Dive Brief:
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Sportswear retailer Under Armour on Thursday reported double-digit revenue and profit gains in Q1, beating Wall Street estimates, and raised its 2016 revenue forecast to $5 billion from previous projections of $4.95 billion.
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Under Armour's overall Q1 net revenues increased 30% to $1.05 billion compared with net revenues of $805 million a year ago. Q1 wholesale net revenues grew 28% year-over-year to $744 million compared to $579 million, while direct-to-consumer net revenues grew 33% year-over-year to $266 million, compared to $200 million in Q1 2015.
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Footwear continues to be a source of Under Armour's strength, with Q1 footwear net revenues up 64% to $264 million from $161 million a year ago. The company credited the increase to the ongoing success of its Stephen Curry signature basketball line and expanded running shoe offerings.
Dive Insight:
Despite surpassing Adidas in the U.S. in 2014, Under Armour is still seen as the underdog in the athletic-gear sector. That’s because Nike remains number one, by far, because the space is extremely competitive, and because Adidas is working on a comeback.
Under Armour took a beating earlier this month when golf star and UA celebrity endorser Jordan Spieth suffered a final-round meltdown at the Masters tournament hours before Morgan Stanley sent out a note forecasting a Q1 earnings miss for the company. Morgan Stanley apparel and footwear analyst Jay Sole called Under Armour's huge North America sales growth in footwear “unsustainable,” maintaining that its growth would instead merely be “solid” and adding that its fiscal 2015 triple-digit running footwear growth was largely due to price cuts that outpaced its rivals.
Perhaps in a rebuttal to the Morgan Stanley punch, Under Armour Chairman and CEO Kevin Plank said in a statement Thursday that the company’s strong Q1 results “demonstrate the balanced growth of our brand across product categories, channels and geographies.”
Under Armour also credited its shoe sales and its partnerships with Spieth and Golden State Warriors point guard Stephen Curry, the NBA's reigning Most Valuable Player.
“[Under Armour's Q1 success] showcases our heightened focus on providing better service across our distribution channels, ensuring that our consumer consistently finds the newest, most premium product from us wherever they shop,” Plank said. “In footwear, this includes the remarkable success of the Stephen Curry signature basketball line, as well as the exciting launches of our first smart running shoe and our new line of Jordan Spieth inspired golf shoes. Combined with the introductions of premium apparel technologies like Microthread and CoolSwitch, we will continue to drive elevated innovation and excitement to the athlete throughout the remainder of 2016."
Analysts polled by Thomson Reuters had estimated per-share Under Armour earnings of 2 cents on revenue of $1.04 billion, according to MarketWatch. Shares were up 4% to $45.50 in Thursday’s pre-market trading, according to Reuters. As of Wednesday's close, Under Armour had risen 23% in the past three months, MarketWatch added.