July 23, 2015 / 12:06 PM / in 2 years

Under Armour raises sales forecast again, stock at new high

(Reuters) - Under Armour Inc, the No.2 U.S. sportswear maker, raised its full-year forecast for the second time in three months, strengthening investors’ confidence in the company whose valuation is already lofty.

Jordan Spieth walks up the second fairway in his sponsored Under Armour golf shoes during the final round of play of the Masters golf tournament at the Augusta National Golf Course in Augusta, Georgia April 12, 2015. REUTERS/Jim Young -

Shares of the company jumped as much as 9 percent to a record $97.37 on Thursday morning, after the company also reported better-than-expected quarterly sales.

Under Armour has been quick to cash in on the new trend of “athleisure”, a mash up of athletic and casual clothing seen even in formal settings like offices.

“The trend shows no signs of slowing down,” research firm Conlumino’s CEO Neil Saunders said.

The success of sports stars, such as golfer Jordan Spieth and ballerina Misty Copeland, whose signature lines Under Armour sells has helped its results race past estimates in the past few quarters.

Under Armour, founded in 1996, has moved from designing sweat-absorbing T-shirts to acquiring companies that make wearable technology and connected clothing such as Endomondo and MyFitnessPal in February.

The acquisitions have increased debt and eaten into profits, But have also created a new income stream at a modest cost to pay “for a development that could transform the company’s long term earning potential,” Saunders said.

Under Armour shares traded at 69.81 times forward earnings as of Wednesday — more than thrice the industry median of 26.76, according to Thomson Reuters data.

Bigger rival Nike Inc’s stock traded at 26.76 times while Adidas AG was at 10.45 times.

Under Armour will increase marketing for growth categories such as basketball and golf for the rest of this year, Chief Financial Officer Brad Dickerson said on a post-earnings call.

The company’s apparel sales jumped 23 percent in the second quarter ended June 30 while footwear sales soared 40 percent to $154 million, boosted by demand for running shoes and CurryOne, a line endorsed by NBA star Stephen Curry.

Revenue jumped 29 percent to $783.6 million.

Net income fell nearly 17 percent to $14.8 million, or 7 cents per share, on higher selling, general and administrative costs.

Analysts on average had expected a profit of 5 cents per share and revenue of $761.5 million, according to Thomson Reuters I/B/E/S.

Under Armour said it now expects full-year revenue of $3.84 billion, up from $3.78 billion it forecast earlier.

Under Armour shares were up 7 percent at $95.59 in premarket trading. They have risen 31.6 percent in the year through Wednesday.

Editing by Joyjeet Das and Ted Kerr

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