This week is a big one for the apparel industry, as several clothing manufacturers and retailers are scheduled to report earnings today and over the next few days: Body Central Corp. (BODY), Cabela’s Inc. (CAB), Skechers USA (SKX) and The Wet Seal Inc. (WTSLQ), to name a few. But there’s one apparel maker that grabbed my attention today. If you’re looking for a sold retail play to own, this is it:
Shares of Under Armour Inc. (UA) fell after it posted first-quarter operating results this morning. However, this appears to be an overreaction to one detail in a generally solid report.
Compared with Q1 2013, net income declined 13% to $11.73 million, or $0.05 per share. This was in line with analysts’ expectations. During the first quarter, Under Armour acquired Endomondo and MyFitnessPal for $560 million; these acquisition costs weighed on Under Armour’s bottom-line results.
Meanwhile, Under Armour reported its 20th straight quarter of 20%+ net revenue growth. Net revenues jumped year-over-year 25% to $805 million; on a currency neutral basis, they increased 27% year-over-year. This beat the $802.53 million consensus estimate. Breaking it down, apparel sales increased 21%, footwear sales jumped 41% and accessories improved 23%. International net revenues surged 74% compared with last year.
Looking ahead to 2015, management is targeting net revenue of $3.78 billion, or 23% annual sales growth. This is higher than the company’s previous forecast of 22% annual sales growth. Operating income is expected to come in between $400 million and $408 million, or 13% to 15% growth.
I consider UA an A-rated Strong Buy, and I expect it to bounce back from the near-term selloff.