Under Armour Inc. reported slightly higher third-quarter profits that exceeded analysts’ estimates and raised yearly guidance, but shares of the athletic apparel and footwear supplier fell more than 11 percent after its projection implied a weaker-than-expected fourth quarter.
The Baltimore-based vendor said Tuesday that increased footwear and apparel sales helped drive net income up 2 percent to $26.2 million, or 52 cents a diluted share, for the quarter ended Sept. 30, compared with profit of $25.7 million, or 51 cents a share, in the year-ago quarter. Net sales jumped 16.2 percent, to $269.5 million from $231.9 million. Wall Street anticipated earnings per share of 44 cents on sales of $249.9 million.
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Licensing and accessories sales grew 15.9 percent and 21 percent, respectively, as revenue in its two biggest categories, apparel and footwear, climbed 7.1 percent to $215.4 million and 153 percent to $33 million, respectively. The direct business, which represents 15 percent of sales, grew 62 percent over last year, the firm said.
The company raised full-year earnings guidance to between 85 cents and 87 cents a share, up from a range of 80 cents to 82 cents.
According to Stifel Nicolaus retail analyst Thomas Shaw, this implies a fourth-quarter profit of between 23 cents and 24 cents a share, lower than Wall Street’s projection of 28 cents a share.
“We believe full-year 2010 is being positioned more as a transition year as Under Armour recalibrates the running shoe message, price, technology, takes a measured approach to new footwear categories, and continues to invest in product development and the fast-growing, margin-rich direct business,” Shaw said, adding the “footwear category is not expected to grow” in 2010 and that apparel should accelerate in low-double digits versus the company’s prior midsingle-digit growth assumption.
For the nine months, Under Armour said net income increased 5.6 percent to $31.6 million, or 62 cents a diluted share, from $29.9 million, or 59 cents a share, in 2008. Sales grew 16.2 percent to $634.2 million from $546 million in the year-ago quarter.
Under Armour said based on higher personnel costs, which include increased funding of its performance incentive plan, selling, general and administrative costs for 2009 are expected to expand at a mid-teen percentage rate from 2008. Earlier, the company anticipated a low-teen percentage rate increase.
The firm’s shares ended the day at $29.27, down $3.82 or 11.5 percent.