Under Armour, Inc. UA reported first-quarter 2016 earnings of 4 cents a share that beat the Zacks Consensus Estimate by a couple of cents, and jumped from 3 cents delivered in the year-ago quarter on the back of sturdy top-line performance. This prompted management to provide an upbeat revenue outlook for 2016. Consequently, shares of this Baltimore-based company rose roughly 4% during pre-market trading hours.
Aided by continued strong performance of the Apparel, Footwear and Accessories categories, total revenue came in at $1,047.7 million, up 30.2% year over year and ahead of the Zacks Consensus Estimate of $1,042 million. On a currency neutral basis, revenue grew 32%.
The company, which competes with giants such as Adidas and Nike, Inc. NKE in the sports apparel business, is keen on expanding its footprint and enhancing brand recognition to get an edge, and the deal with rising athletes provides platform to showcase its brands.
Under Armour’s largest product category, Apparel, once again reported strong sales. Apparel sales jumped 20% to $666.6 million buoyed by growth in training and golf, while Footwear net revenue soared 64.2% to $264.2 million during the quarter driven by the demand for the Curry signature basketball line and expanded running offerings. Net revenue in the Accessories category advanced 26.2% to $79.7 million buoyed by new product introductions in the bags and headwear category, while Licensing revenue grew 14.7% year over year to $19.4 million.
The company’s Connected Fitness segment reported massive year-over-year growth of 119.4% to $18.5 million. This was driven by the acquisitions of Endomondo and MyFitnessPal. These buyouts, along with its existing MapMyFitness and UA RECORD suite of applications, helped the company to form one of the largest digital health and fitness communities.
Under Armour recorded a 28% surge in wholesale net revenue to $744 million, while a 33% increase in Direct-to-Consumer net revenue to $266 million. North America net revenue jumped 26% or 27% on a currency neutral basis, whereas international net revenue, which represented 14% of total net revenue, increased 56% or 65% on a currency neutral basis.
Gross profit escalated 27.3% to $480.6 million. However, gross margin contracted 100 basis points to 45.9% due to higher liquidations and foreign currency headwinds, partially offset by improved product cost margins. Under Armor’s operating income grew 26.1% to $34.9 million, whereas operating margin remained flat at 3.4%.
Other Financial Details
Under Armour ended the quarter with cash and cash equivalents of $157 million, down 30% from the prior-year period, while total debt was $935 million compared with $677 million in the prior-year period. Shareholders' equity at the end of the quarter was $1,741.3 million.