Under Armour, Inc.
Q2 2014 Earnings Call Transcript

Published: 24 Jul 2014

[Operator:]

Good morning, ladies and gentlemen, and welcome to the Under Armour, Inc. Second Quarter Earnings Webcast and Conference Call. [Operator Instructions] As a reminder, this conference call is being recorded. I would now like to turn the call over to your host, Mr. Tom Shaw, Director of Investor Relations. Mr. Shaw, you may begin.

[Thomas D. Shaw:]

Thanks, and good morning to everyone joining us on today's second quarter conference call. During the course of this call, we'll be making projections or other forward-looking statements regarding future events or the future financial performance of the company. We wish to caution that such statements are risks and -- are subject to risks and uncertainties that could cause actual events or results to differ materially. These risks and uncertainties are described in our press release and in the Risk Factors section of our filings with the SEC. The company assumes no obligation to update forward-looking statements to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events. Joining us on today's call will be Kevin Plank, Chairman and CEO; followed by Brad Dickerson, our Chief Financial Officer, who will discuss the company's financial performance for the second quarter, followed by an update to our 2014 outlook. After the prepared remarks, Kevin and Brad will be available for a Q&A session that will end at approximately 9

[Kevin A. Plank:]

Thank you, Tom, and good morning, everyone. In our press release this morning, we raised our full year revenue guidance for 2014 to a range of $2.98 billion to $3 billion. That represents growth of 28% to 29% for the year, an increase from our prior range of 24% to 25%. That's a great forecast of growth, strongly supported by the 34% revenue increase that we saw in the second quarter. But these numbers are not without precedent. Back in 2007, net revenues grew 41% for the full year, and more recently, in 2011, revenues grew 38% for the full year. As we said previously on these calls, the growth opportunities for the Under Armour brand are abundant. What is, however, unprecedented is the source of our growth, the new dimension these revenue drivers are bringing to our brand, and most importantly, the confidence it provides that our strategy is right and positions us well for sustainable growth. To illustrate the breadth of the growth and help you understand the benefits for our investments, I want to discuss 5 pieces of our business that are bringing diversity to our story

[Brad Dickerson:]

Thanks, Kevin. I'd now like to spend some time discussing our second quarter 2014 financial results, followed by our updated outlook for 2014. Our net revenues for the second quarter of 2014 increased 34% to $610 million. Growth again was balanced across many parts of our business during the North America wholesale, Direct-to-Consumer and International channels, as well as our -- as across our Apparel and Footwear categories. Areas that contributed to upside from our original plan during the quarter included positive trends in our International and Footwear businesses, a desire from our wholesale partners for earlier delivery of back-to-school product and outperformance in both our Factory House and E-Commerce channels. Taking a look at Apparel, we grew this category 35% during the quarter to $420 million compared to $310 million in the prior year. In general, we continue to see success where we drive newness and excitement for the consumer, including innovation stories like ArmourVent, as well as enhanced design elements through products such as Alter Ego, UA Tech and graphic tees. Specifically, in Men's, the first quarter momentum we experienced in Golf and Outdoor continued to drive results during the second quarter. In Women's, we saw strong growth in both the Running and Studio category; and in Youth, Training and Golf were the big stories. Building on our first quarter success, second quarter Footwear net revenues increased 34% to $110 million from $82 million in the prior year, representing approximately 18% of net revenues for the period. We continue to offer more balanced running price points across our sporting goods distribution and remain encouraged by the early success of our SpeedForm platform. Our momentum is also continuing our cleated business where we are increasing market share in both baseball and football this year. Following on the relaunch of our bags business in the prior year period, our Accessories net revenues during the second quarter increased 18% to $60 million from $51 million last year. Growth during the quarter was primarily driven by headwear. Our Direct-to-Consumer net revenues increased 38% for the quarter, representing approximately 31% of net revenues. While Kevin walked you through some of the early progress we are making in International markets, it's important to note the vast majority of our current Direct-to-Consumer revenues are concentrated in North America. In our North America retail business, square footage in our Factory House channel grew 22% year-over-year. This growth reflects a total of 118 Factory House stores at the end of the quarter, up 12% from the second quarter of 2013, as well as the upsizing of some existing doors. On the full price side, we now have 5 Brand House stores in North America, following the April opening of our Soho location in New York City. In E-Commerce, strong traffic gains continued to drive our business during the quarter, and we remain focused on key second half initiatives, including responsive design for mobile, consumer marketing segmentation and Connected Fitness engagement. Continuing the success from the first quarter, International net revenues increased 80% to $46 million in the second quarter and represented 8% of total net revenue. In Europe, strong results continue to be driven by higher brand awareness and a more focused in-country strategy around 3 key markets of the U.K., Germany and France. In Asia, we are in the process of accelerating our partner store model in China, while also building both wholesale and distributor relationships across the region. Finally, in Latin America, our business benefited from the conversion of our Mexico distributor to an Under Armour subsidiary at the beginning of 2014, as well as our market entry into Brazil. Moving on to margins. Second quarter gross margins expanded approximately 90 basis points to 49.2% compared with 48.3% in the prior year's quarter. Two factors were the primary contributors to the improvement this quarter

[Operator:]

[Operator Instructions] And our first question is from Pamela Quintiliano with SunTrust.

[Pamela Nagler Quintiliano:]

You gave a lot of info on DTC, and I was hoping you could just talk a little bit more about stores and what type of learnings you have from the newer locations, particularly Soho. I know you mentioned Women's, but anything else there? And does it make you approach any aspects of the store build-out differently? And then just in line with that, the tourism component. I'm sure it's very high. Are you able to collect data there? Is that impacting your future build-out domestically or internationally?

[Kevin A. Plank:]

Yes. Thanks very much, Pam. I think as we look at the opportunity, we've built an incredible learning center for us. Number one, getting close to the consumer and the things we found out. We've had a great relationship, and I want to reiterate. We are very much a wholesale distributor and have incredible partners. And so our business there is very strong, very healthy and something that we continue to see additional growth. As we learned though from retail, 2 real key learnings

[Pamela Nagler Quintiliano:]

And then if I could just have one quick follow-up. With your wholesale partnerships, are they also taking the learnings from the Soho location and other DTC and the way they're presenting products? Or is it changing their approach in dealing with you?

[Kevin A. Plank:]

Yes. Well, I think everyone is unique in their own situation, without question, and the goal that we have, when we built the first Brand House here in Baltimore, 8,000 square feet, was having our partners walk in and say, "I want this in our store. And why doesn't our Women's selection look like it does here with the breadth of color, style, design?" And really, the reach, to ability to go outside of sporting goods. Because a lot of times, particularly in, take a category like Women's, it's -- you're branded by your buyers, you're branded by your partners and they say things like, "We'll buy you for a compression short and a sport ball." But that's the way that we see you and there's a lot more to it, and I think that our Women's team and the creative that we've been driving there, our Women's design center in New York, for instance, and what that's been, I think bringing to us, it's coming through with products the way it's hitting the floor, and it is absolutely educating everyone up and down through our distribution channels, beginning with our sales in our Direct-to-Consumer channel and as well as informing in a big way our wholesale partners. So it will create a lot of expectation for them. It's the way that we see how we can be presented, and frankly, we're looking for that to be reflected in all of our wholesale partner stores in some way, shape or form.

[Operator:]

And our next question is from Faye Landes with Cowen and Company.

[Faye I. Landes:]

Can you just talk about your thinking on spending going forward? I mean, this is a tremendous -- you have a tremendous revenue growth period, and you're spending to support it. When should we start thinking about [indiscernible]? How do you think about it? How should we think about it?

[Brad Dickerson:]

Yes, Faye, we've talked a lot about this around our spending and our strategy around spending going forward here and with all the opportunities, especially what Kevin kind of laid out in his script, all the opportunities around things like Women's, Connected Fitness, International, DTC. We see so many opportunities after this. It's really, really important for us to make sure that we balance the need to maintain operating margins, maybe even slightly, slightly improve operating margins a little bit year by year, but balance that with the absolute need to invest in our businesses. And Kevin made a great point in his script around the investments we made in 2010 or why we're seeing success in things like Footwear and International and Women's today in 2014. So the theory there being that if we keep investing and balance this need to invest in 2014, you'll continue to see those benefits in future years to come like 2015 through '17 and so forth. So we said pretty consistently that our focus on operating margin is to slightly improve it year-over-year. It's kind of the case you've seen from us the previous years, but more importantly, make sure we're putting the right investments in the right places to drive shorter-term and longer-term growth down the road. So we've even talked about the possibility of this. We overdrive our current year revenue or have some upside in gross margins like the back half of this year. Potentially, if we have some of those things and we have some extra dollars, we would absolutely look to spend those extra dollars in areas like International or Connected Fitness or Women's basically, as we talked about earlier. So continue to see us spend and balance that spend to drive short-term and long-term growth and continue to see us focus on maintaining and slightly improving operating margins, but balancing that with investments.

[Faye I. Landes:]

Okay. And just one other quick question. On the Women's thing, I mean, can you just put a little texture or context on what we're supposed to see and when is like -- when do we go somewhere other than Soho [indiscernible] it has and expect to see the full Women's line, the full -- the new Women's line?

[Kevin A. Plank:]

Faye, let me just give you some color and context around Women's as a whole and make sure we get the whole picture out there because, obviously, it's a huge story for the brand as we've been preaching about for a long time, but it's actually coming up in the next 7 days with the big launch that we're doing next week in New York around breaking our spot. There's an incredible amount of excitement. So I just used the word launch, but it's probably absolutely the wrong phrase to use. It's not a launch when you already have a $500 million business in Women's and growing at a rate north of 20% consistently for a very long time, but we do think it's great timing for this campaign. Our Women's business is healthy. There's still areas that we see that we need to communicate and continue to have a conversation with the consumer. We're pleased and proud of the 26% growth for Women's this past quarter, but we think that there's obviously a lot more upside and a lot more opportunity there. We believe there's this quiet shift that's going on where women are increasingly wearing more athletic product outside of the gym, obviously. We think that Under Armour is in the best position to continue to grow the business as we felt this loyal base of athletes, and we're growing with her as she moves in a new category, grows up, and frankly, new end uses for Under Armour. So as a brand, brand shops will have a point of view. And the Brand Holiday that we're launching, our Holiday 2 -- remember, this is back-to-school, this is the middle of football season, sweating and soccers breaking, and all your fall sports and Under Armour, big tough Under Armour decided to launch a Women's campaign with a ballerina no less. And it's absolutely no accident and something we explicitly knowingly did because we think this is the best use of our time and resources. And I want to say we're not forgetting about these other categories, but we're absolutely focused in taking the 3 holidays we do a year. We're doing Holiday 2 and communicating exclusively to Women's. So this will be the biggest global campaign we've ever done around Women's -- for the Women's brand, but I think it demonstrates the commitment that we have to the category. And when I say commitment, we're committed to building, first and foremost, the best athletic products for Women and for athletes and inviting a conversation around them. We want them talking about Under Armour being an important product. I mentioned our ballerina. It's Misty Copeland, who is -- she's probably -- she's a great human being, first, and she's an amazing athlete and ballerina probably all beyond that. But she's the one featured in the ad. And she probably doesn't fit the old definition of what people would see as an athlete, but when you see her story, you see her perform and you frankly see the way that she willed her way to becoming one of the world's top ballerinas, it's 100% reflective of what the Under Armour brand DNA is all about. We're incredibly proud of the product that's going to be on the floor this fall. It brings a heightened design esthetic that's aligned without sacrificing any of our commitment to performance. So every product you build, it may look like it's just a beautiful top, but it's a beautiful top that with moisture, keeps you light, keeps you cool and helps you perform and all the Under Armour DNA, which we think gives us our personality and our differentiation. And then you're also going to see us continue to expand from that core audience. So we know that she shops our sports bra and our compression short, but we think we can take her to a different place outside of the gym, off the court and take her to and from in some of those wearing occasions that we're seeing this shift happen with women wearing athletic "product." And it gives us the ability to reach women who are incredibly active and participate in many sports activities, but probably don't consider themselves athletes. But definitely they see themselves as maybe moving or an athletic female, we're going to speak to her. I started this by saying, and I mentioned it a little bit earlier, we believe that Women's can be as big, if not bigger, than Men's, and this campaign is something, I think, that underscores our commitment in investment in making that a reality.

[Operator:]

And our next question is from Omar Saad with ISI Group.

[Omar Saad:]

Wanted to ask you about this simultaneous sales and gross margin acceleration that seems to have begun about 3 quarters ago. I mean, look, those are the 2 kind of financial -- healthy financial indicators of brand strength, especially when you get them moving together. Do you think the 2 are related? Is the key driver Direct-to-Consumer or mix shift to more premium products? Are you taking pricing, all 3? Just help me think about this simultaneous sales acceleration and gross margin, and over the long term, how you think about the 2?

[Brad Dickerson:]

Yes. Omar, I think I'll look at both of them a little bit differently and then kind of bring it together at the end here. But on the sales side, obviously, we've had strong quarters in the last few quarters, and there's been some things that have been tailwinds first that we talked and then some of those tailwinds actually, if they get to the back half of the year, start to be a little bit tougher comps for us within the back half of this year. But we talked about things like supply chain and the fact that we, in previous years, have had some challenges on deliveries in the supply chain. As we got to the back half of last year, started to correct those, and that gave us a little bit of a tailwind, especially as we got into Q4 and early part of this year in comping some tougher supply chain deliveries in the prior year. So that favorable comp does start to go away from us a little bit as we get in the back half of this year, when we started improving them last year. So that's part of the revenue piece. It's also part of the margin piece, too, where things like air freight and so forth that we needed in previous years, we needed a lot less in the current year and as we get into the back half of this year, too. So that's been a, call it, the tailwind on the revenue side and the margin side. Obviously, we talked about weather last year, in the fourth quarter, a lot as being a good tailwind for us, especially around our DTC business where we can react very quickly to weather changes and so forth. So those are kind of some of the things that are consistent and we talked about in previous quarters. Some things that you saw in the current quarter and maybe going into the back half of this year on the revenue side, again, one thing we called out with some early demand from our wholesale partners. Again, maybe going off some challenges we had in prior years around getting deliveries on time on the back-to-school period. We had some requests from some of our wholesale partners to get that product in a little bit earlier so we can get the floor set for back-to-school. That's definitely helped the second quarter here and took a little bit away from the third quarter as we go forward in order to do that. We have talked about Factory House square footage growth and other revenue items as we get towards the back half of the year. Square footage growth in the front half of this year was in the upper 20s in Q1, low-20 percentage in Q2. As we get to the back half of the year, we'll be in the upper teens. So that will take away a little bit of that kind of revenue driver that we've seen in some of the last few quarters. And obviously, when you look at our guidance, we've talked heavily about this and just being very, very careful about our fourth quarter revenue. And what we're guiding to in the fourth quarter, coming off the tailwind of the weather, positive last year in the fourth quarter, so being just kind of careful in what we put in our guidance for this year. So those are kind of some of the numbers things. On the margin side, we talked about some things like made for mix and air freight that, again, as we get to the back half of this year, are kind of a little less of favorable comp year-over-year in general. But to kind of wrap that all up, to bring up what's happening positively for us, probably the biggest change in the last 6 months specifically is the gaining confidence we're getting in this International and Footwear business segment that have been really important to us. Obviously, we put a lot of investment in those in the last few years and really the front half of '14. Coming into '14, we were being a little bit cautious in our guidance around the expectation of those 2 businesses because they were relatively new for us. As we got to the first 6 months here and saw a lot of success, not just in selling in, but more importantly selling through to the consumer, it gives us a lot of confidence here in raising our guidance for the back half of this year. Obviously, those businesses to some degree, right now for us, are a little bit of a drag on gross margin, but absolutely heading in the right direction longer term in places like Footwear, where we're having a better mix towards running, and we're improving margins in products like SpeedForm. And International, longer term we'll start to improve also. In the near term, no, a little more distributor weighted, which will hurt our gross margins.

[Omar Saad:]

That's really helpful. And at the analyst meeting, you guys talked, I think, about long-term 2025 revenue targets. You've been above that. Are you ready to sign up, given the gaining confidence and some of these new -- or newer areas of growth to an elevated growth rate long term? Or is it premature at this point?

[Brad Dickerson:]

You know what, we'll probably speak to our last year investor day guidance for now, and we'll do investor days every once in a while and give longer-term guidance. So we looked at last year talking about our revenues through 2016 hitting $4 billion. Obviously, as we wrapped up 2013 and as we get into '14 here, we're outpacing that trend right now. So we're not going to sit here and commit to a number today for 2015 or '16. We'll definitely give some more insight to 2015 at the end of October, on our next call. But obviously, I think just in general, the trend being that what's changed from our last Investor Day last year to this year, I go back to the 2 big changes. I'd say there's 3 big changes

[Operator:]

And our next question is from Randy Konik with Jefferies.

[Randal J. Konik:]

I guess, Kevin, the way we're approaching the stock is talking about the brand for the next generation. And I guess what's different when I see adults, you -- they'll have pieces of Nike and pieces of Under Armour in the gym. But you look at like a 5-year-old or a 10-year-old or a 15-year-old, they're decked out from Footwear to the whole Apparel assortment in Under Armour. So you don't really talk about the kids part a lot. What are you seeing there? And what are some of the initiatives in that part of your world to kind of build to the future when these kids become adults? And then in Footwear, I guess my question there is, how do you think about -- you've had success with SpeedForm and Spine, how do you think about platforming over the years ahead? Should we expect like 1 or 2 platforms per year? And then should we expect additional -- more SKUs or colorways to complement those platforms? And then lastly, in International, do you assume that -- do you think that International becomes half the company over time? And what is the biggest opportunity internationally?

[Kevin A. Plank:]

All right, we got 10 minutes left. I'm closing this call out with this question. So let's begin with number one, we haven't figured how to get a 5-year-old a credit card yet, so we still have to work through the older brother and mom for that, and the good news is it typically does come from there. So without question, I think grandparents grew up wearing one brand from Europe. Parents grew up wearing a brand from the West Coast, and we're very happy to see the youth of today are growing up wearing Under Armour. And we see that, that trend is happening. And there's a lot of things that we have to do. It's certainly not God-given to us, but we're pretty proud of the way that we're executing right now in order to deliver on that opportunity that we have. So Youth for us, you're right, it's massive. And the growth we're seeing, happily -- I said along that our Youth business was obviously outpacing the general growth of the business, both Men's, Women's, Footwear, everything. So we're seeing Youth in the 60% and 70% type of growth opportunities we have there. And frankly, the new thing, when we typically talk about Youth in the past, we would be referring to boys, and what we're seeing right now is that our Girls' business is, frankly, "on fire." So we're very pleased with the balance that, that's presenting for us. And that demonstrated -- I think giving her a voice and giving her a brand that she can wear in a very big and balanced way with something that she has much confidence with Under Armour, we're very excited to be able to bring her up, take her through athletics, take her through her school years, take her into her college years and then get her out as she moves into 20-somethings and 30s and grow up and, frankly, move on with her. So we're learning a lot from the Youth standpoint. The difficulty we've always found with Youth is distribution and where can you find appropriate distribution, so we've been working with our key wholesale partners in expanding their footprint. And I think you'll see that from some of our bigger players like Dick's and even creating up some Dick's and Sports Authority and some of the others, but really, I think you've seen a real commitment from our wholesale partners and saying, "What can I do to attack the Youth business?" And so that's happening with us. And frankly, there's not a lot of horseshoes in this race either. Kids are pretty specific with what they're looking for. I think we're proud of the position and the leadership that we're taking there. So there's more to do on distribution and continue to work with our partners to give us appropriate space in stores to get those products a chance to be sold. Let me -- before I leave Youth, I can't tell you how excited we are about our position as the product of the next generation and the brand of the next generation, and we think that's something which is really -- it's more of a movement than anything and I wish I could explain it and know exactly how to bottle it up. But instead, we're pleased with the results, and we're happy that we're speaking in a very important way to this youth consumer. And there's a lot more to come there. We think there's great opportunity, both in Apparel and, obviously, in Footwear. So let me move on to the Footwear side of the question, asking about platforms. Our success year-to-date is something that we're really proud of, and obviously our success in Footwear is something that gives us the confidence to raise our outlook to that $2.9 billion to that $3 billion range. So first and foremost, with Footwear, it always begins with the largest category, which is Running. First and foremost, we're really excited about Running, and the reason we are is because of leadership, product and distribution. First of all, we've done a great job, I think, bringing leadership onto our team. Fritz Taylor, we mentioned his name before, is now heading up, running for the Under Armour brand. And China created that cross-functional process that will take place, connecting what we have in this leadership position with Apparel, then tying it truly into Footwear. And we said that in the past, but we're in our 10th year making shoes today, and I say that because we started in 2004 making shoes. We started selling the product because of the 18-month calendar in 2006, and we've been in this for a long time, and I'm telling you it just takes a long time. But it took maybe -- it was not only the product, but it's the people, it's the positioning, it's the factories. It's really the distribution. It's all those pieces that come together. And so with leadership and our team here existing, and again, this is a product that was built long before Fritz got here, but he's walking in and he really has a full plate. It's not something that's saying the cupboard is not there. There's amazing technology that we have in the market today with SpeedForm, products like SpeedForm, but there's also -- there's a full cupboard of things that we're about to bring out, and that comes out in the product. So the SpeedForm Apollo at $100 or something, it met all of our expectations, and with that gave us confidence to go in a much bigger position, which you'll see rolling out through the end of 2014 with things like the SpeedForm Vent, which is a terrific upgrade to the product that we think has got a real esthetic and something that will be compelling, still at $100, really performing well in sporting goods, and of course, some of our key mall partners as well. We also -- I mentioned the SpeedForm Gemini, which will be coming out in the beginning of 2015. I tell you it's just a terrific product. And if people talk that our SpeedForm was maybe a little bit light, or more of a sprinter shoe, the Gemini is the shoe that you can wear. It's the every man's shoe. It's whether you're a 3-miler counter or whether you're a long distance looking to train for a marathon. It's an incredible shoe featuring unbelievable technology. The seamless fits just like our SpeedForm, made in the same version of the bra factory where we made the original SpeedForm Apollo, but with things like charged foam, which has got recovery and retention. Every runner, it's the shoe, I think, that we were literally supposed to make. It's something we're incredibly proud of. And we're also doing it at $130, so we're stretching the price points there. Running, I think you'll see there's a lot more to come. Obviously, the largest category, but also our longest-standing category with the shoe that we first sold in 2006 with the football cleat, and we promise the ability for us to chase the #1 position there. So as we sit here some 8 years later, we're still on our way to that goal. We're off to an incredibly strong start with football across all of our distribution and particularly in our retail stores and online and places like Eastbay, the online component of Foot Locker. And so we're seeing our product is really doing well. And so one thing that's interesting is we got the #1 cleat at the high end in the market called the Under Armour Highlight Cleat, and it's a $110 shoe that we sold a year ago. We added ClutchFit to it. We upgraded the product. We moved the price point to $130, and the product is doing even better than it did a year ago. We're seeing our sales up over 35% after being #1 last season, and it's priced at $20 more. We've got the Cam Newton special shoe at $160. We've got our Alter Ego with Superman and Batman and the Flash and other styles that are relatively -- basically sold out everywhere we're doing distribution. So we feel like we cracked the code. And we will take market share this season, and we will continue our march to being the #1 cleat in America. And you can say, "Is that a big deal? It's a small category." I think it's just telling us what else is to come. The category that we fit in for 8 years in football cleats, the category was in 7 years in baseball, 6 years in training shoes, 5 years in running, 4 years in baseball, all these things will come, and I used to use a speech called 7 years. I think my new speech is going to be called 8 years. Sometimes it takes just time to become great at things. I don't know if I'm declaring that it's great, but I'll tell you our product is great. We're still continuing to hunt down becoming the #1 athletic footwear brand in the world. Basketball, it's a different story and another category that we think taking a leadership position there, begins of course with products, always first and foremost, but also with talent. Bringing Stephen Curry onto our roster, who everyone from the President of the United States, is called the best shooter that they've even seen in basketball, is really an asset that we're going to blow out a few more product lines with Steph until we can do to really get his shoe moving for us, but we think he takes us to a different place. So Footwear is something we're incredibly happy for. What was the third?

[Randal J. Konik:]

That was great. So the third one is International.

[Kevin A. Plank:]

Got you, got you, got you. All right. So we've had a lot of -- I spend a lot of time on the road. Our company is spending more and more time on the road, Charlie Maurath and our team on the global side. Going from being a North American wholesale apparel compression company into evolving into a global true athletic brand that we expect to be, and frankly, we believe we're in the process of becoming, it just takes time and it takes seeing a lot of different things. So just give you a little bit of my calendar, which is indicative of what's happening across our team across the world. This year already, so halfway through the year, I've already been to Asia, I think once, maybe twice; the Middle East, once; Europe, 2 times; Latin America, 3 times, including a couple of weeks ago at the World Cup, which was awesome, I've got to say. We are definitely committed to being a global brand, and it's not something that's going to happen overnight, and it's not going to happen from people doing North American jobs. They're spending a little bit of time helping us become international. So building that out. And one of the previous questions about things like investments and how we're seeing leverage come on to company. There is an entirely different company that needs to be built in order for us to be a global brand. And so we're proud of the fact that we're able to continue to deliver for our shareholders, both top line and especially bottom line, and doing it all the while, while posting the numbers that we are and building out the infrastructure that will allow us to take advantage of the investments that we're seeing now in the future, just like we saw the investments, as Brad mentioned, in 2010 that we're seeing today in 2014 with things like Footwear and International. So we talked about the Brand Houses that we opened, the opening we did in Soho, the store we have coming in Chicago, but we've got a couple of big openings that are happening globally around the world. Let me begin with -- in EMEA. Throughout Europe, crossing $100 million and gaining momentum for the first time, it's taken us a long time. We've been in Europe since 2006. And we spent a long time, a, figuring out International business logistics, products, sourcing, colors, how to tell your story, translation and all the pieces. It's just taken a long time, but I think we are finally positioned where we can start to accelerate, and that tipping point is something that we feel like we've reached in Europe and really ready to go. We've seen aided and unaided brand awareness triple year-over-year in key markets like the U.K. and Germany. Of course, we point to our strategic partnership with Tottenham Hotspur and what that's done being a part of EPL football. We're working on our new E-Commerce sites and not defining ourselves by having to limit ourselves to brick-and-mortar retail, but also seeing what we can do in finding new channels for distribution. So we're taking a new approach that we don't have the infrastructure investment that maybe other brands have and so we can take a clean sheet of paper and say, "What's the most effective way for us to be important in these other markets?" Latin America, I mentioned that. Mexico, for us, we -- I was down there for -- we opened our Mexico City Brand House, trending way above plan from where we thought it was going to be. A new sponsorship we just announced with Cruz Azul and then extending our existing partnership that we had with Toluca down there and 2 of the best soccer clubs in Mexico. Brazil, we launched in April. We are down there. We've been watching. We saw the World Cup, and it was interesting and just people asking and saying, "How did you -- what did you think of the World Cup? And what was Under Armour's participation?" And we didn't participate as much. We had several athletes wearing boots on different teams and clubs from around the world, but our outlook is much longer and much more strategic. And as difficult that is for us to say over the largest sporting event in the world, that we weren't as key an important partner as we wanted to be, we still grew our International business 80% this quarter and 79% last quarter. So we feel like we're putting the pieces in place to be able to take advantage of the global sport, the beautiful game of football, once we truly have the ability to capitalize on it and once we are truly ready. So our outlook there is not saying, what's it going to look like 4 years in Russia or 8 years when we're in the Middle East, we're taking a long-term 12- to 20-year outlook of how Under Armour is going to be the leading global football brand in the world.

[Randal J. Konik:]

It's very helpful, very helpful.

[Kevin A. Plank:]

I wasn't done yet, I think, on Asia. Hold on a sec [indiscernible] this call yet.

[Randal J. Konik:]

Stocks working so...

[Kevin A. Plank:]

I haven't seen that. Last thing I just want to say is leave Asia. Our partners in Japan are amazing, growing the brand, growing the business. Last and most importantly, it's just a couple of store openings that we had. I was down for a store opening in Panama recently, but also in Asia, we recently opened Singapore and the Philippines. And I got to tell you, of all the travels I've done, I've never been to the Philippines, yet we delivered -- for our store opening there, we had 700 people waiting outside in line to get into a 2,500 square foot store. And it's the kind of thing that had you scratch your head and say, "I think this brand has real legs and real opportunity, and I think we have a chance of doing something incredibly special." So there's a lot of energy, a lot of heat, a lot of excitement and something that we're incredibly proud of. And I guess, thank you, but the last thing I want to say before we do close the call is I'm very pleased that our CFO, Brad Dickerson, was here. He has a due date with a baby coming in the next 24 hours and we thought that I was going to have to answer the financial questions. So I'm very glad to report that you guys would hear directly from Brad. So with that, thank you very much for the last question, Randy, and thank you all for your time.

[Thomas D. Shaw:]

As promised, Kevin took us through the end of the call here. So thanks again for everyone joining us today, and we look forward to reporting to you our third quarter 2014 results, which we tentatively scheduled for Thursday, October 23, at 8

[Kevin A. Plank:]

Brad said he's going to name the baby Armour.

[Thomas D. Shaw:]

Thanks.

[Operator:]

Ladies and gentlemen, thank you for participating in today's conference. This does conclude the program, and you may all disconnect. Everyone, have a great day.