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Under Armour lowers its projections for online sales

Under Armour Inc. executives said Tuesday they have lowered projections for online sales for the year as the Baltimore-based sports apparel company continues to have difficulty converting site visits to dollars.

“We continue to grow the business at a healthy pace, but we had some challenges converting traffic to sales since our new site launched last November,” said Brad Dickerson, Under Armour’s chief financial officer, during a conference call with industry analysts.

The challenges are largely driven by speed and ease of navigating the website, but both issues have recently been addressed, he said.

“As we work through these issues, we think it’s prudent to take a more conservative view of e-commerce’s contribution to our business for the duration of the year,” Dickerson said.

Dickerson declined to say how much Under Armour was selling through its website.

The company’s overall performance, however, was positive in the second quarter as sales increased across the board and the company raised its 2012 guidance.

Under Armour’s second-quarter revenue increased by 27 percent, to $369.5 million, compared to $291.3 million in the corresponding quarter last year. Apparel revenue increased by 23 percent, footwear revenue increased by 44 percent and revenue from accessories increased by 21 percent.

“We’ve been very patient internally on our footwear business, and some of you know how hard a word that is for me to use, but our 44 percent growth in Q2 and the excitement that is building around Spine are great examples of creating the proper cadence within our footwear business,” said Kevin Plank, president and CEO of Under Armour.

The company recently launched the UA Spine running shoe and has started rolling out its $130 Highlight football cleat.

The quarter’s net income was $6.7 million, or 6 cents per share, a 7 percent increase from $6.2 million, in the second quarter of 2011. Net income per share did not change from the corresponding period in 2011, but beat projections. Analysts polled by Thomson Reuters had been expecting 5 cents per share for the quarter.

Income did not grow as fast as revenue because of increased marketing expenses in the second quarter, the company said. Under Armour also offered a 2-for-1 stock split on July 10.

Despite decreased online sales, the company’s direct-to-consumer sales increased 35 percent year-over-year. Under Armour has 92 factory house stores, a 28 percent increase from 72 in the second quarter of 2011.

Under Armour raised its full-year outlook for the second time this year. It expects the year’s revenue to be in the range of $1.8 billion to $1.82 billion, or 22 to 24 percent growth over 2011. The company had previously expected 21 to 22 percent growth in revenue.

Under Armour raised its 2012 operating income estimate to the $205 million-to-$207 million range, or 26 percent to 27 percent growth over 2011. The company previously anticipated annual operating income growth from 25 to 26 percent.

The company continues to work toward building itself as an international brand — only about 10 percent of revenue comes from outside of the U.S., Plank said — through sponsorship deals with Olympic athletes such as Michael Phelps and the United Kingdom’s Tottenham Hotspur Football Club.

Under Armour inked its deal with the Barclays Premier League team in March 2011 and rolled out new uniforms this month.

“With our Tottenham relationship, we are introducing ourselves to a much larger audience,” Plank said.

The team was scheduled to wear the Under Armour uniform for the first time Tuesday night when they take on the LA Galaxy in the first match of their U.S. tour. Tottenham will play in Baltimore on Saturday against Premiere League rival Liverpool.

Shares of Under Armour’s stock rose $4.41, or 9 percent, to close at $52.79 on the New York Stock Exchange.