Baltimore, MD (July 25, 2013) - Under Armour, Inc. (NYSE: UA) today announced financial results for the second quarter ended June 30, 2013. Net revenues increased 23% in the second quarter of 2013 to $455 million compared with net revenues of $369 million in the prior year's period. Net income increased 163% in the second quarter of 2013 to $18 million compared with $7 million in the prior year's period. Diluted earnings per share for the second quarter of 2013 were $0.16 compared with $0.06 per share in the prior year's period.
Second quarter apparel net revenues increased 23% to $310 million compared with $253 million in the same period of the prior year, primarily driven by new baselayer product and the expansion of the Storm and Charged Cotton® platforms. Second quarter footwear net revenues increased 21% to $82 million from $67 million in the prior year's period, led by the Highlight football cleat and the UA Spine platform. Second quarter accessories net revenues increased 30% to $51 million from $39 million in the prior year's period, primarily driven by headwear. Direct-to-Consumer net revenues, which represented 30% of total net revenues for the second quarter, grew 29% year-over-year.
Kevin Plank, Chairman and CEO of Under Armour, Inc., stated, "We continued to create great excitement in the marketplace during the second quarter through innovative design across all platforms - apparel, footwear and accessories - speaking loudly to the next generation of Under Armour athletes. While we continue to see great momentum in our apparel business, we are demonstrating share gains in footwear on the field with baseball and football cleats, as well as building upon our momentum in running footwear with foundational platforms like UA Spine. This continued execution against our athlete's demanding expectations helped drive net revenues growth in excess of 20% for the 13th consecutive quarter."
Gross margin for the second quarter of 2013 was 48.3% compared with 45.9% in the prior year's quarter, primarily reflecting lower year-over-year North American apparel and accessories product costs and favorable year-over-year sales mix. Selling, general and administrative expenses as a percentage of net revenues were 41.2% in the second quarter of 2013 compared with 42.7% in the prior year's period, primarily reflecting the timing of marketing expenses. Second quarter operating income increased to $32 million compared with $12 million in the prior year's period.
Balance Sheet Highlights
Cash and cash equivalents increased 57% to $224 million at June 30, 2013 compared with $143 million at June 30, 2012. Inventory at June 30, 2013 increased 29% to $491 million compared with $381 million at June 30, 2012. Long-term debt decreased to $55 million at June 30, 2013 from $74 million at June 30, 2012.
Updated 2013 Outlook
The Company had previously anticipated 2013 net revenues in the range of $2.21 billion to $2.23 billion, representing growth of 21% to 22% over 2012, and 2013 operating income in the range of $256 million to $258 million, representing growth of 23% to 24% over 2012. Based on current visibility, the Company now expects 2013 net revenues in the range of $2.23 billion to $2.25 billion, representing growth of 22% to 23% over 2012, and 2013 operating income in the range of $258 million to $260 million, representing growth of 24% to 25% over 2012. The Company now anticipates an effective tax rate of 40.0% to 41.0% for the full year, compared to prior full year guidance of 39.0% to 39.5% and 36.7% for 2012. The Company continues to anticipate fully diluted weighted average shares outstanding of approximately 108 million to 109 million for 2013.
Mr. Plank concluded, "We are set up a for a strong second half of the year which we recently kicked off through the debut of our Global Brand Holiday, 'Ready for August.' This is the second chapter in the three Brand Holidays we will deliver this year and tells the story of high school football in the U.S. and fútbol globally. In conjunction with this global campaign, we debuted Speedform, a revolutionary running shoe actually built in a bra factory that features a non-traditional seamless heel cup that will help redefine fit in the category. We are also building on our leadership position in baselayer this fall with our latest innovation, ColdGear® Infrared, allowing athletes to stay warmer, longer. These exciting product introductions, along with the existing platforms we continue to build, highlight the ongoing strength of our product pipeline and increase our conviction in achieving our long-term global ambitions."
Conference Call and Webcast
The Company will provide additional commentary regarding its second quarter results as well as its updated 2013 outlook during its earnings conference call today, July 25, at 8:30 a.m. ET. The call will be webcast live at http://investor.underarmour.com/events.cfm and will be archived and available for replay approximately three hours after the live event. Additional supporting materials related to the call will also be available at http://investor.underarmour.com. The Company's financial results are also available online at http://investor.underarmour.com/results.cfm.
About Under Armour, Inc.
Under Armour® (NYSE: UA) is a leading developer, marketer, and distributor of branded performance apparel, footwear, and accessories. The Company's products are sold worldwide and worn by athletes at all levels, from youth to professional, on playing fields around the globe. The Under Armour global headquarters is in Baltimore, Maryland. For further information, please visit the Company's website at www.ua.com.
Forward Looking Statements
Some of the statements contained in this press release constitute forward-looking statements. Forward-looking statements relate to expectations, beliefs, projections, future plans and strategies, anticipated events or trends and similar expressions concerning matters that are not historical facts, such as statements regarding our future financial condition or results of operations, our prospects and strategies for future growth, the development and introduction of new products, and the implementation of our marketing and branding strategies. In many cases, you can identify forward-looking statements by terms such as "may," "will," "should," "expects," "plans," "anticipates," "believes," "estimates," "predicts," "outlook," "potential" or the negative of these terms or other comparable terminology. The forward-looking statements contained in this press release reflect our current views about future events and are subject to risks, uncertainties, assumptions and changes in circumstances that may cause events or our actual activities or results to differ significantly from those expressed in any forward-looking statement. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future events, results, actions, levels of activity, performance or achievements. Readers are cautioned not to place undue reliance on these forward-looking statements. A number of important factors could cause actual results to differ materially from those indicated by the forward-looking statements, including, but not limited to: changes in general economic or market conditions that could affect consumer spending and the financial health of our retail customers; our ability to effectively manage our growth and a more complex business; our ability to effectively develop and launch new, innovative and updated products; our ability to accurately forecast consumer demand for our products and manage our inventory in response to changing demands; increased competition causing us to reduce the prices of our products or to increase significantly our marketing efforts in order to avoid losing market share; fluctuations in the costs of our products; loss of key suppliers or manufacturers or failure of our suppliers or manufacturers to produce or deliver our products in a timely or cost-effective manner; changes in consumer preferences or the reduction in demand for performance apparel, footwear and other products; our ability to accurately anticipate and respond to seasonal or quarterly fluctuations in our operating results; our ability to effectively market and maintain a positive brand image; the availability, integration and effective operation of management information systems and other technology; and our ability to attract and maintain the services of our senior management and key employees. The forward-looking statements contained in this press release reflect our views and assumptions only as of the date of this press release. We undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events.