By almost all accounts, athletic-wear retailer
Under Armour reported $642 million in first quarter revenue, a 36% improvement over the $472 million reported for the prior-year quarter and a figure that beat the Street consensus by $45 million. First quarter net income increased 73% to $14 million, up from $8 million in the prior-year period, and resulted in earnings of 6 cents per share, up from 4 cents per share during the same time in 2013 and two-cents higher than the analyst consensus.
"We are off to a great start in 2014 driven by broad-based strength across our apparel, footwear, and international growth drivers. Our formula for driving newness and innovation in apparel continues to resonate with consumers and helped deliver over 30% growth for our largest product category," Kevin Plank, Under Armour chairman and CEO, said in a statement Thursday morning. Looking ahead to potential 2014 highlights, Plank noted that the company also "enhanced [its] ability to reach the global athlete, including the recent expansion of our brand in key Latin American markets, as well as strong gains across Europe and Asia."
In spite of these clearly strong results -- which saw growth of 30% or more in all of Under Armour's product segments, the first time this has occurred since the third quarter of 2011 -- the retailer said it expects full-year revenue to fall somewhere between $2.88 billion and $2.91 billion, representing growth of 24% to 25% (up from prior guidance of a 22% to 23% increase) over 2013 revenue, and full-year 2014 operating income to fall somewhere between $331 million and $334 million, marking 25% to 26% (up from prior guidance of 23% to 24%) growth over 2013.
"Looking at the second quarter we do not expect the three primary drivers of our positive performers during the first quarter to carry forward into the current period," Under Armour CFO Brad Dickerson said in a conference call with investors Thursday morning, citing factors like the normalization of the company's factory house product mix and "a more consistent comparison of our supply team performance year over year." Relative to the cautious third quarter and fourth quarter forecast, Dickerson cited higher U.S. import duties, which impacted the third quarter of 2013 by negative 0.9%, as well as an anticipated higher mix of lower-margin international business during the fourth quarter of 2014.
Considering the 33% growth in revenue for the first quarter of the year alone, some considered this outlook entirely too conservative and that management should have increased full-year guidance by more than just 1% to 2%.
"Despite clear evidence of momentum in the quarter, the increase to guidance seemingly only reflects a pass through of the first quarter upside," said Stifel analyst Jim Duffy in a note released Thursday morning.
Duffy was not the only person disappointed by Under Armour's full-year outlook. Investors sent the stock skidding into the red at the opening bell; Under Armour opened for trading $2.55 lower than Wednesday's close and continued its downward slide from there, at one point dipping by more than 10% to $48.78 per share. The stock is currently trading for an 8.3% decline. Year-to-date, the stock is up 25.2%.
Updated at 6:10 pm EDT: After trading in the red throughout the day on Thursday, Under Armour eventually closed at $50.42, a 7.4% drop that cost its billionaire CEO Kevin Plank $163 million of his fortune, a loss that translates to a 6.8% decrease in his net worth, according to FORBES' real-time wealth rankings. However, the stock reversed some of its losses in Thursday's after-hours trading session, getting a 2.88% boost on the news that Under Armour will be added to the S&P 500 after the close of trading on April 30. Under Armour will be taking the place of Beam, the maker behind classic American bourbon whiskey brand Jim Bean. Japan's Suntory Holdings' $13.6 billion buyout of the American spirits maker is expected to close on or around April 30, and when the deal closes, Beam will no longer be a part of the S&P 500.
