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Under Armour Under Pressure

It guides 2006 to slightly below the consensus.
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Stock market darling

Under Armour


reported a blowout fourth quarter Tuesday but the shares were roughed up over a potentially disappointing 2006 forecast.

The athletic outfitter, which doubled on its first day of trading in November and has added another 55% since, earned $7 million, or 8 cents a share, in the quarter ended Dec. 31, up from $6.2 million, or 15 cents a share, a year ago. The latest quarter had a charge of 8 cents a share for a debt redemption.

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Analysts surveyed by Thomson First Call were forecasting earnings of 7 cents a share in the fourth quarter of 2005.

Under Armour's fourth-quarter net revenue rose 25% to $87.3 million, while net sales, which exclude licensees, rose 24% to $84.4 million. Analysts had been forecasting net revenue of $87.3 million for the latest quarter, according to Thomson First Call.

For 2006, the company predicted net revenue growth of 20% to 25% over the $271.3 million it recorded in all of 2005, implying $337 million to $351 million. The Thomson First Call consensus estimate is for $352.5 million. Net income should rise at the same rate, implying $23.6 million to $24.6 million, or 47 cents to 49cents a share based on 50 million shares outstanding, in the full year. The Thomson First Call estimate is $26.1 million, or 51 cents a share.

The stock lost $3.20, or 8%, to $36 early Tuesday.

"We believe our results for 2005 reflect not only the overall strength of the Under Armour brand, but also our dedication to innovating the category of performance, evolving our product lines and educating consumers by translating complex technology into a very simple marketing message," the company said. "Most impressive, we accomplished this while laying the groundwork for continued growth, marked by our investments in the business, our entrance into the European market, the ramp up for our launch of footwear, and the recruitment of several key members to our senior management team. We look forward to bringing our business to new levels of success as Under Armour continues to grow."