Under Armour (UA) Q1 2012 Earnings Call April 20, 2012 8:30 am ET Executives Tom Shaw - Kevin A. Plank - Founder, Chairman, Chief Executive Officer and President Brad Dickerson - Chief Financial Officer and Principal Accounting Officer Analysts Robert F. Ohmes - BofA Merrill Lynch, Research Division Joseph Parkhill - Morgan Stanley, Research Division Pamela Nagler Quintiliano - Oppenheimer & Co. Inc., Research Division Kate McShane - Citigroup Inc, Research Division Omar Saad - ISI Group Inc., Research Division Daniel R. Wewer - Raymond James & Associates, Inc., Research Division Taposh Bari - Jefferies & Company, Inc., Research Division Mitchel J. Kummetz - Robert W. Baird & Co. Incorporated, Research Division Presentation Operator
Joining us on today's call will be Kevin Plank, Chairman, CEO and President; and followed by Brad Dickerson, our Chief Financial Officer, who will discuss the company's financial performance for the first quarter, followed by an update of our 2012 outlook.After the prepared remarks, Kevin and Brian will be available for Q&A session that will end at approximately 9:30 a.m. Finally, a replay of this teleconference will be available at our website at approximately at 11:00 a.m. Eastern Time today. And with that, I'll turn it over to Kevin Plank. Kevin A. Plank Thank you, Tom, and good morning, everyone. We had another quarter of solid revenue growth in Q1 as we continue to lead our industry in bringing true innovation to athletes. All 3 of our product engines: apparel, footwear and accessories grew more than 20% with total revenues up 23%. That marked the eighth consecutive quarter where our top line has grown above 20%. Brad will provide more color on our results in a moment, but I want to focus my comments this morning on 2 broad themes that we believe are driving our results, and more importantly, setting us up for continued profitable growth in 2013 and beyond. The first point is a simple equation. When we innovate and add value for the athlete, we win. And importantly, when we do that, we do not see consumer resistance to price, a critical piece for us as we expand distribution while maintaining our premium brand status. Second, we've done a very effective job over the past 2 years of balancing the need to improve our competencies in critical areas like supply chain, planning and design, while executing to deliver the 20-plus percent growth that we have accomplished. While our brand strength continues to drive our connection with consumers, we believe its ability to focus on investments in people and systems, while also delivering solid top and bottom line growth is a critical element to the Under Armour story.
Let me cite a few examples of how investments we made in the past 2 years paid off in this quarter and how we continue to make new investments that we believe will help drive results 2 years out. While innovation for athletes will always be at the core of how we build products, over the past 2 years, we've begun to deliver a more Under Armour-specific design language throughout our assortments. We invested significantly in both our team and tools around design, bringing industry expertise to help bolster this dimension of the Under Armour brand. This focus has specifically helped drive improved results in our Women's business and the introduction in Q1 of the Armour Bra, Sports Bra, is a great example of the right blend between performance and style.Our team talked extensively with our consumers to understand what was lacking with their existing sports bra. They also went into the lab to better understand how a sports bra could offer ultimate support and comfort. From that work, our design team reconstructed the sports bra and the results have been great. We've had a very successful launch with the Armour Bra with our wholesale partners and early sell-through on our e-commerce site was as strong as we've seen for new women's products. By increasing our investments and design over the past 2 years, we're now seeing stronger products across the Women's business with new items like the Perfect Pant, with soft, breathable fabric that has superior stretch with a great fit. Our sweat-wicking Moisture Transport System accelerates dry time as well. The true benefit is longer term as we're introducing our brand to a new Women's consumer who may have previously seen us as solely focused on team sports. As I mentioned upfront, when we innovate, we win. And we are able to drive higher price points with better products. We saw it last year at the introduction of Charged Cotton that dries faster than your old cotton T-shirt. On the Women's side, we focused on improving the fit of our Charged Cotton T-shirt in year 2, and the early results have been very strong sell-throughs.
We saw it first quarter with the Armour Bra introduced at that $58 price point. And we also saw strong consumer reaction to our new Tech tee, where we've brought a new fabrication making it softer, while keeping it extremely lightweight and taking the price up to $23 from just $20 a year ago. We believe these are all great indicators that the consumer continues to view us as a premium performance brand and reinforces the thought that as long as we continue to innovate, we will win.The other major apparel store that hit in Q1 was ColdBlack. This latest technology from Under Armour not only blocks the sun's UV rays, the ones that causes sunburn, but also reflects infrared heat keeping you more comfortable on a hot and sunny day. Our success here is enabling us to drive higher price points in our polos, and eventually, at other products as well. Hunter Mahan has been wearing ColdBlack to great success in the PGA Tour this year. Winning 2 tournaments so far this year and moving up to #5 in the world, his highest ranking ever. ColdBlack is a great example of Under Armour incorporating additive technology to a premium product, and we see consumers truly starting to embrace it as the weather heats up. Read the rest of this transcript for free on seekingalpha.com