Under Armour Results Jump on Strength of Stephen Curry Shoe Line
Under Armour reported a 30% jump in revenue to $1.05 billion for its most recent quarter, a mark that Chief Executive Kevin Plank joked was a homage to Mr. Curry, who averaged 30 points a game while wearing jersey number 30.
Mr. Plank invoked Mr. Curry’s name 14 times on an earnings conference call Thursday. The basketball star’s signature shoes, now in their second year on the market, helped the company’s small footwear business log a 64% surge in revenue.
The Baltimore-based sportswear maker has made significant strides, quarter after quarter, in growing sales in a competitive market dominated by rival Nike Inc. The Curry sneaker, which is priced at $130, has been selling faster than some higher-priced Nike offerings, such as the $160 signature shoe for LeBron James, according to analysts.
Mr. Plank defended his company from Wall Street criticism that average selling prices of its shoes are falling. Seeming exasperated, he said the footwear manufacturing process “doesn’t mean we can make a pretty shoe and put a big price tag on it, you have to earn the right to do that.”
As the retail sporting goods industry goes through a reset period following the bankruptcy filing of national chain Sports Authority Inc. last month, Under Armour offered a bright outlook.
“We do not believe that retail is dead,” Mr. Plank said. He stressed the company’s own direct sales growth, helped by its recent investments in fitness-tracking apps which encourage users to buy more Under Armour product.
Shares of Under Armour rose 7.8% to $47.39 in morning trading. The stock, which recently split, has now gained about 14% so far this year.
For the quarter, the company posted a profit of $19.2 million, or 4 cents a share, up from $11.7 million, or 3 cents a share, a year earlier.
Under Armour still gets two-thirds of its revenue from apparel. Footwear sales were $264 million in the quarter, while apparel sales climbed 20% to $667 million, led by growth in training and golf. By comparison, Nike reported $8.03 billion in revenue for its latest quarter.
Growth in inventories continue to outpace sales gains, a trend the company attributes to an effort to speed shipping times. Inventories grew 44% to $834 million.
Gross margin slid to 45.9% from 46.9% the year before, hurt by higher liquidations and the strength of the U.S. dollar.
The company also reported a 30% decrease in cash for the period ended March 31, while debt rose 38% to $935 million.