In the money: Under Armour reaffirms international focus
Under Armour says international remains an “important opportunity and priority” for the firm.
US-based performance apparel, footwear and accessories brand Under Armour has reiterated its focus on international expansion and said its long-term aim is for global markets to account for more than half of sales.
The company yesterday (30 January) booked an increase in fourth-quarter earnings and sales and upped its full-year fiscal 2014 outlook.
Net profit climbed 9.4%, while sales increased 35%. Gross margin for the quarter was up at 51.3%.
Speaking on the firm's earnings call, CFO Brad Dickerson said international remained an "important opportunity and priority" for the firm.
"We will continue to make the right level of investments to help realise our global potential, especially in Latin American markets that we are entering in 2014. MapMyFitness will also be a key area of investment as we look to build and further engage this community."
While the company did not break out figures for its international division, on its third-quarter analyst call in October, CEO Kevin Plank said that international was one part of the business that still "drags" on overall gross margins for the company.
Nonetheless, the company continues to have ambitions outside of its home market and has been busy in investing in new markets.
It is currently in different stages of growth globally, with operations in countries including the US, Japan, China and across Europe.
"We're incredibly encouraged," Plank told analysts yesterday. "We're confident that the brand does translate. And as long as we execute and we do the things that we're supposed to do, we've got a real chance to live and fulfill that mission of being a true global brand where someday, more than half of our revenues will come from outside of our home country."
Plank said he was confident of the company moving international from 6% to 7% of business to more than 12% by 2016.
Dickerson added that international growth expansion will be weighted towards the back half of the year.
"The realisation is, that we obviously are planning to execute flawlessly in going into these markets, but we want to be cautious because we are entering some new markets for us."
Dickerson said the firm's success in North America and the cash generation there will be the "engines that feed our global ambitions for us as a company".
"Our core North American Apparel business is strong, and that gives us the firepower to invest in growing new geographies with new categories and new consumers."
That cash generation may come from sales of its latest innovations. This week, the company launched its latest "game-changing" running shoe: the UA SpeedForm Apollo.
Dickerson said the focus for the company in 2014 will be in women's.
"Coming off of a year of outstanding results in women's, we are extremely excited about what we planned for 2014. In addition to the great product that is in the pipeline...we will be focusing our second brand holiday this year on women's.
"One of the reasons we are so bullish on our women's business is that there has been a quiet shift going on, where women are increasingly wearing "athletic product" outside of the gym.
"We think the reality is this shift is more permanent than some may expect, as our female consumer continues to embrace our technology innovation and increase focus on style. We are in a great position to continue to grow this business as we build a loyal base of athletes and are growing with her as she moves into new categories and end-users for Under Armour product."
For 2014, Plank said the company will continue to invest in its brands in order to deliver results, but that longer-term its ambitions stretch beyond $4bn in revenue by 2016.
"Our ambition is fuelled by investments. Some large and immediately relevant, like Notre Dame, and others that are small now but could potentially ignite our business down the road. It may be a logistics tool that you'll never hear about, a retail store in Mexico or an up-and-coming athlete who may one day become the next Stephen Curry or Tom Brady.
"When we invest well, we win. We believe our 2013 results are a great reflection of sound investments and solid execution. We are a growth company, one that's focused on our future but delivering results right now."
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