Baltimore, MD (October 24, 2013) - Under Armour, Inc. (NYSE: UA) today announced financial results for the third quarter ended September 30, 2013. Net revenues increased 26% in the third quarter of 2013 to $723 million compared with net revenues of $575 million in the prior year's period. Net income increased 27% in the third quarter of 2013 to $73 million compared with $57 million in the prior year's period. Diluted earnings per share for the third quarter of 2013 were $0.68 compared with $0.54 per share in the prior year's period.
Third quarter apparel net revenues increased 26% to $561 million compared with $445 million in the same period of the prior year, primarily driven by the continued expansions of the Storm and Charged Cotton® platforms, as well as the introduction of ColdGear® Infrared technology. Third quarter footwear net revenues increased 28% to $81 million from $63 million in the prior year's period, led by strong gains in both running and football. Third quarter accessories net revenues increased 18% to $64 million from $54 million in the prior year's period, primarily driven by bags and headwear. Direct-to-Consumer net revenues, which represented 25% of total net revenues for the third quarter, grew 34% year-over-year.
Kevin Plank, Chairman and CEO of Under Armour, Inc., stated, "We have a consistent formula that is driving success across our business: deliver newness and innovation and the consumer responds. This has been instrumental in driving net revenue growth in excess of 20% for the past fourteen straight quarters and we will continue to fuel this strategy going forward. During the quarter we introduced our latest apparel innovation, ColdGear® Infrared, which utilizes a ceramic thermo-conductive inner coating to absorb and retain body heat. With the limited release of Speedform we also provided a glimpse of where we can take footwear and redefine fit in the category."
Gross margin for the third quarter of 2013 was 48.4% compared with 48.7% in the prior year's quarter, primarily reflecting higher import duties, partially offset by the net impact of lapping the prior year's sourcing challenges. Selling, general and administrative expenses as a percentage of net revenues were 31.7% in the third quarter of 2013 compared with 32.9% in the prior year's period, primarily reflecting leverage of marketing expenses. Third quarter operating income increased to $121 million compared with $91 million in the prior year's period.
Balance Sheet Highlights
Cash and cash equivalents increased 19% to $186 million at September 30, 2013 compared with $157 million at September 30, 2012. Inventory at September 30, 2013 increased 59% to $497 million compared with $312 million at September 30, 2012. Long-term debt decreased to $54 million at September 30, 2013 from $72 million at September 30, 2012.
Updated 2013 Outlook
The Company had previously anticipated 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. Based on current visibility, the Company now expects 2013 net revenues of approximately $2.26 billion, representing growth of 23% over 2012, and 2013 operating income of approximately $260 million, representing growth of 25% over 2012. The Company continues to anticipate an effective tax rate of 40.0% to 41.0% for the full year, compared to 36.7% for 2012. The Company now anticipates fully diluted weighted average shares outstanding of approximately 108 million for 2013.
Mr. Plank concluded, "The sustained momentum we are generating domestically will help fuel our global ambitions. Many of these global efforts are ramping up with recent specialty stores opening in China, Japan and Mexico, E-Commerce platforms launching in Hong Kong and Taiwan, and new offices opening in Brasil and Chile. Moreover, we are better aligning our internal leadership to help capitalize on these global opportunities, while also adding talent across our Direct-to-Consumer businesses. We have never been better positioned to take the Under Armour performance story to athletes around the world."
Conference Call and Webcast
The Company will provide additional commentary regarding its third quarter results as well as its updated 2013 outlook during its earnings conference call today, October 24, 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.