Athletic apparel and equipment maker Under Armour (NYSE:UA) announced a major milestone during its fourth quarter/fiscal 2010 earnings release, with the company reaching the $1 billion in annual revenues for the first time. The ever-growing apparel firm has seen its strategy of adding additional product lines to its core anti-moisture apparel pay off in spades thus far and management is hoping that their new sponsorship deals with celebrity athletes along with a move away from its "hard-core sport" image will drive growth in 2011.

IN PICTURES: World's Greatest Investors

UA's Billion-Dollar Year
For the fourth quarter Under Armour reported sales of $301.1 million, up 36% from the $222.2 million reported in Q4 2009, and well above the $272 million expected by analysts. On the earnings side, numbers were equally as impressive with net income rising 51% to $22.9 million (44 cents per share), from $15.2 million (30 cents per share) in 2009. Additionally, gross margin rose 50 basis points to 51.7%, compared to 51.2% last year. The margin boost was a key sign for investors that Under Armour is able to manage its sales and product growth while maintaining (and even increasing) margins.

For full-year figures, as previously mentioned, Under Armour had its first $1 billion year, with annual revenues totaling $1.06 billion. With last year's sales coming in at $856 million, the 24% year-over-year improvement is a clear sign that the company's growth is for real. Earnings rose 46% to $68.4 million ($1.34 per share), compared to 446.7 million (92 cents per share) last year.

New Products and the Future
CEO Kevin Plank also introduced what he hopes will lead UA's growth in the next couple of years, "Charged Cotton." The new product, which should hit shelves in February, will combine Under Armour's familiar performance synthetics with cotton. Plank told analysts during the call that teens typically have around 26 cotton shirts in their wardrobe, compared to only five or six that would fit under the "performance" category. Management is hoping that by offering the new product at a fair price (reportedly about $25), Under Armour can grow revenues by picking up some market share in the huge cotton apparel marketplace. While time will tell whether or not this is true, it's a safe bet that they will gain some traction with casual athletes and the general fitness population.

Plank also spoke with a lot of pride when he spoke about equipping this year's NCAA BCS champion Auburn Tigers. The Under Armour Logo couldn't be missed this college football season, and went head-to-head with rival Nike's (NYSE:NKE) home state Oregon Ducks in the BCS Championship game, coming out on top on the scoreboard in a last second thriller. In addition to the company's NCAA footprint, it also has steadily added to its sponsorship resume in the pro ranks as well, most notably with the recent signing of Patriots QB Tom Brady, who will don Under Armour apparel for training and a new line of customized cleats for games. Additionally, the basketball shoe segment shows good growth potential, accounting for just under $22 million in sales for the fourth quarter, an increase of 152% from the prior year. Management expects the basketball shoe segment to perform well over the next few years as awareness of the brand on the court grows.

Bottom Line
Under Armour has done a great job in catering to the performance athletes with its trademark moisture-wicking materials, building a loyal customer base in the process. Now management is looking to steal some more market share from big name rivals Nike and Adidas (OTC:ADDYY) in the casual sportswear arena. Under Armour's new cotton blends should help drive the top line for 2011 and perhaps lead to new product lines down the line. (To learn more, see Analyzing Retail Stocks.)

Related Articles
  1. Stock Analysis

    Net Neutrality: Pros and Cons

    The fight over net neutrality has become an amazing spectacle. But at its core, it's yet another skirmish in cable television's war to remain relevant.
  2. Personal Finance

    A Day in the Life of an Equity Research Analyst

    What does an equity research analyst do on an everyday basis?
  3. Mutual Funds & ETFs

    ETF Analysis: PowerShares S&P 500 Downside Hedged

    Find out about the PowerShares S&P 500 Downside Hedged ETF, and learn detailed information about characteristics, suitability and recommendations of it.
  4. Mutual Funds & ETFs

    ETF Analysis: ProShares Large Cap Core Plus

    Learn information about the ProShares Large Cap Core Plus ETF, and explore detailed analysis of its characteristics, suitability and recommendations.
  5. Mutual Funds & ETFs

    ETF Analysis: iShares Core Growth Allocation

    Find out about the iShares Core Growth Allocation Fund, and learn detailed information about its characteristics, suitability and recommendations.
  6. Mutual Funds & ETFs

    ETF Analysis: iShares MSCI USA Minimum Volatility

    Learn about the iShares MSCI USA Minimum Volatility exchange-traded fund, which invests in low-volatility equities traded on the U.S. stock market.
  7. Stock Analysis

    Should You Follow Millionaires into This Sector?

    Millionaire investors—and those who follow them—should take another look at the current economic situation before making any more investment decisions.
  8. Professionals

    What to do During a Market Correction

    The market has what? Here's what you should consider rather than panicking.
  9. Mutual Funds & ETFs

    ETF Analysis: Vanguard Mid-Cap Value

    Take an in-depth look at the Vanguard Mid-Cap Value ETF, one of the largest and most popular mid-cap funds in the U.S. equity space.
  10. Mutual Funds & ETFs

    ETF Analysis: Schwab US Broad Market

    Take an in-depth look at the Schwab U.S. Broad Market ETF, an incredibly low-cost fund based on a wide selection of the U.S. equity market.
  1. Equity

    The value of an asset less the value of all liabilities on that ...
  2. Hard-To-Sell Asset

    An asset that is extremely difficult to dispose of either due ...
  3. Sucker Yield

    When an investor has essentially risked all of his capital for ...
  4. PT (Perseroan Terbatas)

    An acronym for Perseroan Terbatas, which is Limited Liability ...
  5. Ltd. (Limited)

    An abbreviation of "limited," Ltd. is a suffix that ...
  6. BHD (Berhad)

    The suffix Bhd. is an abbreviation of a Malay word "berhad," ...
  1. What is the difference between called-up share capital and paid-up share capital?

    The difference between called-up share capital and paid-up share capital is investors have already paid in full for paid-up ... Read Full Answer >>
  2. Why would a corporation issue convertible bonds?

    A convertible bond represents a hybrid security that has bond and equity features; this type of bond allows the conversion ... Read Full Answer >>
  3. How does additional paid in capital affect retained earnings?

    Both additional paid-in capital and retained earnings are entries under the shareholders' equity section of a company's balance ... Read Full Answer >>
  4. What types of capital are not considered share capital?

    The money a business uses to fund operations or growth is called capital, and there are a number of capital sources available. ... Read Full Answer >>
  5. What is the difference between issued share capital and subscribed share capital?

    The difference between subscribed share capital and issued share capital is the former relates to the amount of stock for ... Read Full Answer >>
  6. What happens to the shares of stock purchased in a tender offer?

    The shares of stock purchased in a tender offer become the property of the purchaser. From that point forward, the purchaser, ... Read Full Answer >>

You May Also Like

Trading Center

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!