Under Armour 2Q13 Earnings Call Notes

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This post is part of a series of posts called “Company Notes.” These posts contain quotes and exhibits from earnings calls, conference presentations, analyst days and SEC filings. The quotes are generally pieces of information that I find interesting or helpful to understanding the company, industry or economy and are not meant to provide summaries of the full content of the call. Other posts in this series can be found by clicking here. Full transcripts can be found at Seeking Alpha.

“let me start with International. As you hear, we’re really excited about it. We think there’s — as I said, it’s going to be our largest growth category next year, which will be somewhere north of 40% as we see it as a company. ”

“we’re currently doing business in 61 markets today. When I say doing business really well, it means that a lot of times, we just have a rack of clothes and maybe a distributor. And so, we’re really trying to professionalize that and really grab markets that we can make an impact in. So beginning, A, with the opportunity of where should we go based off GDP, things like that. Then we’re looking at the return because we’re not looking to make 15-year investments, although we have the ability to do that and we are, in some cases, but we understand that we also want to invest in markets that can return to us quickly. And then we’re also looking at the market expertise. And that basically comes down to do we have the leader”

“Sporting goods doesn’t exist as cleanly as it does here in the majority in the rest of the world. So having to be a lot more thoughtful and a lot more creative. And it means we’re not taking one playbook into the new markets that we’re attacking or going into”

“…introducing ourselves to consumer not just as an apparel company but as a true head-to-toe athletic brand.”

“our mix today still is heavily weighted towards cleated versus non-cleated relative to a lot of other players out there. Obviously, that cleated side of our business is really, really important to our overall Footwear business from an authenticity perspective and credibility perspective, but it does come at the lowest of low margins in Footwear. So with our mix being more weighted towards cleated, that obviously impacts our overall Footwear gross margins. Over time, though, as we are able to grow our non-cleated Footwear business, specifically things like running, which we’ve been recently doing, we have the ability — those are — those commit better margins, and that should help our mix going forward, gross margins in Footwear as we sell more non-cleated footwear.”

“I think we’re still establishing ourselves. The one thing about International and probably lessons learned over the last 17 or 18 years was that anything just takes time. And I think a longer view is what we need to approach any of these markets. I use the story of Japan a lot in sort of articulating how long it takes us, 8 years from 0 to $35 million, and then it was year 9 that they went from $35 million to $72 million and I think the tipping point really occurred. So I don’t know if that model — even with larger scale, larger size, well, resources, the things that we have today going for us, it still comes back to an investment, and it’s a prudent model.”

“we really want to bring something to China. And the gift that we want to give them is what does it feel like and what is it like to be an athlete. And so this story is about 80% experience of what does it feel like to be in the middle of the pitch at White Hart Lane with Tottenham or does it mean to feel like you’re in the ring with Canelo Alvarez and what is made to feel like being on a court with Brandon Jennings and Kemba Walker and DeAndre and our basketball assets. And so there’s a lot of education that goes to all with it. The philosophy that we’ve taken as a company is that we’ve got a great U.S. business, a great North American business that is driving and creating profit for us, and we understand that there’s a balance between our ability to utilize, I think, our North American growth and cash position, of making prudent investments in a longer-term strategy of being a global brand. As I’ve mentioned all along, our definition of global is when more than half of our revenues will come from outside the United States, and there’s a lot of reason for that. Number one, the opportunity. Our brand translates. The consumer is asking for it in other markets. And so we need a good job of making sure that we do that in a prudent way that’s very [indiscernible]. And then also, as Brad said, there’s a lot of strategic reasons for it as well. And we’re not going to make decisions based on tax rates, but the fact is that there’s a lot of things that can help us by being a more impactful and bigger global brand.”

“it’s not going to happen in 2 or 3 years. And if we get lucky and the market catches fire, great, but it’s going to take 6, 8 and 10 years and we’re sitting here telling you that we expect to be around for that much time and more. And we’re going to make the investments that’ll help us be great and be a local brand.”