October 27, 2009 / 11:14 AM / 8 years ago

UPDATE 4-Under Armour 2009 view implies weak fourth quarter

* Q3 EPS 52 cents tops Street view of 44 cents

* Q3 revenues rise 16 pct to $269.5 mln

* Raises ‘09 forecast for profit, revenue, SG&A expenses

* Sees ‘10 EPS up high single-digit/low double-digit rate

* Shares fall 8.3 percent (Recasts; adds 2010 view; changes headline)

By Martinne Geller

NEW YORK, Oct 27 (Reuters) - Under Armour Inc (UA.N) posted quarterly earnings that soared past Wall Street estimates and raised its full-year outlook, but the forecast implied a weaker-than-expected fourth quarter and sent the athletic clothing and shoe maker’s shares down more than 8 percent.

Under Armour, a smaller challenger to Nike Inc (NKE.N), said sales gains in its apparel and footwear business led to third-quarter net income of $26.2 million, or 52 cents per share, up from $25.7 million, or 51 cents per share, a year earlier.

Analysts on average had been expecting earnings of 44 cents per share, according to Thomson Reuters I/B/E/S.

The Baltimore-based company said it now expected 2009 earnings of 85 cents to 87 cents per share, compared with a prior forecast of 80 cents to 82 cents.

Given its strong third-quarter results, the full-year forecast implies fourth-quarter earnings of 23 cents to 25 cents per share, said Stifel Nicolaus analyst Thomas Shaw. That is below the 28 cent-per-share average estimate of analysts polled by Thomson Reuters I/B/E/S.

Under Armour also said it expects 2009 revenue of $830 million to $835 million, up from its prior forecast for revenue of $810 million.

For 2010, the company said it expected earnings per share and revenue to grow a high single-digit to low double-digit percentage rate. That forecast assumes no sales growth in Under Armour’s smaller footwear business.

STRONG THIRD QUARTER, CAUTIOUS HOLIDAY VIEW

Under Armour revenue rose 16 percent to $269.5 million in the third quarter, beating the analysts’ average estimate of $249.9 million.

    Clothing revenue rose 7.1 percent to $215.4 million, driven by increases in the company’s men‘s, women’s and youth apparel businesses. Revenue from footwear, a growing category, jumped to $33 million from $13.1 million a year earlier.

    Across the retail sector, consumers are showing a renewed interest in shopping, said William Blair analyst Sharon Zackfia. She cited strong sales reports from Lululemon Athletica LLL.TO (LULU.O) and J Crew Group Inc JCG.N, in addition to Under Armour. [ID:nN26203223] [ID:nN22137286]

    “The vast majority of retailers are showing improving trends -- against easier comparisons -- but it’s encouraging,” Zackfia said.

    Still Zackfia remains cautious in her outlook for the holiday season, saying that it was still too early to tell how the industry’s most important quarter would play out.

    “I like what I‘m hearing right now, but I don’t want to go crazy with September and October. I feel more confidence, but it always comes down to the wire with the holidays.”

    Under Armour’s third-quarter gross margin contracted by 1.3 percentage points. Its selling, general and administrative expenses were up 21 percent due to higher personnel costs and the expansion of its outlet stores.

    Under Armour forecast selling, general and administrative costs to grow at a mid-teen percentage rate from 2008. It earlier forecast a low-teen percentage rate increase.

    Under Armour shares were down $2.76, or 8.3 percent, at $30.33 on the New York Stock Exchange. (Editing by Derek Caney and Lisa Von Ahn)

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