Apparel company Under Armour isn’t allowing an excellent set of second quarter results to distract it from realising its long-term goals and ambitions.
The 150% increase in second quarter profit, on top of a 24% revenue hike, leaves the US business within touching distance of achieving full-year revenues of US$1bn in 2010.
That’s a great psychological barrier to clear – assuming the company can reach the upper end of its revenue guidance – but Under Armour has more important challenges ahead.
Chairman and CEO Kevin Plank recognised this when he said success was defined not so much by immediate results, but by the way the company secured long-term growth.
Nonetheless, those results do look impressive – with one glaring exception. Up across the men’s, women’s and youth businesses, but footwear revenues were down 4.5%.
So, on the list of medium- to long-term things to do, improving footwear performance must be somewhere near the top.
What else? Plank told analysts that fitted product would be an “important driver” during 2010, adding that multiple fit options and new fabrication options were also vital to attract new customers beyond the company’s core compression business.
He pointed to the company’s Catalyst T-shirt, which is made from recycled water bottles, as evidence of this much-needed innovation and diversification.
The internet is another key territory, both for e-commerce and from a marketing standpoint. “When our consumer is not on the field, they’re online, and we are working to improve our relationship with them there,” Plank said.
An immediate focus is on improving access to the company’s sites for mobile devices, as well as a general desire for a consistent upgrading of the Under Armour online store.
Finally, there is the international side of the business. Growth is strong off a small base, led by Europe and especially Japan, where the company is well-positioned in baseball.
But there’s plenty of work left to do: international sales account for only 4% of revenues to date and, for a company poised to break the $1bn barrier, that’s still very small indeed.
Click here to read the company’s first-half results story.
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