Good morning, ladies and gentlemen, and welcome to the Under Armour, Inc. First Quarter Earnings Webcast and Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question and answer session, and instructions will follow at that time. If anyone should require assistance during the conference, please press star then zero on your touchtone telephone. As a reminder, this conference call is being recorded. I would now like to turn the conference over to your host, Mr. Tom Shaw, Director of Investor Relations. Mr. Shaw, you may begin.
Thanks. Good morning to everyone joining us on today's first 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 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 an unanticipated event.
Joining us 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 first 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 9:30 A.M. Finally, a replay of this teleconference will be available on our website at approximately 11:00 A.M. Eastern Time today. With that, I'll turn it over to Kevin Plank.
Thanks, Tom. Good morning, everyone. Our first quarter results are a great example of what happens when we execute at a high level. We grew revenues 36% this quarter. The strength was evident across genders, categories, geographies, and both our wholesale and direct distribution channels. Our top-line growth exceeded 20% for the sixteenth consecutive quarter. That's four straight years. We saw meaningful acceleration in both our footwear and international businesses. Our first quarter results also illustrate two key elements of what I'd like to discuss today. First, what we are capable of delivering today as a North American-based brand, and second, the boundless opportunities that exist for our brand, both here at home and in markets beyond our shores.
I want to start today by addressing three product categories that demonstrate both our ability to execute and the opportunity that still lies out in front of us. I'll hit running first, cover golf, and then outdoor. Of the three categories, running represents the biggest revenue opportunity for us, given the size of both the footwear and apparel components, as well as the fact that it's an important category across all geographies. We've always had a strong running presence in apparel but have focused a tremendous amount of resources the past few years in cracking the code in footwear. I think it's safe to say that given the strong launch this past quarter of our SpeedForm Apollo footwear, we are on a trajectory to become a significant player in the global running marketplace.
While the number of pairs we sold then was limited, we did a great job of executing the SpeedForm launch and set ourselves up to broaden and deepen the platform for the balance of 2014 and beyond. While we saw the benefits this quarter with a great SpeedForm launch, I think the important takeaway is how well it positions us to benefit from the flow of footwear and apparel product our team is working on in running. We are unique in that we came to the running category through apparel and are therefore in great position to have successful platforms like SpeedForm help ignite our entire apparel business, be it in running, training, or other pieces of our core business.
We believe our opportunity to grow running in an integrated way with footwear, apparel, and accessories, combined with what we will bring to market with our Connected Fitness Initiative, truly positions our running business as a key building block of our global growth story for the foreseeable future. Part of that confidence comes from the growing strength of the team we are building in running. It's a team where we've made significant investment in human resources, a team that understands the importance of building multiple platforms for all different types of athletes, and a team that continues to break the rules about footwear construction, as we did with SpeedForm, to create the precision, feel, fit, and comfort consumers have come to expect from our apparel. The second piece of business that speaks to the scope of our opportunity is golf.
I'm sure there are a lot of people watching the Masters a couple of weeks ago who said to themselves, "Hey, look, Under Armour's making golf shirts now." As most of you know, the golf category was one of our first steps outside of our core compression apparel. That original insight came from the football field when some of our coaches saw how dry our compression was keeping their players and asked us for polo shirts that they could wear on the sideline with a little looser fit but the same performance properties. Those sideline polos started making their way to the golf course, and we quickly understood the opportunity to authenticate ourselves with that consumer. We built the UA golf business systematically by doing what we do in every category we enter, bringing performance innovation to the consumer and maintaining a premium position wherever we do business.
The business started to change along with Under Armour. When we started out, the overwhelming majority of polos sold in golf pro shops were cotton. I think any of you who've been in a pro shop in the last year or two have noticed how that map has absolutely flipped, and the overwhelming majority of golf polos are made now from performance materials. Last year, we signed a 19-year-old kid who we thought was a great fit for the Under Armour brand for one simple reason: He had the talent and drive to be a game-changer. What we saw in that first year of our relationship with Jordan Spieth was an athlete with little fear and high confidence in his ability to compete with the world's best golfers.
We talked about that at our investor day last June. He went out in July and became the youngest winner on the PGA Tour in 82 years. We continue to grow our golf business, which approached the $100 million mark in 2013, with an increased focus on fit and style in both our shirts and pants to accompany the technology we build into our golf apparel. We also thought that Jordan had the opportunity to be something special and made sure we were in position to capitalize on his presence over the long term. He proved that at the Masters with not only a great finish playing in the final pairing, but in the manner that he comported himself both on and off the course.
Again, our golf business is a great example of not only our ability to execute today, but to position ourselves for sustainable growth by partnering with a great stable of young golfers like Hunter Mahan, Scott Stallings, Gary Woodland, and of course, Jordan Spieth. The third category I'd like to discuss today is outdoor. It's not a category that we talk to you about a lot, but it's one that has been a critical piece of our growth and brings a new dimension to our brand. You've heard us talk consistently about being a premium brand wherever we show up. Outdoor is a great example of this. In both the hunt and fish categories, we've been an authentic brand with our consumer from day one.
We've seen a very strong six-month trend across the board. We're seeing great growth across specialty outdoor accounts as well as our bigger wholesale partners, all driven by great product and innovation like our UA Scent Control and Magma. We will continue to grow this category from a comp perspective as well as growing new categories like outerwear and boots. That has enabled us to reach more athletes off the playing field and expand our presence in their closets with product that is more lifestyle-based. Our outdoor business is another great example of Under Armour authenticating itself with our consumer, earning their trust, and expanding our share of their closet. They're three big categories of business for us: running, golf, and outdoor, all of which are helping drive our business today and where we are setting ourselves up to be major players on a global level.
Better understanding the scope of opportunity we have outside North America has been a focus of our organization for at least the past 24 months. We talked at our investor day last June about how we would ensure building our brand globally in the same authentic manner we did here in the U.S. Since then, we progressed against several of our key global initiatives, including transitioning our distributor in Mexico to a wholly owned subsidiary, launching our brand in Brazil and Chile, and signing several sports marketing agreements in global football. Two of those teams, Toluca in Mexico and Colo-Colo in Chile, have had outstanding runs, with Colo-Colo winning their first Chilean Primera División title in five years in just the first year wearing Under Armour kits.
Toluca played in a CONCACAF Champions League final last night at home against fellow Mexican League team Cruz Azul for a sport in prestigious FIFA World Cup in December against many of the world's best club teams. While Toluca did not advance, Under Armour will still be represented in the tournament as we've just signed an agreement to outfit Cruz Azul starting later this year. Our strong 79% increase in international revenues this quarter is a positive sign that these new initiatives are off to a strong start and that the story of our brand continues to play well as we expand into new markets outside North America. The strength this quarter internationally was really across all regions, including and especially Europe, where the Under Armour brand continues to gain traction. In key markets like Germany and France, our brand awareness doubled year-over-year.
In the U.K., where we are in the second year of outfitting Tottenham Hotspur in the English Premier League, it grew three times as we continue to bring new consumers into our brand through global football. One last area that I want to touch on is the opening today of our first new store in New York City, which will highlight the largest presentation of the Under Armour brand anywhere in the world. When we opened our first brand house here in Baltimore, we talked about how the deeper presentation of footwear and women's would help our wholesale partners get a better understanding of the opportunity we see in these key categories. This morning when we open the doors in our Soho store, that breadth of product will be on display in full force.
The timing will be particularly good for our women's business as we activate our next brand holiday later this summer. It will be our first holiday focused exclusively on women's, and we believe it will help call attention to how Under Armour is constantly evolving to meet the needs of both the female athlete and the athletic female. In summary, when we look at the 16 consecutive quarters of revenues up 20-plus%, it's clear that we are executing well during a period of tremendous growth. There's going to be variability in any given quarter, and this consistent growth can mask inefficiencies in our business where we can improve. We are becoming better merchandisers, and what you see in our New York store today should be the standard for how we want our brand to look around the world in all channels of distribution.
Within our supply chain, we are constantly looking to improve our inventory turns while balancing consistently high demand for our products. We are a growth company. As a part of that growth story, we will not always make the perfect decision. We promise that when that happens, it will be done full speed, and we will never make the same ones twice. Whether it's categories like running, golf, and outdoor, key growth drivers like women's and footwear, early-stage businesses like basketball and connected fitness, or new markets like Brazil and China, it's equally clear that the opportunities for the Under Armour brand are abundant, and our philosophy around growth is unchanged. Our North American growth and cash creation will be the engine that feeds and fuels our global ambitions.
We still have tremendous runway here in the North American market that will fuel our business and enable us to invest early and often to capitalize on the opportunities that will drive our growth in the years to come. With that, I'll turn it over to Brad.
Thanks, Kevin. I would now like to spend some time discussing our first quarter 2014 financial results, followed by our updated outlook for 2014. Our net revenues for the first quarter of 2014 increased 36% to $642 million. As expected, we experienced a strong rate of growth during the quarter, given sustained momentum in apparel, a broader range of product and running footwear, and international market expansion. This quarter marks the first time since the third quarter of 2011, where each of these key growth drivers surpassed 30% growth. Taking a look at apparel, we grew this category 33% during the quarter to $459 million, compared to $346 million in the prior year. This represents the 18th straight quarter of at least 20% growth for our largest product category. Overall, we saw strong apparel growth from our training, golf, hunting, and fishing lines.
In women's, our studio line remains a standout, while youth registered notable gains in training and baseball during the period. Taking a look at some of our product programs, we experienced broad-based strength in Fleece, UA Tech, and Base Layer, while also offering new innovations with ColdGear Infrared and ArmourVent. First quarter footwear net revenues increased 41% to $114 million from $81 million in the prior year, representing approximately 18% of net revenues for the period. We were encouraged by the strong sell-through rate of our SpeedForm Apollo running shoe while also offering a broader running assortment at key price points, including the Assert, Engage, and Spine Evo styles. We are also seeing success in baseball with our cleated business taking market share despite the somewhat slower start to the season given adverse weather conditions.
Our accessories net revenues during the first quarter increased 43% to $52 million from $36 million in the prior period, primarily driven by our headwear lines. Our direct-to-consumer net revenues increased 33% for the quarter, representing approximately 26% of net revenues. During the quarter, we opened our first of what we expect to be seven new factory house stores for the year. Our first quarter-ending store count in North America totaled 118 locations compared to 103 a year ago. We also expanded two existing locations during the quarter as part of our current full-year plan to expand 12 locations. Looking at our full-price brand house stores, we are excited to open our third location in Soho following our 2013 openings at Harbor East in Baltimore and Tysons Corner near D.C. These three brand house locations will provide valuable learnings as our full-price retail strategy continues to evolve.
In e-commerce, we continue to see strong results driven primarily by traffic gains. Our efforts throughout the duration of 2014 will include an enhanced mobile experience, improved consumer marketing segmentation efforts, and increased engagement in connected fitness. International net revenues increased 79% to $55 million in the first quarter and represented 9% of total net revenues. We experienced broad-based geographic strength during the quarter. In Europe, we are starting to see the combined benefits of higher brand awareness and a more focused in-country strategy around our three key markets of the U.K., Germany, and France. In Asia, we are starting to accelerate our franchise store model in China and driving growth through e-commerce and expanded distributor relationships. Finally, in Latin America, our growth was primarily driven by the conversion of our Mexican distributor to an Under Armour subsidiary at the beginning of the year. Moving on to margins.
First quarter gross margins expanded 100 basis points to 46.9%, compared with 45.9% in the prior year's quarter. The following factors contributed to this improvement. First, our sales mix remained favorable due primarily to a lower mix of excess inventory sold to our factory house outlet stores, contributing approximately 40 basis points of gross margin improvement. Second, improvements in our supply chain drove lower air freight expenses year-over-year, contributing approximately 30 basis points of gross margin improvement. Finally, we experienced lower product input costs primarily in our accessories business, contributing approximately 20 basis points of gross margin improvement. Selling, General, and Administrative Expenses as a percentage of net revenues leveraged 40 basis points to 42.7% in the first quarter of 2014 from 43.1% in the prior year's period. Details around our four SG&A buckets are as follows.
First, marketing costs increased to 13.7% of net revenues for the quarter from 13.3% in the prior year period, primarily driven by the launch of our first brand holiday of 2014 and international marketing efforts. Second, selling costs increased slightly to 10.8% of net revenues for the quarter from 10.7% in the prior year period as our direct-to-consumer business grew roughly in line with our overall business combined with increased investments around our brand house store strategy. Third, product innovation and supply chain costs decreased to 10.4% of net revenues for the quarter from 10.5% in the prior period, as costs tied to our connected fitness efforts were offset by lapping prior year costs tied to the start of our expanded West Coast distribution facility. Finally, corporate services declined to 7.8% of net revenues for the quarter from 8.6% in the prior year period, primarily reflecting lower incentive compensation expenses.
Operating income for the first quarter increased 99% to $27 million, compared with $13 million in the prior period. Operating margin expanded 130 basis points during the quarter to 4.2%, compared to 2.9% in the prior year period. Our first quarter tax rate of 46.1% was unfavorable to the 39.9% rate last year, primarily due to an R&D tax credit recorded in the first quarter of 2013, as well as higher international investments primarily associated with the 2014 market entries in Brazil and Chile. Our net income in the first quarter increased 73% to $14 million, compared with $8 million in the prior year period. First quarter diluted earnings per share increased 71% to $0.06, compared to $0.04 last year. The EPS calculations for both periods reflect the two-for-one stock split, which was effective April 14th.
On the balance sheet, total cash and cash equivalents for the quarter decreased 30% to $180 million, compared with $256 million at March 31, 2013. We continue to utilize $100 million of our $300 million revolving credit facility, which was used to fund a portion of our $150 million purchase of MapMyFitness in December. Inventory at quarter end increased 46% to $472 million, compared to $324 million at March 31, 2013. Our investment in capital expenditures was approximately $31 million for the first quarter, compared with $11 million in the prior period. We continue to plan 2014 capital expenditures in the range of $140 million-$150 million, primarily driven by incremental investments to support our direct-to-consumer and international business and further develop and expand our global office footprint. Moving on to our updated outlook for 2014.
Based on current visibility, we expect 2014 net revenues of $2.88 billion-$2.91 billion, representing growth of 24%-25%, and 2014 operating income of $331 million-$334 million, representing growth of 25%-26%. Both expected growth rates are outpacing the long-term growth rates laid out at our investor day last June. Below operating results, we continue to anticipate higher interest expense in 2014 given the financing of the MapMyFitness acquisition. We now expect a full-year effective tax rate of approximately 40%, ahead of our prior guidance of approximately 39%, giving additional investments toward our international expansion. Adjusted to the two-for-one stock split, fully diluted weighted average shares outstanding are now expected to be approximately 219 million. Given these updated full-year parameters, we'd like to provide a few more details on how we currently see the quarterly cadence playing out.
Looking at net revenues, we currently anticipate our growth rate for the remainder of the year to be roughly in line with our long-term investor day compounded annual growth target of 22%. We currently have planned a growth rate for the second quarter slightly higher than this target and for the fourth quarter, slightly lower than this target. Relative to the fourth quarter, we grew 35% last year, given favorable weather, our improved year-over-year ability to better service demand, a strong new innovation story around ColdGear Infrared, and better-than-expected direct-to-consumer performance. We are taking a more balanced approach in planning the business for the fourth quarter, particularly around weather expectations and our direct-to-consumer business, which represented approximately 40% of our total business during the fourth quarter of last year.
Next, on gross margins, where we continue to expect modest overall gains for the full year, following the 48.7% level achieved in 2013. From a cadence standpoint, we currently expect year-over-year rates to be relatively flat during the second quarter, up strongly during the third quarter, and down in the fourth quarter. Looking at the second quarter, we do not expect the three primary drivers of our positive performance during the first quarter to carry forward into the current period. This includes the normalization of our factory house product mix, a more consistent comparison on our supply chain performance year-over-year, and the lapping of our bags relaunch, which carried higher margins commencing in the second quarter of last year. During the third quarter, the primary consideration is higher U.S. import duties, which negatively impacted the year-ago period by 90 basis points.
For the fourth quarter, our forecast reflects a higher mix of our lower-margin international business, as well as our approach to planning the direct-to-consumer business, considering the prior factors I previously mentioned. Moving on to SG&A. As we indicated in January, we plan to allocate more dollars to marketing, international, and connected fitness throughout 2014, areas that we believe are key to our long-term global success. The timing of these investments this year is currently planned to create substantial deleverage of our SG&A rate in both the second and third quarters. The magnitude of this deleverage is expected to be greatest in the second quarter as higher marketing and product innovation and supply chain investments contribute to approximately 250 basis points of total expense rate deleverage year-over-year. We expect overall deleverage of estimate to ease somewhat during the third quarter before showing significant leverage during the fourth quarter.
As a reminder, the fourth quarter of last year included significantly higher incentive compensation expenses and MapMyFitness deal-related costs. Overall, we continue to expect modest SG&A deleverage for the full year, inclusive of a marketing expense rate of approximately 11% of net revenues. To reiterate, our focus will remain on driving operating income dollar growth balanced with making the right investments to drive our long-term global success. Below operating results, we expect the elevated effective tax rate from the first quarter will persist during the second quarter before trending more in line with our full-year guidance during the second half of the year. Finally, a quick update on our inventory position for the balance of the year. As we outlined last call, we expect the inventory growth rate to return to more in-line levels with our revenue growth rate during the balance of the year.
We would now like to open the call for your questions. We ask that you limit your questions to two per person so we can get to as many of you as possible. Operator?
Thank you very much. Ladies and gentlemen, at this time, if you have a question, please press star and then the number 1 on your touchtone telephone. If your question has been answered or you wish to remove yourself from the queue, please press the pound key. Our first question is from Matthew McClintock with Barclays. Your line is open.
Hello. Yes. Good morning. Can you hear me?
Yeah, Matt. How you doing?
Thank you. Good morning and great quarter. Kevin, you talked a little bit about the women's business, and you had growing success with the studio line, and we talked about the brand holiday. I was just wondering if you could maybe go into some more detail on the product that's coming out this year that gets you excited, and maybe some of the innovation that you plan to launch throughout the year or layer into the year surrounding the brand holiday. Thank you.
Sure. A few things. Number one, it's interesting. It feels like every time we talk about women, people give us the perspective of congratulations on launching women's. We forget sometimes we have a $500 million wholesale business of women's today. We are certainly not in launch mode. We are in perfecting mode. I think we're incredibly proud of the team, and that always begins with leadership. Leanne, who joined our company a little less than two years ago, her first season will be hitting floors this fall in partner with, I think, the outstanding leadership that we already had here of really understanding what the female athlete wanted and transitioning, I think, and evolving with our consumer into what the athletic female wants. We want to make sure as well we never lose that athlete credibility.
We want 16-year-old girls that are playing field hockey and volleyball and basketball and soccer and lacrosse. We want them to feel like Under Armour is their brand. We just want to demonstrate that we've got additional chapters in two and three and four that we can grow up and we can grow older with her as well. I think the one thing you'll see, and I'll get to innovation in a second, is the commitment that we have as being successful in the women's space. You won't see that any more clearly articulated than what we're going to be doing with our second holiday that'll be hitting, as I mentioned in my comments, later in the summer. Holiday two for us is 100% committed and about women's.
Brands are about points of view. I think we're incredibly excited about the creative that we have and the statement that this is making about Under Armour's commitment to this space, I think more importantly, our thought leadership in the space. The campaign's going to be about increasing awareness and the breadth of the line, it's actually the first taste of where we really see taking this consumer to. When you think about innovation, Under Armour, I think we've been coined, I think we haven't shied away from positioning ourselves as an innovation company, and we take no exception to that with what we're doing with women's. Whether it's something as core and basic and as important to the female athlete or the athletic female as the sports bra with things like Armour Bra.
Taking it from being a really great functional bra to making it sexy and beautiful and ensuring that she has the use for wearing it beyond the athletic field. I think you'll see us take that. To be honest with you, I know a lot of people on the call are dialing in from N.Y. I can't emphasize enough, if you want to see what does Under Armour women's look like, take a walk down to our new brand house in Soho which opens today. It's a soft opening, we're just getting going. We'll have a grand opening next week. Be nice when you go as we work out the cobwebs. I think we're incredibly excited by what's on the floor, the presentation of product that we have there and the commitment to, A, innovation.
The thing that makes Under Armour unique is every product does something, wicks moisture, keeps you light, keeps you cool. That didn't mean we couldn't allow it to be beautiful or sexy or cute. I think that when you walk in there, anyone who has an idea or picture of what they thought Under Armour women's is or was will absolutely be blown away and change. I want to be clear, the goal that we have as you walk into our brand house in Soho is that you will see a great breadth, but frankly, this is the inspiration that we are hoping to bring all of our partners at every channel of distribution to have Under Armour presented in this way.
Beyond just the authentic and things really for that athletic female, I think you're going to see a beautiful presentation of Under Armour women's product that we're really proud of, then backing that up with some great storytelling coming later this year of driving home Under Armour to be successful in the women's space.
Thanks for that, Kevin. We'll make sure to make it down there for that.
Thanks, Matt.
Thank you. Our next question is from Michael Binetti with UBS. Your line is open.
Hey, guys. Thanks, and congrats on a great quarter.
Thank you.
Brad, one quick question for you. Can you discuss a little bit, in case I missed it, how much the improvement in the fulfillment rates you guys had, which obviously continued in the first quarter from the fourth quarter? Is there any way you can help us estimate how much that contributed in the first quarter? Then does that completely go away as an opportunity in the second quarter? Then I have a quick follow-up.
Yeah, the metrics from the fill rates are relatively comparable year-over-year. The change, though, I think, is the way we got there relative to achieving those fill rates. Fill rates by request date and fill rates by cancel date. The fill rates by request date were around 70, and the fill rates by cancel date were kind of in the mid-90s. Just the difference being last year, well, we took some more unnatural ways to get there relative to airfreighting product in to get here on time, whereas this year that product flowed a little more naturally, so that busts the call out of the benefit in margin because of air freight expense. As we get forward into the rest of the year, what we start to see in Q2, Q3, and Q4 is we start to comp better supply chain performance last year.
We're going to see less of that benefit in Q2, Q3, and Q4, especially in the back half of the year where we had started to improve that supply chain performance in the back half of last year. You're still seeing some comp benefit in Q1 here. That'll start to fade into Q2 and then become less so in Q3 and Q4.
Okay. Great. Then Kevin, if I could ask you just a bigger picture question. Since you guys announced your acquisition, there's been a lot of media coverage on what's going on in the digital part of the athletic industry. You guys obviously acquired MapMyFitness. Recently, we've seen headlines that Nike's been moving away from at least from the hardware side of their FuelBand business. Could you give us a state of the union on how the integration is going and maybe how you see the industry moving forward with digital investments like this and how it fits into your longer-term thinking?
Yeah. Thanks very much, Michael. It's a great question, I think it's an opportunity that everyone looks at and is wondering, where is this category going and what does it mean? Let me start by saying that proactive health, or as we've now coined the term, connected fitness, we believe is a massive opportunity. I think as a company, we are positioning ourselves to put ourselves in a position to really look at this being one of the next major industries. Proactive health means not waiting till you're sick to go to the hospital, but how are you being preventative of that? Things like predictive analytics and the science and the technology that are out there are things that just aren't being applied to your own body. Think about it for a second.
People know more about their car today than they do about their own body. You know how fast you're going. You know how much gas is in the car. You know how much oil is in there. You know the tire pressure. Yet you don't have an idea yourself of when you think about your own health, you go see the doctor every 12, 18, or 24 months. You walk in, and he pulls out a manila folder, and he starts with the subjective question of how do you feel? You're thinking, my gosh, there's got to be more data and more analytics available to the world than that. We've been positioning ourselves for quite some time around the space of biometric measurement and understanding the best way that Under Armour can play there.
Where we did, frankly, going back to last year, we made the decision as looking at things like the wearables and the hardware, that wasn't really where the future was. The reason for that is because there has yet to be a single market leader has stepped forward. We think about listening to some of the really exciting launches that are coming up around the wearable community, frankly, there's always going to be new and additional exciting launches coming up with someone trumping someone else and the idea of that capital-intensive business of sitting on a piece of hardware versus us sitting back and maybe saying, who is the best player in the world?
The key to the acquisition we made last year with Map My Fitness was the idea of their being agnostic, their being open and acceptable to over 400 different devices that work within their community. When you look and you think about the community, what we purchased last December was a community of Map My Fitness of 20 million registered users. As you think about just in the last five months, as of today, I spoke with Robin Thurston, the CEO and co-founder of MMF, and now the Head of Digital for Under Armour. As of this morning, around 11:00 A.M., we're going to pass 24 million users. On Monday, we signed up more than 46,000 people in a single day to the MMF platform. As we think about that size and scale and our prediction has us, we'll be over 30 million users by year-end.
If we sit here and we dream and we play out how big can this community be, it's tens of millions, frankly, we believe it can be hundreds of millions someday. The big question is, what's the product that we're selling them and what's the role that we play in that space? You think about 30 million people by the end of the year, that's the size of Canada. We're definitely having an input and I think an impact. Again, this world and this phrase, connected fitness of what it means. The way we're thinking about it is not building individual products, but more importantly, building a platform with our own community that one day we envision to have that huge scale and size. As I said when I started, this category is incredibly large.
We're working on products, we're continuing to operate the MMF platform today as it stood and existed prior to our acquisition. Robin and his team are driving toward that because there's a great product there. We also understand what the engineering and the, frankly, the vision of one of the founders of this industry and Robin and his partner, Kevin. We feel we're incredibly well-positioned to see where this market is going. As we know, our competition is not stepping away from this from any side. Everyone is getting involved in sort of trying to get into the game, but figuring out what is the game, I think, is the next big question. We're anticipating additional announcements of large partnerships that our competition will be stepping up with.
Frankly, we feel we are in the lead, that we've got the largest community, and that we're the ones that are dictating the tempo of the space. We're not making predictions about perfection, as I mentioned in my comments before, but we like where we are, and we think that we've got the best insight into being an important place for the athlete to turn to as they're thinking about, how is my body doing? Frankly, expanding the definition of exactly who is an athlete as we think about how big this opportunity could potentially be for our company and for our brand.
Thanks a lot again. Congrats.
Thank you very much.
Thank you. Our next question is from Sharon Zackfia with William Blair. Your line is open.
Hi, good morning. Congratulations on a really great quarter.
Thanks.
Question on the international side. As we think about international longer term and the way you grow internationally, could you talk about direct-to-consumer and the role it will play in the international growth? I'm assuming, and maybe incorrectly, that direct-to-consumer will be a bigger driver of how you grow overseas, given the distribution, but would love some perspective on that.
Sure. Let me grab that, and I've been doing a good job of giving long answers, so this one isn't going to get short. The world's a big place. I've spent a lot of time on the road in the last couple of years and beyond Investor Day, but just as we made that commitment to being a truly global company, which our definition of that is someday more than half of our revenues will come from outside of our home country. Standing here today, we're less than 10% of our revenues are coming from outside North America. That's an incredibly large statement to make. Last year, I did over 230,000 miles of travel. This year, I'm on pace to break that. Just in the first quarter alone, been to Latin America to launch our brand in Brazil, visit a couple of our other markets down there.
I've been to Europe in our headquarters in Amsterdam as well as to London to see Tottenham Hotspur play in London, where they won. The Middle East to meet with and select our future distribution partners there. Heading to Asia in just a few weeks here. We are, without question, focused on global. I love that statement that we've claimed of what is the role of global where, number one, we've got this horse in North America. As we say, we believe that our North American growth and cash creation are going to be the engine that feeds our global ambition. That means we need to continue to win in the U.S. I want to be really clear that we're giving and providing the resources to the U.S. to be successful.
Also means it gives us the ability to deploy resources outside the United States and North America in front of some of the real revenue. We believe that real revenue is there and it's coming. For instance, this year or this quarter, we posted 79% growth on our international business, but we haven't even started selling product in Brazil yet. The product that we've been selling in Chile, for instance, has just been Colo-Colo kits. They haven't even got our full inline sporting goods. As we look at it, we extrapolate the numbers, we think that there is incredible opportunity. Now, granted, it's coming off a relatively small base, but frankly, all these things come back to leadership.
Charlie's been in the chair now for coming up on 2 years and has been doing just an excellent job building out a team of leaders around the globe. Under Armour today is doing business in 61 countries. I think we've got 31 different MDs that are managing that in offices all over the world. We're doing a good job. Let me give you a quick rundown just how the world looks for us. Latin America, I mentioned it briefly, but one of the things we said we were going to do is we completed the transition of our distributor in Mexico to now being a wholly owned subsidiary of our brand. The signings that we did, that CONCACAF Cup last night, final with Toluca wearing our kit, and Cruz Azul, who we begin to outfit at the end of this year or in July. We'll have a winner that'll be in the Latin American Club Championship down there.
In Brazil, great feedback from the launch that we did in both Rio and São Paulo, and the event turnout, I think, was really exciting. I think Under Armour is bringing a different energy and a different point of view to the brand that they don't have anyone like us today. The fashion role that other brands are playing is not the performance bent that Under Armour can bring still with product that looks great. We're going to have 70 shop in shops that'll be going up, as I mentioned. By the end of this week, we're going to start selling product there. It's a big idea. Chile was the first year in 5 years Colo-Colo hasn't won the Premier Cup title, and our first year outfitting them, they do that.
We're getting our brand awareness out there in a big way. Speaking of brand awareness, Europe is something that it's been since 2006. We're proud to say this is the first year Europe will break $100 million for us as a company. I believe we're really taking control and driving alignment across all of our European markets and countries. The one thing with that is aided and unaided awareness, there's a lot of things at work. We're spending a lot more money from a marketing standpoint, deploying resources there. There's the addition of Tottenham Hotspur, which has been critical, I think, from a brand awareness standpoint, and being on the pitch in an authentic way within the EPL is massive. Getting to the point you make is more impactful direct-to-consumer. Our e-commerce there is doing a better job.
We've used some third-party partners to distribute our product via the web in Europe. We're bringing that in-house. With the addition of Henry and Jason LaRose here in North America, figuring out how we can be better from a supply chain standpoint to have more and a broader array of our products available online. That in the past, it's been pretty limited what you're able to get in other markets, and we've really edited hard for them. We're happy to be able to make much more of that as we understand and become better from a distribution, supply chain, logistics, and frankly, knowing how to get product to market. That isn't any different in Asia either. Quickly on the direct-to-consumer side, in China specifically, we've got nearly 20 stores in China by the end of April.
That'll be growing to over 50 stores by the end of 2014. Now, most of this is going to be utilizing a franchise store model, but we're expanding from two cities to 10 cities. We're seeing incredibly strong results with e-commerce. We're also going to be launching our brand on the e-commerce front in Hong Kong and a few other markets throughout Southeast Asia as well. Again, all this, when you talk about Asia for us, it's anchored by our partners in Japan, up more than 50% in the quarter growth. That's on a real number. They continue to grow for us and be an anchor in Asia with brand-appropriate retail stores, driving authenticity with the athlete, building incredibly strong Under Armour culture, in fact, the personality. I can't point over and over that it all comes back to leadership.
We've got a great leader in Shuichi Yasuda running that business for us in Japan. The one thing that we found when you look at it, I don't know if I've given you enough detail on the e-commerce side of it, the world isn't quite as caught up as we are here in the U.S. Some markets are in front of us, some markets are lagging a little bit. One thing we recognize is, number 1, we don't have to go at these new markets the way that our competitors have gone at them in the past. I don't know if that model is perfected by anyone yet, we're keeping enough flexibility, we're putting enough resources behind it to give ourselves the ability to make the best decision and not just the decision that someone else had done.
We expect to write the book, again, not unlike connected fitness, we expect to be dictating the tempo as to how we enter these markets. The good news, the world's a big place, we've found that the Under Armour brand translates, we've got a big opportunity.
That's super helpful. Thank you.
Thank you. Our next question is from Omar Saad with the ISI Group. Your line is open.
Thanks, guys.
Hey, Omar.
I wanted to ask a question about your philosophical approach to SG&A, so to speak. You've had this kind of sales acceleration the last couple of quarters. You talked about boundless opportunities for the brand. It's still a very early-stage growth company in so many ways. How do you think about pouring money back into the business to take advantage of this and perhaps extending a higher kind of growth rate curve, looking out over a longer period of time versus providing upside in the numbers? I think you even had a little bit of SG&A leverage this quarter because the top-line number was so strong. Just what is your philosophy around investing, reinvesting back in the business?
Omar, a couple things on that. I think one, there's always going to be some nuances in timing quarter-by-quarter. We tend to look more on an annual basis of how we want to invest in our business and the timing of how we want to invest in our business to best support what we're trying to do and initiatives we're trying to do during the course of the year and the timing of that. You'll see some nuances in where we're calling those out relative to marketing spend and so forth, and investment incentive compensation nuances also last year and this year as far as timing also.
As far as the level of investment, how we approach that, we really have consistently kind of looked at investing in our current growth drivers that are performing for us at the highest level by also balancing that with some midterm and longer-term needs of our business. As an example of that, investing in our direct-to-consumer business in the near term around expanding square footage in our factory house stores, building brand house out and putting money into our e-commerce business here in North America is a return that we tend to get right away in our business. We tend to put more of our SG&A investment in those kind of short term where the return is parts of our business. That doesn't mean, though, we're going to ignore some of the longer-term successes we need.
Kevin just talked about international, and absolutely international is in a deep investment mode right now relative to not only growing our existing business in Europe, starting our business up in Asia the last few years, but obviously just getting into some of these markets in Latin America. We definitely want to make sure we balance our investment kind of in the near term and over the next couple of years. A lot of that investment going to short-term gain relative to getting ROI out of it right away, sprinkled with some midterm and long-term investments that we know are going to pay off down the road later, but are much needed investments today.
As far as how we look at how things go during the course of the year, we've talked a lot about this over the course of the last probably 12-18 months that we see a lot of opportunity in our brand across all of our growth drivers, near term and long term, and we will definitely use benefits that we have in top line or margin and the benefits of how that drops through into SG&A. We'll take advantage of that and accelerate and escalate SG&A investment to do one of two things. One, that would give us an insurance policy on the execution of near-term initiatives, especially around things like launching international markets and getting into markets for the first time in Latin America and Asia and so forth.
Two, accelerating investments that would pull forward maybe hopefully by a year or two, some benefits we might have in some of our growth drivers that are in investment mode. We've talked about focusing on operating income dollar growth and really taking any benefit we have in top line and margin to reinvest in our business to give us, again, that insurance policy we'll deliver and execute on our initiatives or continue to drive growth going forward.
Let me jump on the back end of that, too. Brad and I, we've got a couple deals and agreements that we keep with one another. Number one, first of all, when we talk to the street, we're committed, I think, to the operating line that we've committed to and the ability that we see in our business to maintain and at times show leverage and grow that.
At the same time, with the top line growing the way that it is, it means a dollar invested in Under Armour has the benefit of the top-line growth that we're enjoying. Financially here, based on our latest outlook, as we see the year, we'll be adding roughly $600 million in revenues over what we did in 2013 and 2014. That is just south of $3 billion for the year. With an 11% roughly commitment to marketing, we've got $330 million to spend in marketing. When you look at the largest sports marketing assets out there in the world, it really doesn't put us out of the game for anything. We could theoretically go buy anything we wanted to do, but we don't have all the money in the world, we just have to be really thoughtful, and we have to pick the right deals.
Two great examples of doing that. Number one, I mentioned in my script, regarding Jordan Spieth. Hopefully, we use a phrase here at Under Armour, humble and hungry. We placed a bet on Jordan really ahead of the curve when he was still a sophomore at the University of Texas and making the decision to turn pro, that we would get behind and sponsor an endorsement. We're incredibly proud of finding someone like Jordan. Look, he didn't come out of nowhere. He was certainly a bet that our company took in a really large way, and he's done everything that he said he would do and more. Hopefully our company is delivering on that way and more as well. We want to remain opportunistic about staying close enough to the athlete and the consumer to find those Jordan Spieths out there.
As you know, they are incredibly rare, and you can beat your chest a little bit once you do find them. I promise that's what we're trying to do, is find assets before they're really out in the open and the market really has a chance to understand what we're doing. The second would be Notre Dame. In the last, I guess it was within this quarter, where we announced our new partnership with Notre Dame. It was announced as the largest sports marketing deal at the collegiate level in the country. As we see that and just understanding the size of it, is that we have the ability to go buy the best deals and the best assets. We have to, I think, remain true to a philosophy we have about the operating line.
One thing I'm incredibly emphatic about is that winning is a culture, and winning is a habit. I saw some people as we talked about Soho, and there's been some commentary about it. It's just a flagship. This is more about marketing than it is about profitability. Let me be clear. Every activity that we involve ourselves in has a line of sight to profitability and winning. We don't do anything that we see as being just good for the brand, just for marketing. Everything must have a return. That commitment is something that I think is cultural, and I think it plays to what and who the Under Armour brand is. It doesn't mean we win all the time, but we don't go into things thinking that we're going to lose.
When we sign athletes and assets, and when we did that deal with Notre Dame, it's because we put a business model behind it that said, if we really focus on this, we can make this a profitable business for us. Which will make more money for Notre Dame, which will give them the resources that they need to compete at the highest level, and everybody basically wins. It just means our being really good at what we do. Whether that's Notre Dame, Jordan Spieth, Colo-Colo, or any of the assets, Tottenham Hotspur, anyone that we sign, it's about having the resources behind the initial investment to make sure that we make those resources valuable. Within that, we haven't had an instance where we believe we have to change anything about the way that we're growing.
We think we can deliver growth with the outlook that we provided on our investor day last June. We expect to deliver on that going forward. I don't think that we're not doing anything because of the commitment that we have to growth, and frankly, with that growth, the commitment that we have to profitability.
Thanks, guys. That's really helpful. I actually wanted to ask one quick follow-up on your speed skating business. No, I'm just kidding.
Thank you.
I know it's such a big business for you. Quick question on ASPs. It seems like there's a premiumization trend going on in the marketplace in the whole kind of athletic, active lifestyle space. Are you guys seeing that in your business or feeling that in the marketplace? That's my last question.
Yeah. ASPs, they've been trending kind of in that mid-single digit range for us over the course of the last two quarters or so, maybe a little below that to mid-range. Again, that does go back to what you're talking about, Omar. A lot of our new innovations coming at higher price points and so forth. Yeah, we're definitely seeing some of that kind of in that 3%-5% range over the course of the last few quarters.
One thing we've seen, too, Omar, is that we've talked to some of our partners about that and the way it works in the market. You go back to last holiday season, and there was a tremendous amount of discounting happening in the marketplace. Frankly, we didn't participate. I think we're really proud of the 35% growth that we put up in the fourth quarter. Look, weather makes us all a lot smarter. It wasn't a consumer coming in and just choosing price. It was that there's a consumer that needs and is making a decision based on price, there is a bit of a barbell effect that continues to take place, and Under Armour continues to differentiate itself as the premium player in any market.
As long as we are delivering newness and innovation, whether that newness is SpeedForm, whether it's Alter Ego, whether it's our ColdGear Infrared, which is an incredible product, if you haven't tried it when it's cold outside. Whether it's our new MagZip zipper we're going to be introducing on 400,000 pieces of jackets and outerwear at the end of this year. What it effectively is, it's a zipper that has a magnetic lock on the bottom of it that allows you to zip your jacket with one hand. It's things like that we need to make sure we continue to do as a market and not relying on playing the price game. There's plenty of people doing that. Under Armour wants to stand for innovation. We're going to stand for newness on the floor.
We'll continue to give our partners reasons for their consumers, all of our consumers and customers, to walk into their stores and find what's next and what's the latest and greatest at Under Armour.
Thanks, guys. Very helpful stuff.
Thanks very much, Omar.
All right. Thank you. Our last question is from Camilo Lyon with Canaccord Genuity.
Thanks. Good morning, guys. Also, great quarter.
Thanks.
Kevin, you started the conversation about talking about running and the momentum you're seeing on the product side. You also mentioned human capital, and I think about a month ago or so, you made a pretty significant hire in Fritz Taylor. I was wondering if you could just shed some light on what you think he'll bring to the category, to the business, what he can do, and where do you think he can take the business to?
First of all, it's great when you have industry veterans, and Camilo's referring to is Fritz Taylor, who's our new head of running for Under Armour. He's a 25-plus-year vet, Mizuno, Brooks, Nike, and is someone who brings a really strong point of view of what the consumer's looking for. I think we're really proud, specifically, of footwear business overall, but running is probably the easiest way for us to define where are we and where are we going. A company that started as an apparel company, I think it's taken us, as we are in our eighth year in the footwear business as a whole, to really find our stride as to what is the product that really comes through from Under Armour. Again, not unlike our women's business, in 2013, we finished our footwear as just under $300 million in revenues.
This year, we're north of a $400 million business for footwear in 2014. We've got a long way to go, but we're beginning to create some scale, and will allow us to grow much faster in the future. SpeedForm for us was something, again, this happened prior to Fritz being here. The most difficult thing about the footwear business is the long lead time, the long time it takes to get people on board. The good news is, as excited as we are about Fritz, this is not one person. I know, I think we've got three or four people coming off of non-competes at the end of this month, going to be joining our offices both here in Baltimore as well as in Portland. Every month it's like that.
People are coming off of non-competes, we're lucky to have put ourselves in a position where we are looking for who's someone we can hire right now? Who's someone we can hire right now to getting to the ability to take the long view and saying, "We're going to be in this business for a long time." $300 million business is going to turn into a $400 million business to be a $500 million business with a line of sight to $1 billion. Not unlike we've said over and over again, we believe that footwear has the potential to be larger than apparel for us. Within that, this is factory relationships, this is supply chain, this is getting the right design talent on board.
This is really having, I think, the ability to develop a point of view, both for our product as well as from a distribution standpoint. Beyond things like SpeedForm, which again, weren't the largest number of pairs, but it certainly articulates the point of view of our company in running of what Under Armour at $100 at a running shoe looks and feels like. Within that, we've also got a $70 Surge and $80 Engage and $90 Spine Evo, that are products that we have in the market and that we believe in. These are price points that work within our largest distribution today, which is sporting goods. At the same time, take a look and just go from what we're doing there.
Under Armour today, as you look or think about us, we're the sixth or seventh running brand, I guess, when you look at the chart. We're the number 2 running brand in youth. We're the number 2 youth brand in footwear, period. Running, training, basketball. Kids love our product. We have a consumer who's demanding us and who we're willing to grow old with. Frankly, as they're nine today, we have six years to deal with them until they're 15 and 16 years old, and to continue to improve and enhance the product and enhance the team.
Within that, what we're doing, I think the way that we're showing up on field, our baseball business, our football business, the oldest business, the longest footwear business that we've been in, are continuing to do well, continuing to bring innovation like Highlight, continuing to bring things like Alter Ego to cleats. We've got Captain America, Superman, The Flash, in some of our footwear that we'll have. Then you take something from a little more serious standpoint is like the sport of basketball, which we've been pinned on since we entered basketball in 2011, and believing that we have an incredible opportunity there. We found a game changer in Stephen Curry and someone that we believe can really be a difference maker for our brand.
We're seeing that through little small things like exclusive colorways that we're doing at some of our key partners like Foot Locker and Finish Line, where they're blowing out, and these are several hundred units, but they're blowing out in a matter of minutes selling online and other things for these player exclusives. We are finding and we're doing the work to figure out how to crack the code, but we believe that we've got a lot of momentum going in the right direction. I want the world to know that becoming great in running with things like the SpeedForm platform leading the way, continuing to find the sweet spot within our existing wholesale sporting goods distribution, and then finding the relevant mix that we have to make ourselves important in our key mall partners. We're down this road. We're on it every day.
We've got great people that we're not making the calls or having to make the calls. These are people coming to us and saying, "I want to be a part of what's being built at Under Armour." I think the energy, the heat, the momentum is there. It's just a matter of our execution, and I feel pretty good about the team that we have in place to make that happen.
Great. This is my final question for Brad. Brad, on just on the guidance and how to think about the clear deceleration that you're talking about here in Q2 and Q3. Could you just help us understand why the strength that we've been seeing in Q4 on the top line and now in Q1 should not continue into Q2 and Q3? Then just finally, on the fourth quarter, could you remind us what you think the benefit from weather was in the fourth quarter of 2013? Really, because that seems to be the tougher comparison of the business. If you could just provide some color on that'd be great.
Sure. As far as the flow from the first quarter to the second quarter, there's a couple things going on there. One, there's just some timing in the quarters on the seasonal basis front half of the year in some of our business. Footwear and international, we're seeing stronger growth in Q1 versus Q2, and it's just a timing issue in the season. Both of those business, obviously, are going to have strong growth rates for the full year. A little more escalated in Q1 versus Q2. That's part of it. Also, in the second quarter, if you recall, last year, we kind of relaunched our bag business with better margin product in the second quarter of last year. That'll be the first quarter that we're comping that over the last four quarters.
We had a little bit of a benefit there in Q1 of comping a bag business where we were kind of pulling back last year in anticipation of our relaunch in Q2. The supply chain performance, which I talked about earlier. Q1 is probably the last quarter of some pretty decent year-over-year comparisons just in performance of how we're getting product to the retail floor. By the time we get to the second quarter, we start to see a little bit tougher comps against that as we started doing much better than that last year in the second quarter. Those three things are why you're seeing some of the growth from Q1 to Q2 changes in Q2. As far as the back half of the year, specifically around Q4, a couple things in Q4. You mentioned the weather. That was definitely one thing we're taking into consideration.
I believe in our last earnings call at the end of January, we talked about Q4 and the impact of weather in our strong growth rate in Q4 last year. It's really tough to say how that impacts your business. We said it could have had an impact of 2 percentage points, possibly, of the growth rate in Q4 last year by having a cold winter in Q4. I think when you look at the fourth quarter, it's important to note how we're looking and how we're approaching planning our direct-to-consumer business. 40% of our direct-to-consumer business for the whole year was sitting in the fourth quarter of last year. DTC is huge in the fourth quarter for us.
Weather played a part in that last year in the fourth quarter, we do have some nuances there also as we look to the fourth quarter of this year versus last year. Q2 and Q3, we have a positive comp on 2 new stores in Q2 and Q3 with New York opening today and Tysons Corner being opened where it wasn't open last year. We get to the fourth quarter, we just have a positive 1-store comp there with New York in the fourth quarter because Tysons was open by then. We also have just square footage growth in Factory House. We've talked about the door count growth going down, we start to focus more on square footage growth.
The reality in total, when you look at new doors and square footage growth, last year in the back half of the year, we were up in the upper 20s as far as square footage growth. In Factory House for this year, we'll kind of be more down to low 10s. That's obviously impacting, especially again, fourth quarter where a lot of our DTC business sits. Our approach to the fourth quarter right now for this year is we don't want to approach it like the weather will be a tailwind like it was for us last year. We don't want to approach it that the strength we saw in DTC last year will necessarily be duplicated this year. That doesn't mean that we're not putting ourselves in a position if those 2 things turn into tailwinds for us, that we can't deliver on it.
We are definitely putting ourselves in a position we can deliver if things work in our favor. As far as how we're approaching the plan right now and our guidance, we're not assuming as much of that in our current guidance.
To be clear, you will have the ability to change product and go after more sales if those headwinds that you're planning for become tailwinds.
Yes. We're putting ourselves in a position if the weather's cold again this fourth quarter, we're putting ourselves in a position to be able to deliver, and we're also putting ourselves in a position if DTC overdrives like it did last year, we're putting ourselves in a position to be able to deliver. We want to be very careful, obviously, in how we approach that relative to our guidance and our expectations.
Sounds prudent. Thanks a lot and good luck for the rest of the year, guys.
Thanks, Camilo.
Thanks, Camilo. All right. Thanks again for everybody joining us on the call today. We look forward to reporting you our second quarter of 2014 results, which tentatively have been scheduled for Thursday, July 24th at 8:30 A.M. Eastern Time. Thanks again. Goodbye.
Thank you, ladies and gentlemen. This does conclude the program. Thank you for participating in today's conference. Everyone have a great day.