Under Armour has joined a growing list of major consumer brands that are making big changes to their wholesale strategies. The athletic brand, which saw some progress in its turnaround during the third quarter, said it will begin to exit 2,000 to 3,000 stores in North America, its largest market. By the end of 2022, it expects to be in about 10,000 doors, executives said in a conference call. As it overhauls wholesale, Under Armour is also upping its focus on direct-to-consumer (D-to-C) channels, where it plans to offer fewer promotions and discounts to fuel healthier margins. Total Retail's Take: Considering the upheaval we've seen in the brick-and-mortar arena in 2020, and its uncertain future moving into 2021, it's not surprising that leading brands such as Under Armour are taking a long, hard look at their wholesale operations.
Matt Reintjes, President and Chief Executive Officer, commented, “YETI had an exceptional start to the year with first quarter net sales growth of 42% fueled by continued strong demand for the brand throughout the period. Significant gross margin expansion powered nearly a 700-basis point improvement in operating margin for the period, contributing to a more than three-fold increase in earnings per share.”
Mr. Reintjes added, “Building upon the outstanding financial performance in the first quarter, we are focused on investments that will accelerate our future growth through global product and channel expansion, innovative marketing, and growing digital capabilities including enhanced data analytics. We believe that these efforts will not only foster a deep connection between our brand and consumers both digitally and, as the world reopens more fully, in a direct, personal way but will also support our plans for long-term, sustainable growth.”
Mr. Reintjes concluded, “After the strong start to 2021, we are raising both our full year net sales and earnings per share outlooks to 20% and 22% growth, respectively, versus the prior year. The YETI momentum carried over from 2020 and on display to start 2021 showcases the passion for the brand and the relevance of our product portfolio as consumers continue to participate in the significant growth in active, outdoor lifestyles. We believe we are well-positioned to generate and build upon this customer enthusiasm for the brand now and into the future.”
For the Three Months Ended April 3, 2021
Net sales increased 42% to $247.6 million, compared to $174.4 million during the same period last year.
*Direct-to-consumer (“DTC”) channel net sales increased 59% to $126.8 million, compared to $79.6 million in the prior year quarter, driven by strong performance in both Coolers & Equipment and Drinkware. The DTC channel grew to 51% of net sales, compared to 46% in the prior year period.
*Wholesale channel net sales increased 27% to $120.8 million, compared to $94.8 million in the same period last year, driven by both Coolers & Equipment and Drinkware.
*Drinkware net sales increased 32% to $148.9 million, compared to $112.6 million in the prior year quarter, primarily driven by the continued expansion of our Drinkware product offerings, including the introduction of new colorways and sizes, and strong demand for customization.
*Coolers & Equipment net sales increased 57% to $93.5 million, compared to $59.5 million in the same period last year, driven by strong performance in hard coolers, soft coolers, outdoor living products, bags, and cargo.
Gross profit increased 57% to $145.2 million, or 58.6% of net sales, compared to $92.5 million, or 53.0% of net sales, in the first quarter of 2020. The 560 basis point increase in gross margin was primarily driven by a favorable mix shift to our DTC channel, product cost improvements, lower inbound freight and decreased tariffs.
Selling, general, and administrative (“SG&A”) expenses increased 38% to $105.1 million, compared to $76.3 million in the first quarter of 2020. As a percentage of net sales, SG&A expenses decreased 130 basis points to 42.5% from 43.7% in the prior year period. This decrease included a 280 basis points of benefit from non-variable expense leverage on higher net sales. Variable expenses added 150 basis points, driven by the increased mix of our faster growing and higher gross margin DTC channel, which grew to 51% of net sales during the period.
Operating income increased 148% to $40.0 million, or 16.2% of net sales, compared to $16.2 million, or 9.3% of net sales, during the prior year quarter.
Adjusted operating income increased 143% to $43.8 million, or 17.7% of net sales, compared to $18.0 million, or 10.3% of net sales, during the same period last year.
Net income increased to $30.5 million, or 12.3% of net sales, compared to $8.5 million, or 4.9% of net sales, in the prior year quarter; Net income per diluted share increased to $0.35, compared to $0.10 per diluted share in the prior year quarter.
further detail at: https://investors.yeti.com/news/news-details/2021/YETI-Reports-First-Quarter-2021-Results/default.aspx