Baltimore-based Under Armour Inc. says it is outfitted for another year of growth, following an especially successful fourth quarter.
The athletic apparel maker brought in $683 million in net revenue in the quarter ending Dec. 31, 2013, an increase of 35 percent from the fourth quarter of 2012. Net income for the quarter, which includes materials costs and other expenses, increased by 28 percent year over year to $64 million.
The company yielded 59 cents in diluted earnings per share for the quarter and $1.50 for the year.
Chairman and CEO Kevin Plank called 2013 “a banner year for the UA brand,” which brought in more than $2 billion in annual net revenue for the first time. Net revenue for the year was $2.33 billion, surpassing the company’s outlook of $2.26 billion.
“No matter how you slice it, it’s a fantastic result,” said Sean Naughton, an analyst for Piper Jaffray who follows Under Armour.
Net revenue from apparel increased 35 percent in the fourth quarter of 2013 compared to one year before, and footwear by 24 percent. But the leader in growth was accessories, which brought in $65 million during the fourth quarter, a 52 percent increase from one year before, driven by sales in headwear and gloves.
Plank acknowledged a “tailwind” in sales thanks to the cold weather, but expressed confidence that revenue would have grown regardless, as it did in fourth-quarter 2012, amid unseasonably warm weather.
“It’s hard probably for them to just aggregate to say how much was weather,” said Naughton. “At the end of the day, if you’re selling stuff that caters to trying to keep people warmer and you’re having one of the coldest winters in 30 years, it definitely helps.”
One of the apparel-maker’s sales-driving innovations that debuted in the third quarter of 2013 happened to be a cold-weather item, ColdGear Infrared, a new line of garments that are said to retain the wearer’s body heat thanks to a patterned coating on the inside.
The company also completed its first acquisition during the fourth quarter, buying MapMyFitness for $150 million. That purchase allowed Under Armour to expedite its expansion into digital fitness tracking.
“This acquisition immediately brings us the talent we need to leapfrog into a leadership position in the world of connected fitness,” said Plank during a conference call with investors Thursday.
During the first week of January, MapMyFitness added 400,000 users, Plank said, which he described as a major acceleration in a product that already had more than 20 million members. While Under Armour has developed a digital tracking device of its own — Armour 39 — the company wants to keep MapMyFitness “agnostic,” or open for use by a variety of devices.
“I’m not sure that Under Armour wants to bet on the hardware side of this world,” said Plank. “We’d rather sit back, we’d rather find out who the winners are going to be and then partner with them.”
Under Armour may also be able to use the data collected on MapMyFitness to learn more about the athletic activity of users, he said, which could provide useful insight for the company.
The fourth quarter of 2013 marked the company’s 15th straight quarter of total annualized growth above 20 percent. In 2014, it’s expecting that trend to continue, projecting a 22 to 23 percent increase in annual revenue compared to 2013.
When that momentum will slow is difficult to predict, said Naughton.
“The runway they see near term seems to be pretty solid,” he said. “It’s pretty clear to me that the consumers continue to vote for more and more performance in their apparel.”
In addition to announcing its earnings, Under Armour kicked off a new “brand holiday” promotion Thursday for its SpeedForm Apollo shoe.
Under Armour’s stock surged following the earnings announcement. It closed at $104.76, up 22.9 percent from Wednesday’s close.