UPDUnder Armour shares jump as athletic wear demand soars
(Reuters) - Shares of hi-tech athletic sportswear maker Under Armour Inc (UA.N) leaped 25 percent after the company posted a better-than-expected profit for the 13th consecutive quarter.
The company's clothing lines include HeatGear, which draws moisture away from the body to help the wearer stay cool and dry, and its latest ColdGear Infrared range that uses a ceramic coating to retain body heat in cold weather.
"They continue to gain market share because there is so much innovation going on with their product," Suntrust Robinson Humphrey analyst Pamela Quintiliano said.
Quintiliano likened Under Armour to Apple Inc (AAPL.O) with regard to its ability to innovate.
Under Armour shares were trading at $103.08 by midday on Thursday. They have more than doubled in the past year, far outpacing the S&P 500 index's .SPX 18 percent jump in the same period.
Under Armour's strong growth has led to rumors that Nike Inc (NKE.N) may look at acquiring the company. But founder and Chief Executive Kevin Plank told employees in 2011 that Under Armour would not be sold. (link.reuters.com/guf56v)
The global sports apparel market is expected to grow at a compound annual growth rate of 4 percent to reach $178 billion by 2019, according to research firm Trefis.
The firm attributed the growth to rising health-consciousness among customers and the growing popularity of sportswear for women.
Plank said the company was bullish on its women's sportswear products as women are increasingly wearing athletic products outside of the gym.
"We think the reality of this shift is more permanent than some may expect ...," Plank said on a post-earnings call with analysts.
Earlier this month, Swedish "fast fashion" chain Hennes & Mauritz (HMb.ST) said it would launch a sportswear line.
The global sportswear market is expected to grow more than 7 percent in 2014, outperforming the 5.8 percent growth for broader apparel, according to Euromonitor.
H&M joins other apparel retailers trying to benefit from this growing market, including Fast Retailing Co Ltd's (9983.T) Uniqlo, Gap Inc (GPS.N) and Forever 21.
Under Armour posted a 35 percent jump in revenue from apparel in the fourth quarter ended December 31, its seventeenth straight quarter of sales growth of more than 20 percent.
The sales growth was driven by the ColdGear Infrared products and the increased range of clothing made with fleece.
Under Armour's revenue from apparel accounted for 80 percent of its total sales of $682.8 million in the fourth quarter.
The company said it expects 2014 revenue of $2.84 billion-$2.87 billion. Analysts on average were expecting $2.77 billion, according to Thomson Reuters I/B/E/S.
Net income rose to $64.2 million, or 59 cents per share, in the fourth quarter from $50.1 million, or 47 cents per share, a year earlier.
Analysts on average were expecting a profit of 53 cents per share, on revenue of $619.9 million.
(Reporting by Maria Ajit Thomas in Bangalore; Editing by Savio D'Souza)
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