By Sara Germano
Under Armour's sales continued to post fast growth, but its
profit was hit by the cost of digital acquisitions and currency
effects in its growing international business.
The recently minted U.S. No. 2 sportswear maker by retail sales
has a suite of new offerings, from a signature basketball shoe for
an NBA MVP candidate to a newly global business in digital fitness.
But Chief Executive Kevin Plank said the company needs to get
better at merchandising its more complex line.
"We used to sell tight T-shirts and we put them in sporting
goods stores and they would sell, and now it's a much more complex
and diverse line," Mr. Plank said. "But, as I said, we have yet to
play our best game."
Under Armour's sales grew 25% from a year earlier to $804.9
million for the period ended March 31, driven by growth in its core
apparel and footwear categories, up 21% and 41%, respectively.
Profit fell 13% to $11.7 million, in part because of charges
related to digital fitness acquisitions during the quarter.
Shares of the company were down about 5% in midafternoon trading
on Tuesday.
Last fall, Under Armour surpassed Adidas AG to become the No. 2
sportswear brand in the U.S. by retail sales. But both companies
remain far behind Nike Inc., which has long held the top perch in
sales of sweats and sneakers in the U.S.
The stronger U.S. dollar hurt the profitability of the company's
international business, which grew to 12% of overall revenue,
topping 10% for the first time, according to Under Armour Chief
Financial Officer Brad Dickerson.
In February, Under Armour said it would acquire the
nutrition-tracking platform MyFitnessPal for $475 million and the
Copenhagen-based digital fitness app Endomondo for $85 million,
expanding the athletic gear maker's digital platform as it seeks to
use online fitness communities to boost sales. Mr. Plank said the
company now boasts more than 130 million users across its digital
suite, up from 120 million in February.
During the quarter, Under Armour took a $6.3 million charge for
closing costs related to the acquisitions. The company is also
entering a partnership with SAP AG to further integrate its apparel
and footwear categories with digital fitness, Mr. Dickerson said.
As a result, the company raised 2015 capital expenditure estimates
by about $50 million.
William McDermott, chief executive of SAP, is an Under Armour
board member.
Over the years, Under Armour has built up its footwear offerings
and expanded its fleet of concept stores, targeting new
international markets for a brand best known in the U.S. for
performance athletic apparel.
Mr. Plank highlighted its women's business as another category
that could benefit from improved merchandising, particularly as the
company hopes to become more responsive to fast-fashion tastes.
"We're looking to turn product every three to four weeks versus
having two seasons a year," Mr. Plank said of the women's
business.
Angela Chen contributed to this article.
Write to Sara Germano at sara.germano@wsj.com
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