Expanding Product Platforms Drive Armour’s Revenue Gains



Results recap

Under Armour (UA) uses the calendar year as its fiscal year. Following its history, UA’s results for the first nine months of 2014 grew strongly and ahead of expectations. Gross revenues came in at $2.2 billion, up 32.7% from the $1.7 billion recorded in the same period of 2013. The third quarter of 2014 marked the 18th straight quarter clocking revenue growth in excess of 20%.

EBITDA (or earnings before interest, taxes, depreciation, and amortization) came in at $260 million in the first nine months of 2014, an increase of 28.3% over the previous year’s figures.

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Growth ETFs

Under Armour’s strong growth history means that a number of ETFs investing in growth stocks included the company’s stock in their portfolios. These include the iShares S&P 500 Growth (IVW) (0.12% weight), the Guggenheim S&P 500 Pure Growth ETF (RPG) (1.73% weight), the iShares Russell 1000 Growth (IWF) (0.11% weight), and the iShares Russell Mid-Cap Growth ETF (IWP) (0.36% weight).


Key revenue drivers

Apparel and footwear are major product categories for Under Armour (UA). These accounted for 75.6% and 12.8% of total revenues, respectively, in 2013. In the first nine months of 2014, apparel sales grew 30.2% to $1.6 billion. UA expanded many of its existing apparel platforms, including Charged Cotton, Storm, and ColdGear Infrared. Apparel categories experiencing growth included Golf and Outdoors for Men, Studio and Outdoor for Women, and Training for Youth.

Revenue growth for footwear was even higher—footwear revenues grew 41.8% to $0.3 billion in Q1–Q3 2014. Under Armour is a much newer entrant in the footwear space, which is dominated by NIKE (NKE). NIKE holds ~60% share of the US sports footwear market.

Yet, UA has made significant strides in football cleats. Selling prices have also been higher. Despite 50% higher volumes, the Highlight cleat that was launched in 2013 retailed for $20 more in 2014. Cleats, along with the success of its new line of running shoes SPEEDFORM, ensured that footwear revenues grew by over 50% in the third quarter.


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