Under Armour (UA)
Q2 2010 Earnings Call
July 27, 2010 8:30 am ET
Kevin Plank - Founder, Chairman and Chief Executive Officer
Alex Pettit - Director, Investor Relations
Brad Dickerson - Chief Financial Officer and Principal Accounting Officer
Wayne Marino - Chief Operating Officer
Sharon Zackfia - William Blair & Company L.L.C.
Taposh Bari - Jefferies & Company, Inc.
Kate McShane - Citigroup Inc
Michelle Tan - UBS
Mitchel Kummetz - Robert W. Baird & Co. Incorporated
Matthew McClintock - Barclays Capital
Omar Saad - Crédit Suisse AG
Daniel Wewer - Raymond James & Associates
Robert Ohmes - BofA Merrill Lynch
Chi Lee - Morgan Stanley
Jim Duffy - Stifel, Nicolaus & Co., Inc.
Previous Statements by UA
» Under Armour Q1 2010 Earnings Call Transcript
» Under Armour, Inc. Q4 2009 Earnings Call Transcript
» Under Armour, Inc. Q3 2009 Earnings Call Transcript
Good day, ladies and gentlemen, and welcome to your Under Armour Second Quarter Earnings and Webcast Conference Call. [Operator Instructions] I would now like to introduce Ms. Alex Pettit, CFO [ph 0:04:24].
Thank you, and good morning to everyone participating in 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 contain [ph 0:04:40] uncertainties that could cause actual events or results to differ materially. These risks and uncertainties are described in our press release and in the respective 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 address the drivers of our second quarter results and our strategy for continued growth in 2010 and beyond; Brad Dickerson, our Chief Financial Officer, will then discuss the company's financial performance for the second quarter and provide an updated outlook for the year. After the prepared remarks, Kevin, Brad and Wayne Marino, our Chief Operating Officer, will be available for a Q&A session that will end by 9:30.
And with that, I'll turn it over to Kevin Plank.
Thank you, Alex, and good morning, everyone. This morning, I'd like to cover two key topics. First, how we are continuing to lead in the performance apparel market to the right balance of great product and a great story. And secondly, how we are building the organization that will take us beyond the $1 billion platform that we discussed on this morning's release.
We have consistently talked about the abundant growth opportunities we see for the Under Armour Brand and how we are balancing that growth with making the right assessments to ensure we are doing two things: returning value to our shareholders and preparing our company for its next phase of growth.
This past quarter, or more accurately, the first half of this year, is a great example of our ability to balance growth while investing and a great example of how much horsepower is contained in the Under Armour engine. Our Apparel business in the U.S. was up 32% year-to-date and up 34% in Q2, the strongest increase that we've seen in 10 quarters, going back to Q3 of 2007.
The best and simplest part of the apparel story is that everything was up, with strong double-digit growth across Men's, Women's and Youth. Our growth is across-the-board. Gender, channel, category, wholesale and direct. I'm going to talk about a couple of key areas of growth, but the fact that our strength is so broad-based is evidence not only of the growing power of our brand but of our ability to step confidently into the next phase in our growth story, a multi-billion-dollar global platform.
As I said last quarter, the growth story for Under Armour apparel is more than just intact. In fact, it's revitalized. Our Men's business continues to accelerate, with strong double-digit increases in our training, golf, football and underwear businesses. We believe there is still meaningful growth for our brand in all of these drivers as we build up our position as the thought leader in performance and bring Under Armour innovation to a broader range of consumers.
Our Women's business also accelerated in Q2 as our improved fit, style and color helped drive growth. Our Women's Training business almost doubled in Q2 and, along with underwear and base layer, made up the majority of our growth in Women's for the quarter.
The one common thread in both our Men's and Women's apparel business for the first half of this year has been the success of our fitted products. In both Men's and Women's, our fitted products, which provide the same functionality of compression materials without the constriction, gives us the opportunity to offer a broader range of silhouettes across key categories like base layer, golf and running, in both Men's and Women's.
In addition, this fall, we're introducing a great new evolution of our ColdGear fabrication that is warmer, softer and also has a more generous fit that will bring more customers to the brand. This new high-performance moisture-wicking fabrication delivers great neck-to-skin warmth without the squeeze of compression.
Without question, fitted product will be an important driver for us in 2010, but longer-term, offering multiple fit options and introducing new fabrications like our Catalyst T-shirt, which is made from recycled water bottles, shows us that we can successfully reach new consumers with these new technologies and fits without cannibalizing our core compression business. This continued success will be a critical driver of our growth as we evolve into our multi-billion-dollar global platform.
Another key to our long-term growth strategy is executing against the opportunity we have online, both from an e-commerce and consumer engagement perspective. When our consumer is not on the field, they're online, and we are working to improve our relationship with them there.
In the short term, that will mean more focused marketing efforts and enhancing access to our site on mobile devices. Over the longer term, we need to consistently upgrade the consumer experience in our online store so that we are growing along with our consumers’ expectations, and that expectation is a robust Under Armour shopping experience online.