Baltimore, MD (April 19, 2013) - Under Armour, Inc. (NYSE: UA) today announced financial results for the first quarter ended March 31, 2013. Net revenues increased 23% in the first quarter of 2013 to $472 million compared with net revenues of $384 million in the prior year's period. Net income decreased 47% in the first quarter of 2013 to $8 million compared with $15 million in the prior year's period, largely reflecting the planned timing of marketing expenditures. Diluted earnings per share for the first quarter of 2013 were $0.07 compared with $0.14 per share in the prior year's period.
First quarter apparel net revenues increased 22% to $346 million compared with $283 million in the same period of the prior year, driven primarily by the introduction of new Baselayer product and strong sales of Fleece. First quarter footwear net revenues increased 27% to $81 million from $64 million in the prior year's period, primarily driven by new running styles led by UA Spine Venom. First quarter accessories net revenues increased 22% to $36 million from $30 million in the prior year's period. Direct-to-Consumer net revenues, which represented 26% of total net revenues for the first quarter, grew 31% year-over-year.
Kevin Plank, Chairman and CEO of Under Armour, Inc., stated, "In the first quarter, we drove growth in excess of 20% for the 12th consecutive quarter in total revenues and the 14th consecutive quarter in apparel revenues. This growth is the direct result of our enhanced design and innovation, including new and improved HeatGear Sonic Baselayer and the attention-grabbing UA Alter Ego line, featuring iconic superheroes such as Batman and Superman. Our Youth product is stronger than ever and we continue to see traction with our expanded Women's lines in Studio and ArmourBra. Momentum is also evident in Footwear with solid sell through of our latest product in the running platform, Spine Venom."
Gross margin for the first quarter of 2013 was 45.9% compared with 45.6% in the prior year's quarter, primarily reflecting favorable year-over-year North American apparel product costs. Selling, general and administrative expenses as a percentage of net revenues were 43.1% in the first quarter of 2013 compared with 39.2% in the prior year's period, primarily reflecting the timing of marketing expenses and incentive compensation expenses. First quarter operating income declined 45% to $13 million compared with $24 million in the prior year's period.
Balance Sheet Highlights
Cash and cash equivalents increased 139% to $256 million at March 31, 2013 compared with $107 million at March 31, 2012. The Company had no borrowings outstanding under its $300 million revolving credit facility at March 31, 2013. Inventory at March 31, 2013 remained unchanged year-over-year at $324 million. Long-term debt decreased to $60 million at March 31, 2013 from $76 million at March 31, 2012.
Updated 2013 Outlook
The Company had previously anticipated 2013 net revenues in the range of $2.20 billion to $2.22 billion, representing growth of 20% to 21% over 2012, and 2013 operating income in the range of $255 million to $257 million, representing growth of 22% to 23% over 2012. Based on current visibility, the Company now expects 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. Despite deleveraging in the first quarter, the Company continues to expect a relatively unchanged marketing expense rate from the 11.2% rate in 2012. The Company continues to expect an effective tax rate of 39.0% to 39.5% for the full year, compared to an effective tax rate of 36.7% for 2012, and fully diluted weighted average shares outstanding of approximately 108 million to 109 million for 2013.
Mr. Plank concluded, "Our strong start to 2013 was underscored by the successful debut of our first of three Brand Holidays planned for this year, which included our largest ever global marketing campaign, I WILL®. As part of this Brand Holiday, we opened the first UA Brand House retail store in our hometown of Baltimore, launched the first-of-its kind performance monitoring system for athletes, Armour39TM and expanded our footwear running platform led by UA Spine Venom. Combined with a heightened focus on newness and innovation throughout our 2013 product portfolio, these efforts magnify our ability to tell more impactful stories to a global audience. We are excited to share more of our vision for the future of the Brand at our upcoming Investor Day on June 5th."
Conference Call and Webcast
The Company will provide additional commentary regarding its first quarter results as well as its updated 2013 outlook during its earnings conference call today, April 19th, 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.