Under Armour (UA)
Q4 2010 Earnings Call
January 27, 2011 8:30 am ET
Brad Dickerson - Chief Financial Officer and Principal Accounting Officer
Tom Shaw -
Kevin Plank - Founder, Chairman, Chief Executive Officer and President
Camilo Lyon - Wedbush Securities Inc.
Taposh Bari - Jefferies & Company, Inc.
Kate McShane - Citigroup Inc
Michelle Tan - UBS
Mitchel Kummetz - Robert W. Baird & Co. Incorporated
Omar Saad - Crédit Suisse AG
Michael Binetti - UBS Investment Bank
Christopher Svezia - Susquehanna Financial Group, LLLP
Previous Statements by UA
» Under Armour CEO Discusses Q3 2010 Results - Earnings Call Transcript
» Under Armour Q2 2010 Earnings Call Transcript
» Under Armour Q1 2010 Earnings Call Transcript
Good day, ladies and gentlemen, and welcome to Under Armour Inc. Fourth Quarter Earnings and Webcast. [Operator Instructions] I would now like to introduce Mr. Tom Shaw. Please go ahead.
Thanks, Tonesha, and good morning to everyone joining us on this morning's conference call. During the course of this conference call, we'll be making projections or other forward-looking statements regarding future events or the future financial performance of the company. We wish to caution that such statements are subject to risks and uncertainties that could cause actual events or results to differ materially. These risks and uncertainties are described in our press release and in the Risk Factor section of our filings with the SEC. The company assumes no obligation to update forward-looking statements to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events.
Joining us on today's call will be Kevin Plank, Chairman and CEO, who will discuss our strategy for continued growth in 2011 and beyond; Brad Dickerson, our Chief Financial Officer, who'll then discuss the company's financial performance for the fourth quarter and full year 2010, followed by an update to our 2011 outlook. After the prepared remarks, Kevin and Brad will be available for a Q&A session that will end at approximately 9:30 a.m. I will then close with a tentative date of our first quarter 2011 earnings call. Finally, a replay of this teleconference will be available at our website at approximately 11 a.m., Eastern, today.
And with that, I'll turn it over to Kevin Plank.
Thank you, Tom, and good morning, everyone. When I'm talking to Under Armour Inc. employees, investors, athletes or our retail partners, I'm constantly reminding all of them one simple idea: We are just getting started. We believe that for three primary reasons. First, we have built an incredibly powerful and authentic brand in a relatively short time. Second, our product line remains narrow relative to the opportunities at apparel, footwear and other categories where our brand can play. And third, we have yet to truly establish our brand outside of North America.
But even with those limitations, we finished 2010 with a $1 billion foundation in place from which to grow our brand, and we did so with a great end to the year. This morning, I want to leave the recap of our 2010 results to Brad and focus more on the steps we're taking will help us reach the next stage of our growth curve.
Now that we have built our billion-dollar foundation, we are focusing UA on the next billion and the billion after that. We understand we have the unique opportunity to be the world's next great athletic brand, and our energy is focused on building that next addition to our house. So how do we build that structure? We do it by making investments that put us in a position to win, and I want to share some examples of that this morning.
Two great examples of making these types of investments and pulled it for us in sports marketing over the last 100 days. First, our signing of Patriots quarterback and likely MVP, Tom Brady. We were able to make the investment that bought Tom to the UA team because we've invested in our footwear business to make a football cleat that could be worn with confidence by the league's best player. The second example is our relationship with the Auburn Tigers, college football's national champs. As with Tom Brady, we were able to surgically showcase our brand in the national championship game because athletes trust the Under Armour brand will perform on the field of play.
In each of these cases, Tom Brady and national champion's Auburn are consumers with the most exacting in the business, the top of the pyramid in terms of expectations of performance. Being part of their success in the national stage drives our product teams to bring that same level of innovation to all our consumers and reinforces our brand promise to make all athletes better.
And while we are in our fifth year of making football cleats, we are still very early in the development of the major pieces of our footwear business. The continued strong performance of our U.S. apparel business affords us the opportunity to develop our footwear business for long-term growth. It's why we are able to test our basketball footwear on players for several years before we brought them to the market at the end of last year. And while we are in the early stage of our footwear curve, we're confident that over time, we'll become a major player across all the key sport categories.
The second area where we're putting UA in a position to win is with our product leadership at retail. Since our first entry into wholesale, we've built up great equity by selling at full price and consistently taking our consumers expectations up. Those are the metrics of product leadership for UA and 2010 was a great example of us protecting our core while making headway in new categories.
Under Armour continues to be the brand of choice for baselayer, and now, it is especially true in the second half of 2010, despite very aggressive discounting and marketing dollars directed at the category. Not only did we see great broad-based sell through in our core baselayer business, but we also had an excellent quarter across all of our ColdGear apparel offerings, including our expanding Fleece and Evo fitted products. Coming off this very strong performance for Under Armour in apparel in Q4, you can understand why we are enthusiastic about our growth story coming into 2011.
Our apparel growth will be driven largely by maintaining and growing our core UA consumer while bringing the brand to new athletes through our expanding product breadth. we will continue to see strong net revenue growth in our U.S. apparel product category as long as we do three things well: first, bring innovation to our core businesses. Second, continue to expand our share in women's and other growth categories. And third, bring new consumers into our brand with initiatives like charged cotton, which I'm going to cover in just a moment.