every athletic footwear category. COO Kip Fulks, who assumed responsibility for footwear following the departure of vice president of footwear Gene McCarthy last month, will be instrumental in this process because he understands what is in the pipeline, said Plank.
Fulks will also "lead and bring new talent" into the team, he added.
"By continually flowing new technologies to market, and growing our business, our existing distribution in key retailers like Foot Locker and Finish Line, we believe the future of Under Armour footwear holds great promise," Plank said.
Under Armour also aims to be more aggressive this year by expanding its product lines further, Plank emphasised.
The group has unveiled its Armour 39 performance monitoring system, which measures how hard athletes have worked during a training session. Although NFL stars Cam Newton and Julio Jones wore the product in 2011, Plank said the company is now ready to sell it.
"It's the same product, and again, we've had this product in the market for 2.5 years. And so we've been testing it, refining it, now we're finally ready to go to retail with this product," Plank added.
"Armour 39 is the first system that detects and responds to every move athletes make. Any direction, any speed, any position, the Armour 39 wearable on body strap works with an accompanying watch or on your phone through a mobile app."
Looking forward, the company forecasts net revenues to be in the range of $2.2-2.22bn, representing growth of 20-21% over 2012, and operating growth in the range of $255-257m, a 22-23% increase over the prior year.
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