Under Armour posts best quarterly growth of year
- Q4 earnings grow 20.4% to US$105.6m
- Gross margin narrows to 48%
- Sales increase 31% to $1.17bn
Under Armour has continued to diversify its product offering
Performance wear specialist Under Armour has posted its best quarterly growth of the year as fourth-quarter earnings soared and net revenues in apparel, its largest product category, surged 22%.
Earnings in the three months to the end of December grew 20.4% to US$105.6m from $87.7m a year earlier thanks to investments in people, systems, and digital.
Gross margin narrowed to 48% from 49.9%, primarily due to negative impacts of around 90 basis points from sales mix, specifically from strong footwear growth, around 80 basis points from the continued strength of the US dollar, and around 30 basis points from higher liquidations.
Net revenues were up 31% to $1.17bn, and on a currency neutral basis increased 33%. Under Armour said it delivered its 25th consecutive quarter of more than 20% net revenue growth in its largest product category of apparel.
Fourth quarter apparel sales climbed 22% to $865m, led by growth in training, running, golf and basketball. Footwear sales soared 95% to $167m, primarily due to the success of the Curry signature basketball line and expanded running offerings. In the company's international division, which represented 12% of total net revenues for the quarter, sales jumped 70% year-over-year, or 85% on a currency neutral basis.
"Our core business remains incredibly strong and our revenue growth in the fourth quarter is clear evidence of the continued expansion in the breadth and depth of our brand," said CEO Kevin Plank. "We continued to diversify our product offering and geographic reach, driving significant market share gains in key strategic areas like basketball footwear, while better meeting the needs of the global athlete with investments in our global Brand House stores and e-commerce sites."
Looking forward, Under Armour said it expects revenue to total $4.95bn for fiscal 2016, representing 25% growth over 2015. Operating income is expected to be $503m, representing growth of 23%.
Håkon Helgesen, retail analyst at Conlumino, questioned what the new fiscal will bring for Under Armour following such a "successful" 2015.
"In our view strong growth should continue to trend above 20%, and based on the company's plans we have pencilled overall annual revenue growth of 23%. This will take the business to almost $5bn, which is a very respectable position in what will be just its 20th year of trading. Key to the growth are continued product innovation in fabrics and in technologies, both of which should stimulate interest among professional and amateur consumers alike."
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