Strong performance in the Apparel category led Under Armour Inc . ( UA ) to post robust first-quarter 2013 results. The quarterly earnings of 7 cents a share substantially surpassed the Zacks Consensus Estimate of 3 cents but decreased 50% from the year-ago quarter due to increased marketing costs.
Total revenue came in at $471.6 million, up 22.7% year over year and ahead of the Zacks Consensus Estimate of $468 million.
The company witnessed strong year-over-year performances across all its segments. Consequently, Under Armour raised its guidance for 2013. The company now expects net revenue in the range of $2.21-$2.23 billion, up 21%-22% year over year. Earlier, it forecasted 2013 revenues in the range of $2.20- $2.22 billion, representing growth of 20%-21%.
Under Armour's largest product category, Apparel, witnessed a 22% rise in revenues to $345.5 million, reflecting strong performance of new Baselayer product and healthy sales of Fleece. The company's youth apparel businesses and innovative products such as Studio, Running and Armour Bra also contributed significantly to the growth.
Footwearnet revenue soared 26.9% to $80.8 million, reflecting sturdy performance of the UA Spine Venom. Moreover, the company is witnessing improved sales in its floor space at its key distribution partners like Dick's Sporting Goods Inc . ( DKS ), Hibbett Sports, Inc . ( HIBB ) and Foot Locker, Inc . ( FL )
Net revenue in the Accessories category rose 21.8% to $36.1 million during the quarter, while Licensing revenues elevated 18.8% year over year to $9.2 million.
Baltimore, Md.-based Under Armour announced that direct-to-consumer net revenue surged 31% during the quarter, representing 26% of the total revenue.
Gross profit rose 23.6% to $216.6 million during the quarter, while gross profit margin expanded 30 basis points to 45.9%, reflecting lower input product cost.
Operating income plunged 45% year over year to $13 million, whereas operating margin contracted 350 basis points to 2.9%, reflecting higher marketing and selling costs.
Going forward, Under Armour stated that lower input costs will continue to boost its margins. Consequently, it expects an improvement of 100 basis points in gross margin for the second quarter of 2013. It also forecasts a modest expansion in gross margin for 2013.
The company raised its operating income outlook for 2013 in the range of $256 million - $258 million, up 23% - 24% year over year. Earlier, the company projected operating income in the range of $255 million - $257 million, reflecting growth of 22% - 23% year over year.
Under Armour opened 1 new Factory House store during the quarter, taking the store count to 102. Going forward, the company intends to add 10 new Factory House stores in 2013.
Other financial Details
Under Armour ended the quarter with cash and cash equivalents of $255.7 million, total long-term debt of $60 million and shareholders' equity of $843.2 million. The company had no borrowings under its revolving credit facility of $300 million at the end of the quarter.
Capital expenditures came in at approximately $11 million for the reported quarter. Management now expects 2013 capital expenditures to be at the higher end of its projected range of $80 million - $85 million.
Currently, Under Armour carries a Zacks Rank #2 (Buy).
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