This week has been a big one for the apparel industry, as several clothing manufacturers and retailers reported earnings over the past few days: Body Central Corp (OTCMKTS:BODY), Cabelas Inc (NYSE:CAB), Skechers USA Inc (NYSE:SKX) and The Wet Seal, Inc. (OTCMKTS:WTSLQ), to name a few.
But there’s one apparel maker that grabbed my attention today. If you’re looking for a sold retail play to own, this is it…
Shares of Under Armour Inc (NYSE:UA) fell after it posted first-quarter operating results. However, this appears to be an overreaction to one detail in a generally solid report.
Compared with Q1 2013, net income declined 13% to $11.73 million or 5 cents per share. This was in line with analysts’ expectations.
During the first quarter, Under Armour acquired Endomondo and MyFitnessPal for $560 million, and these acquisition costs weighed on Under Armour’s bottom-line results.
Meanwhile, Under Armour reported its 20th straight quarter of 20%-plus net revenue growth. Net revenues jumped year over year 25% to $805 million; on a currency neutral basis, they increased 27% year-over-year. This beat the $802.53 million consensus estimate.
Breaking it down, UA apparel sales increased 21%, footwear sales jumped 41% and accessories improved 23%. Under Armour’s international net revenues surged 74% compared with last year.
Looking ahead to 2015, UA management is targeting net revenue of $3.78 billion or 23% annual sales growth. This is higher than Under Armour’s previous forecast of 22% annual sales growth. Operating income is expected to come in between $400 million and $408 million, or 13% to 15% growth.
I consider UA an A-rated “strong buy,” and I expectUnder Armour to bounce back from the near-term selloff.
Louis Navellier is a renowned growth investor. He is the editor of five investing newsletters: Blue Chip Growth, Emerging Growth, Ultimate Growth, Family Trust and Platinum Growth. His most popular service, Blue Chip Growth, has a track record of beating the market 3:1 over the last 14 years. He uses a combination of quantitative and fundamental analysis to identify market-beating stocks. Mr. Navellier has made his proven formula accessible to investors via his free, online stock rating tool, PortfolioGrader.com. Louis Navellier may hold some of the aforementioned securities in one or more of his newsletters.
