Another Quarter, Another Earnings Beat

Under Armour (NYS: UA) reported earnings for its first quarter this morning, with overall net revenue up 23%, to $384 million, from the same quarter last year. Earnings per share were $0.28, and with the company further raising revenue and income guidance for the year, the stock was up more than 5% just before today's close.

What I was watching
Footwear revenue for the quarter grew 24% from the previous quarter, and represented a sixth of all revenues for the quarter. Although this data is only for one quarter, this is one ratio that will help Under Armour, which is primarily an apparel company, compete better with Nike (NYS: NKE) , which is known more as a shoe company. If the footwear segment can continue to grow slightly faster than the apparel segment, Under Armour should be able to shift its revenue ratios and become a major player in athletic footwear.

As with nearly every other quarter, it is important to keep an eye on inventory growth. For the first time in as long as I've been following the company, inventory actually decreased from the last quarter, though only minimally. Although it is early in the year to say that this trend will continue, it is promising nonetheless. I expected a mild winter to affect sales of the cold-weather gear the company is famous for, but Under Armour touted the performance of new products like ColdBlack and Armour Bra, as well as further expanding its "fit" product lines for women. I don't expect Under Armour to produce yoga apparel on par with the offerings of lululemon athletica (NAS: LULU) , yet the more they can make themselves a "one-stop" shop for all members of a household, the better the company will perform.

What I like going forward
Currently, Under Armour earns over 94% of its revenue from North America. However, the company recently made a step that could bode well for future overseas growth. Earlier this month, the company hired adidas executive Karl-Heinz Maurath to head its international division beginning in September. After 20 years of experience in various international roles at adidas, Maurath will be responsible for expanding into key global markets, as well as growing Under Armour's brand in Europe, Asia, and the Americas.

Direct-to-consumer revenue is also important for Under Armour. Without a major retail presence like Lululemon, Under Armour relies on retail partners like Dick's Sporting Goods to sell its products. Nevertheless, its direct-to-consumer revenue represented 25% of total revenues for the quarter, with year-over-year growth of 49%.

What it all means
The most recent quarter represents the eighth consecutive quarter that Under Armour's revenue has grown by more than 20%. While this is something I don't expect to happen forever, it is something that I see continuing for at least the next year. Feel free to add Under Armour to My Watchlist, or get a copy of our new free report "3 American Companies Set to Dominate the World" to see if it made the cut.

At the time this article was published Foolish contributor Robert Eberhard owns articles of Under Armour clothing but no shares in the companies mentioned here. Follow him on Twitter, or click here to see his holdings and a short bio. The Motley Fool owns shares of Under Armour, Dick's Sporting Goods, and lululemon athletica. Motley Fool newsletter services have recommended buying shares of Nike, lululemon athletica, Under Armour, and adidas, as well as creating a diagonal call position in Nike. The Motley Fool has a disclosure policy.We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.

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