Under Armour calms investor fears with strong Q4

Dive Brief:

Under Armour Thursday impressed investors will its Q4 results and raised expectations for its performance in the coming year. Q4 revenue rose 31% to $1.17 billion, compared to $895 year over year. Taking out the effects of the strong dollar, those sales rose 33%, the company said.
The retailer said that 2016 would see revenue rise 25% to close to $5 billion and that it would meet its forecast of operating income growth of 25% this year.
Gross margin fell to 48%, a loss of 200 basis points, due to effects of the strong dollar, increased discounts, and higher sales of lower-margin footwear, the retailer said. But the company cut Q4 costs to 32.8% of net revenues compared to 33.6% year over year.

Dive Insight:

Warm weather and the strong dollar is a frequent complaint in retail earnings reports this year, but Under Armour shrugged off such headwinds as CEO Kevin Plank said the company would celebrate its 20th birthday this year with more impressive results.

The company said its effort to sell directly to its customers through a greater number of stores—45 more last year—is paying off and that its 191 retail stores accounted for more than a third (36%) of its Q4 revenue.

Plank also called attention to its ongoing partnership with Golden State Warriors star guard Stephen Curry saying that his signature basketball shoes helped fuel a 95% increase in footwear sales.

“We started by redefining the sports apparel industry through performance fabrics and today we are raising the bar for what athletes expect across all of their health & fitness needs,” Plank said in a statement. “Our footwear business, driven by the outstanding success of our signature Curry basketball line, will deliver new iterations of signature product across premium price points and distribution throughout the year.”

Plank’s trademark swagger was evident in the company’s presentation Thursday, and investors responded to its report by giving its shares their best day in almost two years, sending them up 17% by end of day.

"Our core business remains incredibly strong and our 31% net revenue growth in the fourth quarter is clear evidence of the continued expansion in the breadth and depth of our brand," Plank said.

Although the stock isn’t near its high of $105 per share, the retailer managed to persuade many that its performance has legs.

"The beat illuminates the long-term strength and future opportunities of the brand," Sterne Agee CRT analyst Sam Poser told CNBC.