- Prachi Singh |
Fourth quarter net income at Under Armour decreased 1 percent to 105 million dollars and diluted earnings per share for the fourth quarter were 0.23 dollar compared with 0.24 dollar in the prior year's period.
"We are incredibly proud that in 2016, however, numerous challenges and disruptions in North American retail tempered our fourth quarter results," said Kevin Plank, Under Armour Chairman and CEO in a statement, adding, "The strength of our brand and the continuation of investments in our fastest growing businesses footwear, international and direct to consumer give us great confidence in our ability to navigate the current retail environment, execute against our long-term growth strategy and create value to our shareholders."
Review of the fourth quarter results
Revenues at Under Armour were up 12 percent to 1.3 billion dollars, driven by a 5 percent increase in wholesale revenues to 742 million dollars and a 23 percent increase in direct to consumer revenues to 518 million dollars.
North American revenues grew 6 percent. International revenues, which represented 16 percent of total revenues in the quarter, were up 55 percent or 60 percent currency neutral, which the company said, were driven by significant growth in the UK, Germany, China and Australia.
Apparel revenues increased 7 percent to 929 million dollars including strength in golf and basketball. Footwear revenues increased 36 percent to 228 million dollars driven by accelerated growth in running and basketball. Accessories revenues increased 7 percent to 104 million dollars with strength in bags and headwear.
Highlights of the full year performance
Revenues for the full year, increased 22 percent to 4.8 billion dollars or 23 percent currency neutral including a 19 percent increase in wholesale revenues to 3.1 billion dollars and a 27 percent increase in direct to consumer revenues which reached 1.5 billion dollars.
For the full year, direct to consumer revenues reached 31 percent of total revenues compared with 30 percent in 2015. North American revenues grew 16 percent and international revenues grew 63 percent or 69 percent currency neutral. For the full year, international revenues represented 15 percent of total revenues, compared with 11 percent in 2015.
Apparel revenues increased 15 percent to 3.2 billion dollars led by growth in golf, basketball and training. Footwear revenues grew 50 percent to reach 1 billion dollars driven by balanced growth across all categories with particular strength in running and basketball. Accessories revenues increased 17 percent to 407 million dollars with strength in bags and headwear and Connected Fitness increased 51 percent to 80 million dollars.
Operating income increased 3 percent to 420 million dollars and net income grew 11 percent to 259 million dollars. Diluted earnings per share for full year 2016 were 0.45 dollar per share for Class A and B shares and 0.71 dollar per share for Class C shares compared with 0.53 dollar for all classes in 2015.
2017 revenues expected to grow 11-12 percent
Net revenues are expected to grow 11 to 12 percent to reach nearly 5.4 billion dollars, up 12 to 13 percent currency neutral. Gross margin is expected to be slightly down compared to the prior year with benefits in product costs being offset by continued pressure from changes in foreign currency and sales mix, as the footwear and international businesses continue to outpace the growth of the higher margin apparel and North American businesses.
The company also announced that its chief financial officer, Chip Molloy, has decided to leave the company due to personal reasons. Effective February 3, David Bergman, Senior Vice President, Corporate Finance, and a member of Under Armour's accounting and finance organization, will serve as acting CFO.