Surprising analysts who'd expected an off quarter, Under Armour beat sales and earnings forecasts in the January-to-March period, as revenues soared 30 percent on the popularity of training and golf apparel and Stephen Curry's signature basketball shoe line.
Sales rose to $1.05 billion in the first quarter, up from $805 million a year earlier, topping the $1.04 billion predicted by Wall Street analysts.
Income jumped 63 percent to $19 million, or 4 cents per share, compared with $12 million, or 3 cents per share, in the first quarter of 2015. Analysts had expected 2 cents per share. Earnings reflect the company's recent 2-for-1 stock split that created a Class C of nonvoting stock.
The Baltimore-based athletic apparel brand's stock shot up on the news, rising nearly 7 percent to close at $46.93 in Thursday trading.
Equity analyst Tuna Amobi of S&P Global Market Intelligence re-affirmed his "buy" rating on the stock and raised the price target to $52 a share, a $6 increase.
"Revenues rose a healthy 30 percent ... with solid gains across categories (paced by footwear) and nascent businesses," including direct-to-consumer sales through websites and branded stores, international and connected fitness, Amobi wrote in a research note.
The brand has recorded 24 consecutive quarters — six years — of sales growth of more than 20 percent, with surges in footwear and international business leading the way. The company now expects to top $1 billion in sales every quarter this year and hit $5 billion for the year.
"The strong results posted this quarter truly demonstrate the balanced growth of our brand across product categories, channels and geographies," said Kevin Plank, company chairman and CEO, in an announcement. "It also showcases our heightened focus on providing better service across our distribution channels, ensuring that our consumer consistently finds the newest, most premium product from us wherever they shop."
Sales to wholesale customers, stores such as Dick's Sporting Goods, grew 28 percent to $744 million, while sales to consumers through branded stores and websites grew 33 percent to $266 million.
International sales accounted for 14 percent of revenue and grew 56 percent year-over-year. Consumers in China, where the company plans to open about 120 additional stores this year, have a lot to do with that growth. Sales in China in the first quarter exceeded sales in that nation last year and the company plans an encore visit later this year with the Golden State Warriors' Curry.
Plank credited Curry with bringing "unprecedented" attention to the company's footwear business, even outside the United States. Sales in that category soared more than 60 percent to $264 million, due to continuing popularity of Curry's signature basketball shoe line and more styles in running, the brand's biggest footwear category. The company is expanding footwear offerings that sell for more than $100 from four styles last year to an anticipated 14 styles by next year.
The brand plans a July 1 release of the Curry 2.5, which the basketball superstar is wearing in the NBA playoffs, and an unveiling of the Curry Three in the fall. Under Armour also launched its SpeedForm Gemini 2 Record Equipped running shoe, a smart shoe that tracks steps, and a limited release of a shoe with a 3D printed midsole that sold for $300 a pair. It plans to produce additional 3D printed shoes later this year.
Apparel sales during the quarter rose 20 percent to $667 million, spurred by training and golf categories.
Analysts with Morgan Stanley & Co. had raised concerns that a slowdown in wholesale apparel sales, particularly in the women's category, could cause the company to miss sales targets in upcoming quarters. The analysts cited data from SportScan showing a first quarter sales drop of 7 percent in Under Armour's wholesale women's apparel in the U.S., though the report acknowledged the data failed to capture all the brand's women's business.
"We doubt UA would argue that its women's apparel business is performing the way it wants," the April 10 report said.
During a call with analysts Thursday, Plank appeared to address such reports, saying the company's business has been assessed with "myopic metrics."
He said the growth rate of women's apparel in the e-commerce channel outpaced that of men's apparel, with women's sales on track to surpass $1 billion, "a milestone we are proud of and which puts us in select company. We are focused on long term in women's and are continuing to invest to create beautiful performance products."
The CEO added that the company has put in place a team that's dedicated to improving the merchandising of its products — delivering the right products at the right time to all retail channels.
At its largest customer, Dick's Sporting Goods, "there's an opportunity for us to do a better job," he said.
Addressing an analysts' question on the health of the North American wholesale channel in light of Sports Authority's bankruptcy filing, Plank said Under Armour benefits from its global focus.
"It's obviously a tough quarter for some of our partners in sporting goods," he said. "We do not believe retail is dead. ... To compete with what's happening on the digital side, it needs to be experiential."