Under Armour earnings: 'Curry... Curry... Curry... Curry'
Sneaker sales are up — especially in China
Under Armour (UA) is crushing every metric.
CEO Kevin Plank spent most of Thursday's first-quarter earnings call raving about Golden State Warriors guard Stephen Curry. Yes, Plank gave some shout-outs to some of the other stars in Under Armour's remarkable firmament, like golfer Jordan Spieth, quarterbacks Tom Brady and Cam Newton, and Olympic swimmer Michael Phelps. But he quickly returned to Curry.
That's because basketball sneakers, and Curry's signature sneakers in particular, are the biggest storyline in the company's continued rocket-like growth. Under Armour beat expectations on earnings per share (EPS), with 4 cents per share versus analyst estimates of 2 cents, and on revenue, which rose 30% to $1.05 billion versus estimates of $1.04 billion.
Plank joked that the company's 30% revenue growth was "no accident," since it is also Curry's jersey number (yuk, yuk). But Curry's power to sell shoes is no joke, as the Baltimore brand has proven.
The biggest growth area was footwear revenue, which rose a staggering 64% over the first quarter of last year. Curry's shoes have been especially hot in China, where sneakers accounted for one third of Under Armour's overall business in the quarter, compared to the rest of the world, where footwear is less than 20% in every region. Plank mentioned a brand campaign last year in which Curry traveled to China to meet fans; the company will take him back to China this year, after the NBA season. And Under Armour plans to open 120 brand-owned and partner stores there.
"Last year we achieved our first billion-dollar quarter," Plank pointed out. This year, he expects to top $1 billion in all four quarters. It can pull off that feat thanks to its all-star lineup of star athletes, but two in particular are helping on the footwear front: Curry and Spieth. The Curry 2 has been the bestselling basketball shoe apart from Jordans, outselling even Nike's LeBron James shoes. Under Armour is so excited about the Curry line that it can't wait until the fall, when it will release the Curry 3, so it is releasing a special Curry 2.5 on July 1, a shoe Curry wore in the Warriors' historic 73rd win and will continue to wear in the playoffs. Curry, Plank said, has helped Under Armour win over "the hardcore basketball kid."
In golf, Jordan Spieth has ushered the brand onto the green. Under Armour launched its first ever golf shoe last year, just before The Masters, just in time for Spieth to win the tournament. It was perfect timing. This year, the brand did it again, and Spieth nearly did too. Under Armour rolled out its first full golf line (which includes three different shoes) right before The Masters, with the goal of "driving premium as we introduce ourselves to this market." Spieth led for the first three days of the tournament, only to crumble on the final afternoon. Some observed a momentary Under Armour stock drop the morning after the tournament, but no matter now: Under Armour stock is soaring today, up 9.4% in pre-market trading just before the open.
Meanwhile, the company says it is still innovating on materials, which is fitting for a brand that started when Plank, still a football player at the University of Maryland, got fed up with the soaked cotton undershirt beneath his pads, and began to seek out a better wicking fabric. Now Under Armour is rolling out some items made with elastithread, which Plank says dries 30% faster and is 70% more breathable than similar lycra.
2016 marks Under Armour's 20th year in business. In a 2011 Fortune interview, Plank described his company as a person. And back then, it was a teenager. Now it's a 20-year-old, grown man—a formidable one for the rest of the sports apparel and footwear world.
--
Daniel Roberts is a writer at Yahoo Finance, covering sports business and technology.
Read more:
Under Armour is on an insane endorsement-deal hot streak