05 Feb Under Armour’s Q4 Revenues Jump 31 Percent
Under Armour Inc. reported net revenues increased 31 percent in the fourth quarter to $895 million for the period ended Dec. 31, 2014, compared with net revenues of $683 million in the prior year’s period. Sales grew 30 percent in apparel, 55 percent in footwear, and 22 percent in accessories. Net income in Q4 increased 37 percent to $88 million compared with $64 million in the prior year’s period. Diluted earnings per share for the fourth quarter of 2014 were 40 cents compared with 30 cents per share in the prior year’s period.
“We are incredibly proud of recording our 19th consecutive quarter of over 20 percent net revenue growth, including achieving over 30 percent growth in each quarter of 2014, demonstrating the unending opportunity we see across our five key growth drivers,” said Kevin Plank, chairman and CEO of Under Armour, Inc. “2014 marked the year we ignited a powerful new conversation with women, as our I Will What I Want campaign underscored our long-term commitment to both female athletes and athletic females. We built upon our global mission to Make All Athletes Better, as we nearly doubled our International revenues with acceleration in both Europe and China as well as new market strategies in South America, Southeast Asia, and the Middle East. Our Footwear business grew 44 percent as we solidified and took market share in our core on-field businesses, and debuted our award-winning SpeedForm platform.”
Fourth quarter apparel net revenues increased 30 percent to $708 million compared with $546 million in the same period of the prior year, driven primarily by new offerings across training, hunting, and studio, including expanded platform innovations in ColdGear Infrared, Storm, and Charged Cotton.
Fourth quarter footwear net revenues increased 55 percent to $86 million from $55 million in the prior year’s period, led by expanded offerings in running and basketball. Fourth quarter accessories net revenues increased 22 percent to $79 million from $65 million in the prior year’s period.
Direct-to-Consumer net revenues, which represented 38 percent of total net revenues for the fourth quarter, grew 27 percent year-over-year. International net revenues, which represented 9 percent of total net revenues for the fourth quarter, grew 123 percent year-over-year.
Under Armour also announced the creation of the world’s largest digital health and fitness community. Since the December 2013 acquisition of Austin-based MapMyFitness, the company has focused on creating the largest Connected Fitness platform with 31 million registered users. In early January of 2015, Under Armour completed its acquisition of Endomondo for a purchase price of $85 million. Based in Copenhagen, Denmark, Endomondo has one of the largest global connected fitness communities with approximately 20 million registered users primarily concentrated in Europe, providing a strong strategic complement to the company’s existing digital platform.
In addition, the company announced an agreement to acquire MyFitnessPal for a purchase price of $475 million. San Francisco-based MyFitnessPal is the leading resource for healthy living and nutrition with over 80 million registered users, expanding the current offerings for Under Armour’s Connected Fitness platform to now include nutritional resources such as a calorie counter, nutrition and exercise tracker. The MyFitnessPal acquisition is expected to close in the first quarter of 2015. Combined with the company’s recent launch of the UA Record app and website, Under Armour will now be connected with over 120 million unique global consumers, representing the largest digital health and fitness community in the world. Under Armour intends to fund the MyFitnessPal acquisition through an expanded term loan and revolving credit facility as well as cash on hand.
“We first entered the Connected Fitness space with our Armour39 biometric measurement technology at the NFL Combine in February 2011,” explained Plank. “We quickly understood that the power was in the community and an open platform and that these were far more valuable than the hardware tracking device, which informed our decision to purchase MapMyFitness in December 2013. Since the acquisition, we have grown the user base from 20 million registered users to 31 million registered users and gained further insight and validation into the power of the data generated by this community. Today, we have taken defining steps by announcing the acquisitions of two powerful digital businesses that help create the world’s largest digital health and fitness community.”
Gross margin for Q4 was 49.9 percent compared with 51.3 percent in the prior year’s quarter, primarily driven by a higher mix of international revenues. SG&A expenses as a percentage of net revenues were 33.6 percent in the fourth quarter of 2014 compared with 36.9 percent in the prior year’s period, primarily reflecting higher incentive compensation expenses in the prior year’s period. Fourth quarter operating income increased 49 percent to $146 million compared with $98 million in the prior year’s period.
The company offered guidance of net revenues of approximately $3.76 billion for 2015, representing growth of 22 percent over 2014. Operating income for 2015 is expected to be in the range of $397 million to $407 million, representing growth of 12 percent to 15 percent over 2014. The updated 2015 guidance reflects the net dilutive impact from the announced acquisitions, including one-time deal-related costs, as well as the impact of the strong dollar on foreign currency exchange rates.