Under Armour 2009 Annual Report Download - page 39

Net sales increased $112.8 million, or 19.4%, to $695.3 million for the year ended December 31, 2008 from
$582.5 million during the same period in 2007. The increase in net sales primarily reflects:
• $44.0 million increase in footwear sales driven primarily by our performance training footwear launch;
• unit volume growth in certain existing apparel, such as team, golf, mountain, basketball and underwear
products; partially offset by decreased unit volume within our compression products;
• increased average apparel selling prices driven primarily by a higher percentage of direct to consumer
sales in the current year period versus the prior year period; and
• product introductions subsequent to December 31, 2007 in multiple product categories, most
significantly in our training, golf, basketball and mountain categories; partially offset by
• an overall reduction in at-once orders and higher wholesale order cancellations, as result of the
weakening retail environment during the back half of the fourth quarter of 2008.
License revenues increased $6.0 million, or 24.8%, to $30.0 million for the year ended December 31, 2008
from $24.0 million during the same period in 2007. This increase in license revenues was a result of increased
sales by our licensees due to increased distribution and continued unit volume growth, along with new product
offerings.
Gross profit increased $49.9 million to $354.9 million for the year ended December 31, 2008 from $305.0
million for the same period in 2007. Gross profit as a percentage of net revenues, or gross margin, decreased 140
basis points to 48.9% for the year ended December 31, 2008 compared to 50.3% during the same period in 2007.
The decrease in gross margin percentage was primarily driven by the following:
• higher proportion of total sales year over year from footwear which have lower margins than our
apparel, accounting for an approximate 130 basis point decrease; and
• less favorable apparel mix relative to margins, along with higher product and inbound logistics costs,
accounting for an approximate 60 basis point decrease; partially offset by
• increased sales through our direct to consumer sales channel which produces higher margins, along
with increased license revenues, accounting for an approximate 60 basis point increase.
Selling, general and administrative expenses increased $59.2 million to $278.0 million for the year ended
December 31, 2008 from $218.8 million for the same period in 2007. As a percentage of net revenues, selling,
general and administrative expenses increased to 38.3% for the year ended December 31, 2008 from 36.1% for
the same period in 2007. These changes were primarily attributable to the following:
• Marketing costs increased $23.7 million to $94.9 million for the year ended December 31, 2008 from
$71.2 million for the same period in 2007 primarily due to sponsorship of new teams and athletes on
the collegiate and professional levels, increased marketing costs for specific customers, increased
personnel costs, along with our print and in-store brand marketing campaign supporting the
introduction of our performance training footwear. As a percentage of net revenues, marketing costs
increased to 13.1% for the year ended December 31, 2008 from 11.7% for the same period in 2007
primarily due to the items noted above, partially offset by lower media expenditures during 2008.
• Selling costs increased $13.1 million to $56.1 million for the year ended December 31, 2008 from
$43.0 million for the same period in 2007. This increase was primarily due to costs incurred for the
continued expansion of our direct to consumer sales channel, along with additional personnel in our
domestic and international sales force. As a percentage of net revenues, selling costs increased to 7.7%
for the year ended December 31, 2008 from 7.1% for the same period in 2007 due to the continued
expansion of our direct to consumer sales channel, partially offset by lower personnel costs as a
percentage of net revenues in 2008.
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