Athletic apparel maker Under Armour Inc (NYSE:UA) has been under the shadows of its superior competitors for quite some time now, but if you take a look at the company’s quarterly results, you can be sure that the company is trying hard to catch up with its rivals. The results have been overwhelming as the company recorded a robust growth in its margins, beating the analysts’ estimates.
Let’s take a look at the factors that contributed to this growth.
What got Under Armour running?
Under Armour Inc (NYSE:UA)’s total revenue came in at a $454.5 million, signifying an increment of 23%, comfortably beating the consensus estimate of $448.9 million. The hike in top-line was primarily driven by the company’s sturdy performance in the apparel segment. This doesn’t come as a surprise, at least not to me, as this is the 15th consecutive time that the company’s revenue in the apparel section has increased by a whopping margin of more than 20%.
This time around, Under Armour Inc (NYSE:UA) recorded an increment of 23% in apparel net revenue, which contributed $310 million to its revenue. The sustained momentum of sales in the apparels segment is a clear indication that the company is playing to its strengths and will continue to do so to achieve long term success. Apart from that, the revenue was also propelled by the increase of sales in the footwear and accessories segment.
The increase in the earnings was even more impressive as Under Armour Inc (NYSE:UA) recorded an augmentation of 165% to $18 million from $7 million in the prior fiscal year. The diluted earnings per share for second quarter were $0.16, thus surpassing the analysts’ estimate of $0.14. The gigantic rise in the net income was a result of Under Armour’s continued innovations across all platforms, which resonated with the requirements of the consumers and created great excitement in the market place.
Plans for the future
Entering into the more lucrative soccer market
The company is expanding its horizons by stepping into the soccer market, which should potentially show good returns.
Under Armour Inc (NYSE:UA) signed a lucrative deal with Tottenham Hotspur, an English soccer club, replacing Puma as the team’s main sponsor. I consider this to be a very good deal as Tottenham Hotspur have gradually climbed their way up from the bottom of the division and now are regarded as one of the powerhouses of England. This gradual rise was accompanied by the increase in the club’s global fan base and this will potentially prove to be a great deal for Under Armour.
The company is also entering into a relationship with the most famous Chilean soccer team called Colo-Colo to mark its arrival in the country’s soccer market. This will definitely boost Under Armour’s sales in Chile.
94% of the company’s revenue is generated from the U.S.A., but the company is now looking to widen its international base as it tries to make its presence more prominent in the global market.
Under Armour’s contract with Canelo Alvarez is helping the company to enhance its business in Mexico, as the boxer is a highly popular figure in the country and recently won a junior middleweight championship. Along with this, the planned opening of special retail stores in Mexico will also amplify its sales in the country.
Under Armour Inc (NYSE:UA)’s foreign sales presently account for about 6% of the company’s revenue, but the company is looking forward to double that figure by 2015 and contracts with numerous foreign sports teams and athletes show that the right strategies are being implemented to satisfy the expectations.