Under Armour's (NYSE:UA) quarterly sales jumped 30 percent as the company's new sport shoes endorsed by NBA star Stephen Curry and golfer Jordan Spieth were a big hit with customers.
Shares of the company, which also raised its full-year 2016 sales forecast, rose as much as 8.7 percent in morning trading on Thursday.
Under Armour's quarterly sales have risen by at least 20 percent for the past six years, helping the company replace Germany's Adidas <ADSGn.DE> as the No. 2 sportswear maker in the United States last year. Nike Inc <NKE.N> is the market leader.
"The recent market fears about the apparel slowdown were unfounded as they demonstrated another quarter of 20 percent growth, and gross margins were much better than we expected," BB&T Capital Markets analyst Corinna Freedman said.
Under Armour's sales of sports and outdoor apparel rose 20 percent to $666.6 million in the first quarter ended March 31, as more customers bought its training and golf clothing. Apparel accounts for more than 60 percent of the company's total revenue.
Footwear sales jumped 64 percent to $264.2 million on strong demand for the company's SpeedForm running shoes, Curry One and Curry Two basketball shoes and Spieth's newly-launched Drive One golf shoes.
Under Armour said it expected sales in the second quarter to grow in the "high 20s" percentage range, and gross margins to be little changed compared with last year.
Under Armour's gross margin fell to 45.9 percent from 46.9 percent in the latest quarter, hurt by higher discounts and the strong dollar. However, margins still topped analysts' estimate of 45.4 percent, according to Thomson Reuters StarMine.
Freedman said since the company beat its forecast for gross margins, investors could be optimistic that its second-quarter outlook could prove to be conservative.
The company raised its full-year sales forecast to around $5.0 billion from about $4.95 billion. Operating income for 2016 is now expected to be $503-$507 million, compared with its prior forecast of about $503 million.
Analysts on average expected 2016 revenue of $4.98 billion, according to Thomson Reuters I/B/E/S.
The company's net income rose to $19.2 million, or 4 cents per share, from $11.7 million, or 3 cents per share, a year earlier.
Revenue rose 30 percent to $1.05 billion.
Analysts on average expected profit of 2 cents per share on revenue of $1.04 billion.
The company's shares were up 8 percent at $47.49 on the New York Stock Exchange.
(Reporting by Ramkumar Iyer in Bengaluru; Editing by Anil D'Silva)