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What Drove Under Armour’s 30% Revenue Jump in 1Q16?

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Analyzing Under Armour’s revenue performance in 1Q16

Under Armour (UA) grew revenue by 30% to $1.05 billion in 1Q16. This was the company’s 24th straight quarter of more than 20% growth in its top line. According to Kevin Plank, UA’s CEO, the company is expected to top $1 billion in sales each quarter this year. Based on the strong showing in the first quarter, UA also revised its 2016 revenue guidance upward to $5 billion from $4.95 billion, which it had projected in January. We’ll discuss management’s expectations for 2016 in greater detail in the final part of this series.

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How have Under Armour’s peers performed lately?

In contrast to UA’s impressive 30% growth rate in its top line, larger rival Nike (NKE) grew sales by 8% to $8.1 billion in fiscal 3Q16, which ended February 29. Lululemon Athletica’s (LULU) sales grew 16.8% to $704 million in fiscal 4Q16, which ended February 1. Adidas (ADDYY) reported 4Q15 sales of 4.2 billion euros, up ~15% year-over-year.

Category, geographic, and channel performance

Under Armour’s strong showing in the first quarter came despite the bankruptcy of Sports Authority, one of the company’s most important wholesale (FXD) partners. Sales in the apparel category, UA’s largest product category, grew 20% to $667 million, representing about two-thirds of the company’s sales in the quarter. Apparel sales were powered by growth in the training and golf categories. Sales in the United States (SPY) and Canada rose 25.7% year-over-year to $881 million.

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Under Armour’s footwear and connected fitness businesses performed better than average, registering growth rates of 64.2% and 119.4%, respectively. The company also registered impressive growth in its international operations and e-commerce channels. International sales, or sales outside the United States and Canada, rose 55.6% to almost $150 million during the quarter, representing ~14% of total revenue, up from 12% a year earlier.

Under Armour’s e-commerce performance

While UA doesn’t disclose figures for online sales, the company did mention that e-commerce sales growth (IWF) outpaced overall sales growth. UA expanded the number of its country-specific e-commerce websites to 26 in the first quarter.

The footwear business and international operations are high-growth areas for Under Armour. We’ll discuss their performance in 1Q16, as well as the future potential and prospects for these businesses, in parts three, four, and five of this series.

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