Under Armour Surges as Footwear Helps Boost Forecast
Under Armour Inc. (UA), the maker of compression T-shirts and other athletic apparel, jumped the most since January after increasing its annual sales forecast, helped by gains for footwear and overseas.
The shares rose 15 percent to $68.55 at the close in New York for the biggest daily gain since Jan. 30. The stock has increased 59 percent this year.
Under Armour projects that revenue will rise as much as 29 percent to $3 billion this year, up from an earlier forecast of 25 percent, according to a statement today. The Baltimore-based company also said it expects operating income to surge as much as 30 percent to $345 million.
“The growth opportunities for the Under Armour brand are abundant,” Chief Executive Officer Kevin Plank told analysts on a conference call. Running shoes and other new products helped fuel second-quarter gains, he said. The company also opened its first Brand House stores in Panama, the Philippines and Singapore, furthering its push to become a global brand like Nike or Adidas.
Under Armour was founded in 1996 as an athletic apparel company dedicated to making synthetic sweat-evaporating shirts for men. Since then it’s expanded the brand to children and women and now makes products from golf shorts to backpacks.
This strategy has produced annual sales growth of 24 percent or more the past four years. In 2014’s first half, revenue climbed 35 percent.
Until recently, most of the gains had been driven by apparel. That’s changing, with footwear accounting for 19 percent of second-quarter sales, as the category grew 34 percent. First-half footwear sales totaled $223 million, compared with $299 million for all of last year. Plank said items such as SpeedForm Apollo running shoes are connecting with consumers.
Sales outside North America are also becoming a bigger part of Under Armour’s business, with second-quarter revenue doubling to $51.6 million. That was 8.5 percent of total sales, an increase from 5.7 percent a year earlier.
“We hope to look back on 2014 as a year where we transformed from being just a great U.S. apparel brand to truly establishing ourselves as players in both the footwear and international markets,” Plank said.
To contact the reporter on this story: Matt Townsend in New York at email@example.com