Under Armour's (UA) CEO Kevin Plank on Q3 2014 Results Earnings Call Transcript I Seeking Alpha
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`Seeking Alpha 0‘
`
`Under Armour's (UA) CEO Kevin Plank on Q3 2014
`Results Earnings Call Transcript
`
`Under Armour (NYSE:%)
`
`Q3 2014 Earnings Call
`
`October 23, 2014 8:30 am ET
`
`Executives
`
`Thomas D. Shaw Director of Investor Relations
`
`Kevin A. Plank Founder, Chairman, Chief Executive Officer and President
`
`Brad Dickerson Chief Financial Officer and Principal Accounting Officer
`
`Analysts
`
`Robert F. Ohmes BofA Merrill Lynch, Research Division
`
`Eric B. Tracy Janney Montgomery Scott LLC, Research Division
`
`Erinn E. Murphy Piper Jaffray Companies, Research Division
`
`Omar Saad lS| Group |nc., Research Division
`
`Michael Binetti UB8 Investment Bank, Research Division
`
`Sam Poser Sterne Agee & Leach lnc., Research Division
`
`Operator
`
`Good day, ladies and gentlemen and welcome to the Under Armour, Inc. Third Quarter Earnings Webcast and
`Conference Call. [Operator Instructions] As a reminder, today's conference is being recorded. i would now like to turn
`the conference over to Mr. Tom Shaw, Director of investor Relations. Sir, you may begin.
`
`Thomas D. Shaw
`
`Thanks and good morning to everyone joining us in today's third quarter conference call.
`
`During the course of this call, we'tl be making projections or other fonivard 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 fonivard 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 third quarter, provide an update to our 2014
`outlook and introduce our preliminary 2015 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 at our website at approximately 11 a.m. Eastern Time today.
`
`And with that, I'll turn it over to Kevin Plank.
`
`Kevin A. Plank
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`Under Armour's (UA) CEO Kevin Plank on O3 2014 Results Earnings Call Transcript [ Seeking Alpha
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`I spoke to the diversity of Under Armour,
`Thanks, Tom and good morning everyone. On our last earnings call in July,
`the diversity in having our revenues spread more evenly across product categories and geographies, the diversity in
`whom our brand is now reaching and the diversity in how we reach both our existing and new consumers across the
`globe.
`
`With revenues up 30%, Q3 marks our fourth consecutive quarter of total revenue growth of 30% or higher and our 18th
`consecutive quarter with revenue growth in excess of 20%. This consistent outperformance speaks to the continued
`it
`strength of the athletic cycle that we have significantly helped drive over the past few years. But more importantly,
`illustrates the Under Annour brand's ability to thrive beyond our core North American Apparel business and help feed
`our diversification.
`
`The best evidence of that is in the performance of our Footwear and International businesses over the first 9 months of
`2014. We've detailed how we've continually invested in both of these growth drivers over the past few years, building
`the infrastructure needed to grow and adding talent to supplement the team. So we provided some detail that confirms
`return on the investments we've made in these 2 key growth drivers.
`
`Let's begin with Footwear. As we said in our release earlier this morning, our Footwear business grew 50% in Q3, while
`our International business was up 94%. In temts of the contribution to the overall revenue growth, Footwear and
`International have added nearly $200 million to our growth through the first 9 months of this year and together
`accounted for 35% of our total growth year to date. What's more encouraging than the actual numbers is the strength
`of the platforms we are building in these businesses that will lay the foundation for sustainable growth in 2015 and
`beyond.
`
`Let me talk first about our growth globally and the investments we are making in all corners of the globe. To reinforce
`ourfocus on building that global organization,
`I am dialing into this call today from our office in Hong Kong on 1 of 5
`stops I'm making throughout Asia as part of our continued focus on bringing the Under Armour brand to that global
`audience.
`
`Whether it's visits to our newest retail doors in Chengdu, China, Tokyo and Singapore, or conversations with potential
`partners about next generation technology, visiting these markets reinforces the opportunity that we have to grow the
`Under Armour brand.
`
`Ensuring we bring the right balance of Under Armour culture and international experience to our global leadership team
`has been a major focus for me over the past 24 months. We've done a great job of using our own team to build and
`establish the Under Armour culture in any market we do business in, especially Europe and China. We believe this
`process enables us to appropriately establish the Under Armour culture outside the U.S., then transition in a level of
`industry experience that will help accelerate our growth in these critical markets.
`
`in Europe, where we began doing business back in 2006, our business faced challenges reaching scale. So we
`So first,
`placed Matt Shearer, who is running our business in Canada in market and he has helped stabilize and get our brand
`and business headed in the right direction. We are making great progress in key markets in Europe and we will surpass
`$100 million in revenue for the first time this year.
`
`With this stability in place, we were able to recently recruit industry vet Chris Bate, who brings significant on the ground
`expertise to ourteam in Europe, while Matt will continue to offer his leadership with the business back here in North
`America.
`
`And while the markets of China and Europe could not be more distinct, our strategy of balancing Under Armour culture
`and industry experience is consistent in these 2 geographies.
`
`In China, Kevin Eskridge, who originally helped drive our successful Outdoor business in the United States, has done a
`tremendous job overseeing the growth of our brand and retail presence in China. Our plan is for 2015 to bring Kevin
`and his experience in running our China business back to Baltimore where he can then influence our global
`perspective.
`
`As we transition homegrown talent like Kevin back to the U.S., we are bringing in Erick Haskell, who comes to UA with
`a strong sporting goods track record in Asia, especially China.
`
`Seeing how well our brand is being presented in these fast growing markets outside the U.S. and knowing we are
`staying true to the culture of who we are as a brand gives me great confidence that we are building the foundation for
`a much larger version of what you see from us today. But to do so, we need to continually attract talent that brings
`experience and dimension to the organization.
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`Under Armour's (UA) CEO Kevin Plank on Q3 2014 Results Earnings Carl Transcript} Seeking Alpha
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`What I've learned in building Under Armour is that there is no substitution for grade A people, and that bringing fresh
`yet experienced talent into the Under Armour brand is what will continue to drive our growth and goal of being the #1
`athletic brand in the world.
`
`I mentioned our new leadership in Europe and China, but beyond that we've just added Kerry Chandler as our Chief
`Human Resources Officer, who brings 20 plus years of global experience from places like Christie's International, the
`NBA and ESPN. In her role, Kerry will help us continue to attract and develop our top talent.
`
`Additionally, at the board level, Karen Katz, the CEO of Neiman Marcus Group, has joined our Board of Directors. We
`look forward to Karen's perspective and experience as we continue to navigate our path in both global and omni
`channel retail.
`
`So I'm incredibly excited about the terrific new additions to our team and very proud of the efforts that our current
`stable has made to help create what we've built to date.
`
`80 turning to Footwear. We saw our third consecutive quarter of 30 plus percent revenue growth and expect to finish
`the year with a business over $400 million. We continue to gain traction in the large categories of running and
`basketball. And much like where we stand in our International growth curve, we are just getting started in Footwear.
`
`With the great reaction to our SpeedForm launch earlier this year, we are broadening the platform significantly in 2015.
`Next spring, we will see the launch of the SpeedForm Gemini with charged cushioning at $130 retail and SpeedForm
`Vent at $100 retail that features a super lightweight and breathable material in the upper that was originally developed
`for our Apparel line. We are taking the SpeedFom1 technology developed for a single shoe into a broader platfomt that
`will enable us to reach a broader range of consumers and gain share on the shoe wall as well.
`
`In basketball, where we entered the business just 4 years ago, we're seeing double digit sell throughs with the $130
`ClutchFit Drive Stephen Curry wore during the FIBA Basketball World Cup. Stephen will transition into his first
`signature shoe later this season, but you'll see us start to work the ClutchFit technology across our basketball assets,
`whether it's college programs like Notre Dame, St. John's or Maryland, and also over in China with the newest member
`of the UnderArmour basketball team, Emmanuel Mudiay, who'il be playing in the Chinese Basketball Association this
`season and most likely the NBA starting the next.
`
`love talking about our successes in Footwear, given the steep learning curve we know exists in the business. We are
`I
`successfully making that transition from a company learning how to make great shoes into a truly disruptive voice in the
`global footwear market. We did it last year with the Highlight Cleat for football and came back this season selling
`almost 50% more at a retail price $20 higher than last year.
`
`With the mission of being #1 in every footwear category where we compete, we know we have a lot of work ahead as
`we surpass $400 million this year. We ultimately believe Footwear should be as big,
`if not bigger, than our Apparel
`business, and our momentum is helping attract the talent and develop the team that will help make that statement a
`reality.
`
`80 we talked in our last call about the growth potential we have in the Women's category and the opportunity to reach
`a new consumer. We focused our second Brand Holiday this year starting in late July on Women's, and we realized
`within 1 day or 2 days after the launch of the Misty Copeland commercial that we had a game changing campaign on
`our hands.
`
`The l WILL WHAT l WANT campaign, initially with Misty and later on with Gisele Bundchen, immediately struck a
`chord with women, with the 2 commercials generating over 13 million views across YouTube and Under Armour sites.
`It was difficult to turn on a TV or open a magazine in the United States without seeing the ovenrvhelmingly positive
`coverage of the campaign.
`
`The campaign also gained traction outside the U.S., with Misty's appearance in Paris and Gisele driving interest in her
`home country of Brazil. The campaign drove tremendous traffic to our E Commerce site, primarily women, 70% of
`which were new consumers to Under Armour. These consumers engaged with our brand and more than 350,000 of
`them downloaded the brand newl WILL WHAT I WANT app, our first effort into bringing the MapMyFitness
`technology into our brand communications.
`
`it struck a chord with women, resonating with
`And while the reaction to the campaign was rewarding, more importantly,
`her beyond the field, the pitch or the court. The success of the I WILL WHAT I WANT campaign positions us extremely
`well as we continue to build out the product and distribution to expand our reach from the female athlete to the athletic
`female.
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`But even as we expand the reach of our brand to new oonsumers and geographies, we remain extremely focused on
`the continued development of our North American wholesale business. Under Armour is a brand built in America, no
`question. We will reach the $3 billion mark this year and still have more than 90% of our revenues coming from the
`United States.
`
`Our core Apparel business, the majority of which is sold through our wholesale partners, grew more than 20% for the
`20th consecutive quarter. That's 5 years of consistent growth. So we clearly understand the value of protecting and
`growing that asset. And to that end, we're focused on continuing that growth streak by being better partners with our
`wholesale accounts in 2015.
`
`For Under Armour, that has and always will start with product, whether it's introducing our best base layer ever next
`spring, appropriately named Armour; or a more focused training assortment; or even expanding our lifestyle offerings,
`we will continue to bring innovation and relevance to these categories in exciting ways in 2015. as well as improve our
`speed to market.
`
`Beyond these steps, we are also laser focused on improving our merchandising expertise, specifically as it relates to
`our wholesale partners. We've seen the benefit of this effort within our own Direct to Consumer and International
`channels. And we will enable our North American wholesale partners, including Dick's Sporting Goods, Academy
`Sports, Sports Authority, Hibbett Sports, Cabe|a's, Foot Locker and the Finish Line, as well as all of our key wholesale
`partners around the globe, to present distinct points of view on Under Armour within all their doors.
`
`It was almost a year ago that we announced our acquisition of lVlapMyFitness and the changes in landscape in the
`Connected Fitness space have been significant, with new entrants, new platforms and new technologies getting a lot of
`the press.
`
`Since the acquisition, we've focused our energy on 2 areas: Building the user base by making our platform the most
`accessible and productive in the space; and better understanding what consumers want and need in this next
`generation of Connected Fitness.
`
`On the first piece, we have grown our global Connected Fitness community from 20 million at the time of the
`acquisition to more than 30 million users today. That means we are averaging upwards of 30,000 people a day, with
`that number surging on peak days to over 50,000joining the site. And with the progress we've had adding languages
`and product enhancement, our goal is to have over 100 million users in the next several years. These numbers clearly
`illustrate the opportunity digital provides Under Armour to reach our consumer in a fitness focused environment.
`
`What's truly compelling to us is what that platform provides in temis of helping our users proactively manage their own
`health and fitness. We understand the opportunity is massive, and we will share our point of view on how UA plans to
`drive thought leadership to the entire Connected Fitness category starting in early 2015 at CES in Las Vegas.
`
`I want to talk about UA reaching the $3 billion mark this year and what that means for us going
`Soto wrap it up,
`fonivard. Are we proud of the 30% CAGR, both top and bottom line that we delivered since going public 9 years ago?
`No question. But milestonesjust leave us thinking about what's coming and how we need to organize to become an
`even bigger and stronger brand.
`
`We believe that our brand is so much greater than the $3 billion we are projecting this year. Our International business
`will still be less than 10% of our total revenues for 2014 and we foresee a day where it is at least half our business.
`
`Footwear will be less than 15% of the business in 2014 and we can envision it can be largerthan our Apparel business
`someday. Our Women's business, which is over $500 million today, is still less than half the size of our Men's
`business, and we still believe it should be as big or bigger than our Men's category.
`
`The opportunity and appetite around the world for Under Armour is abundant, as I'm seeing firsthand on this trip, and
`we understand that great execution will be critical to our path to becoming the #1 athletic brand in the world. We will
`not stop investing in the talent, the infrastructure, the innovation or the product that will enable us to achieve that goal.
`We are very proud of our performance; however, we are just getting started.
`
`And with that, I'll turn it over to Brad.
`
`Brad Dickerson
`
`Thanks, Kevin. I would now like to spend some time discussing our third quarter 2014 financial results, followed by our
`updated outlook for 2014 and our preliminary thoughts on 2015.
`
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`Our net revenues for the third quarter of 2014 increased 30% to $938 million. Similarto last quarter, we saw
`tremendous traction during the third quarter in areas such as Direct to Consumer, lnternationai and Footwear.
`
`Looking at the details of the third quarter. We grew the Apparel category 26% to $705 million compared to $561 million
`in the prior year‘s quarter. This marks the 20th consecutive quarter of at least 20% year over year growth for our largest
`product category.
`
`One of the keys to our Apparel growth in recent quarters comes from our ability to develop platform innovations and
`expand the reach of those
`these innovations across product categories. This has driven sustained growth in our 2
`large platforms launched in 2011, Charged Cotton and Storm, and it is evident in ColdGear infrared, which was
`launched just last year and has expanded within Apparel to areas like golf and running.
`
`In Women's, we saw solid
`Within Apparel, our Men’s business was led by continued strength in Golf and Outdoor.
`gains in studio, sports bras and outdoor. And in Youth, we experienced broad based strength across both training and
`sports specific categories.
`
`Third quarter Footwear net revenues increased 50% to $122 million from $81 million in the prior year, representing
`approximately 13% of net revenues for the period. Expanded running silhouettes were the primary growth driver as we
`continued our focus on more balanced price points across our sporting goods distribution, while also beginning to
`broaden offerings across our SpeedForm platform. While off a small base, we also experienced strong growth in our
`basketball business during the quarter, led by the new ClutchFit Drive.
`
`Our Accessories net revenues during the third quarter increased 32% to $85 million from $64 million last year. Growth
`during the quarter was primarily driven by headwear offerings and gloves.
`
`Our Direct to Consumer net revenues increased 35% for the quarter, representing approximately 26% of net revenues.
`Square footage in our North America Factory House channel grew 18% year over year. This growth reflects a total of
`102
`122 Factory House stores at the end of the quarter, up 9% from the third quarter of 2013, as well as the upsizing
`of some existing locations. On the full price side, we remained at 5 Brand House stores in North America.
`
`We continue to see strong momentum in our E Commerce channel, where we are driving strong traffic gains through
`efforts such I WILL WHAT I WANT Women's campaign. During the quarter, we also updated our domestic ua.com
`platform to better optimize the mobile experience, while also launching new local sites in the U.K., Germany and
`France.
`
`International net revenues increased 94% to $86 million in the third quarter and represented 9% of total net revenues.
`In Europe, our strong results throughout the year have been driven by a combination of higher brand awareness and a
`more focused in country strategy around our 3 key markets of the U.K., Germany and France.
`
`In Asia Pacific, we continue to build both wholesale and distributor relationships, including accelerated partner store
`openings throughout Greater China and Southeast Asia.
`
`in Latin America, our business benefited from the conversion of our Mexico distributor to an Under Armour
`Finally,
`subsidiary at the beginning of 2014, as well as our recent market entries into Brazil and Chile.
`
`Moving on to margins. Third quarter gross margins expanded approximately 120 basis points to 49.6% compared with
`48.4% in the prior years quarter. Three primary factors contributed to this perfonnance during the quarter: first, we
`lapped higher U.S. import duties from the year ago period, contributing approximately 90 basis points for the quarter;
`second, we experienced a favorable sales mix during the period, primarily driven by a more profitable product mix
`across our Factory House channel, contributing approximately 70 basis points for the quarter; finally, liquidations
`negatively impacted gross margins by approximately 40 basis points, driven by the shift in Footwear liquidations into
`the third quarter that we highlighted on our last call.
`
`Selling, general and administrative expenses as a percentage of net revenues deleveraged 230 basis points to 34% in
`the third quarter of 2014 from 31.7% in the prior year's period. Specific details around our 4 SG&A buckets are as
`follows: first, marketing costs increased to 10.6% of net revenues for the quarter from 10.3% in the prior year period,
`primarily driven by higher year over year sports marketing sponsorships across our lntematlonal businesses; second,
`selling costs increased to 8.9% of net revenues for the quarter from 8.1% in the prior year period, primarily driven by
`higher variable costs tied to the growth in our North America Direct to Consumer business, as well as increased
`investments to support our global retail store strategies; third, product innovation and supply chain costs increased to
`8.5% of net revenues for the quarter from 7.3% in the prior year period, primarily driven by higher product innovation
`costs, including our Connected Fitness efforts, as well as higher personnel costs in Footwear and International; finally,
`
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`corporate services held steady year over year at 6% of net revenues.
`
`Operating income for the third quarter increased 21% to $146 million compared with $121 million in the prior year
`period. Operating margin contracted 110 basis points during the quarter to 15.6% compared to 16.7% in the prior year
`period.
`
`Interest and other expense for the third quarter increased to $5 million compared with $1 million in the prior year
`period, primarily reflecting the negative impact of foreign currency.
`
`Our third quarter tax rate of 36.9% was favorable to the 39.4% rate last year, primarily driven by lower year over year
`losses across international markets in aggregate.
`
`Our third quarter net income increased 22% to $89 million compared to $73 million in the prior year period. Diluted
`earnings per share increased 21% to $0.41 compared to $0.34 in the prior year period.
`
`On the balance sheet, total cash and cash equivalents forthe quarter increased 34% to $249 million compared with
`$186 million at September 30, 2013.
`
`Long term debt increased to $192 million from $54 million at September 30, 2013. Inventory increased 28% year over
`year to $637 million compared to $497 million at September 30, 2013, below our net revenue growth rate for the
`period.
`
`Our investment in capital expenditures was approximately $26 million for the third quarter compared with $23 million in
`the prior year period. We continue to plan 2014 capital expenditures of approximately $150 million, primarily driven by
`incremental investments to support our Direct to Consumer and international businesses, further develop and expand
`our global office footprint and increase capacity at our distribution centers.
`
`Now moving on to our updated outlook for 2014. Based on current visibility, we expect 2014 net revenues of
`approximately $3.03 biltion, representing growth of 30%; and 2014 operating income of approximately $348 million,
`representing growth of 31%. Both expected growth rates are outpacing the long term growth rates laid out at our
`Investor Day in June 2013.
`
`Below operating results, we continue to anticipate moderately higher interest expense in 2014, primarily reflecting the
`$150 million term loan closed in May. We expect a full year effective tax rate of approximately 40%, ahead of last
`year's 37.8% rate, given investments to support our International expansion and the inclusion of a state tax credit in
`2013.
`
`Given these updated full year parameters, there are several factors to consider for the fourth quarter. First, on net
`revenues. We continue to make
`to take a more balanced approach in planning the business around weather
`expectations for the fourth quarter as compared to last year, especially in our Direct to Consumer business, which
`represented approximately 40% of our total business during the fourth quarter last year.
`
`Our gross margin rate is expected to decline approximately 100 basis points year over year, given a higher mix impact
`of our International business, which is more weighted toward lower margin distributor businesses during the period and
`also reflecting some currency headwinds given the strength in the U.S. dollar. As we have mentioned, our approach to
`planning our fourth quarter business also factors into the gross margin outlook for the period.
`
`in SG&A, we continue to expect significant leverage during the fourth quarter, particularly in corporate services, given
`prior year higher incentive compensation expenses and MapMyFitness deal related costs. As we have previously
`indicated, we remain opportunistic in investing incremental dollars during the fourth quarter in the event of more
`favorable than planned net revenues or gross margin rate.
`
`Finally, on the balance sheet, we continue to expect inventory growth will remain relatively in line with net revenue
`growth during the fourth quarter.
`
`Before we turn it over for Q&A, we'd also like to provide you with our preliminary outlook for 2015. Based on our
`current visibility, we are planning 2015 net revenues and operating income to each grow approximately 22%, in the
`range of our long term growth rates established at our 2013 Investor Day.
`
`Based on these numbers, we wanted to outline several preliminary factors to consider for 2015. First, similar to 2014,
`the net revenue growth rate for each of our International, Direct to Consumer and Footwear businesses is planned to
`outpace the growth rate of our overall business.
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`Second, within the operating income line, we are planning for gross margin gains relatively consistent with 2014,
`balanced with SG&A investments to support both near and long term global growth opportunities, including
`International, Retail and Connected Fitness,
`
`Finally, we expect elevated capital expenditures during the year. On top of a normalized capital expenditures growth
`rate, we plan to invest approximately $90 million more in 2 key projects to support our future growth: a new Southeast
`distribution center in North America and the expansion of our corporate headquarters in Baltimore. We will provide
`further color on 2015 during our earnings call in January.
`
`We would now like to open the call for your questions. [Operator Instructions} Operator?
`
`Question and Answer Session
`
`Operator
`
`[Operator Instructions] And our first question comes from the line of Robbie Ohmes of Bank of America Merrill Lynch.
`
`Robert F. Ohmes BofA Merrill Lynch, Research Division
`
`you guys touched I think even more than ever on International
`I actuallyjust have one question. I was hoping
`Kevin,
`and you mentioned being in Hong Kong and everything. Could you just sort of lay out for us which markets are the
`greatest focus for Under Am‘lour right now and, say, over the next 3 years? is it China that's the biggest opportunity or
`is it still LatAm? Or is Europe coming on stronger? And could you move beyond those 3 key European markets you
`mentioned? Maybe if you could just sort of give us a big picture how we should be thinking about International for
`Under Armour over the next 3 years.
`
`Kevin A. Plank
`
`Yes, great. So let me take a minute and actually go a little bit deeper here. And I think it's that important and
`obviously wanted to make a statement with, was actually trying to balance my travel schedule with this call and just
`thinking, it's part of what we're doing as a company, so we might as well just embrace the office that we've had for a
`number of years. So I think there's 3 real components, the first of which is leadership. Since bringing Charlie Maurath
`on the team, he's really done a terrificjob, I think, driving for Under Armour. Number one, laying out our strategy with
`most importantly, the ability to implement behind it, but also, just as importantly,
`is building out our team. As we
`mentioned in my script,
`I spoke about the addition of Chris Bate, who's now in full control and running our European
`business. And again, with the trajectory there of that business heading over $100 million, very important for us. Our
`new Head of China, Erick Haskell, who's actually going to start for us probably around the second quarter of 2015, with
`the transition will take place in China. But again, bringing in an industry pro with over 20 years experience that can
`really hit the ground running for us and building off of the momentum that was built by Kevin there prior to his landing.
`And then thirdly, the addition of a guy named Fernando Pina, who joins us, again, with a 20 year experience in
`growing and building out a European fleet of stores as well within our industry. So we're really bringing,
`I think, the
`talent together. And ending with Fernando, I think it's a good wayjust to talk about the stores that we have coming up.
`So let me give you some perspective. We've got roughly
`by the end of '14, we'll have roughly 80 global Brand House
`stores. And you may be thinking about what it looks like in SoHo in New York City with 14,000 square feet, but
`globally,
`it's a bit of a different story. Our stores can range anywhere from 1,000 to, call it, 6,000 square feet, of
`course, without ruling out larger flagship opportunities. With the culture of Under Armour, that would be profitable and
`make money, but things that can be more statement retail. Where we are today is building out a philosophy because
`the majority of those stores, the 80 stores we'll have outside the United States, the majority of them actually will be in
`Greater China. Soto give you a little perspective on that, as we think about
`just my trip, and let me just tell you
`where I've been through Asia so far. Going into Tokyo and seeing really the flagship stores we have in Shibuya station
`and Harajuku as well.
`I just left we were in Chengdu and we've built We've got 2 stores there existing and then
`we're opening up a third store, a 3,300 square foot store at a new mail called Taikoo Li that surrounds the Dacl
`Temple, a 1,500 year old Buddhist temple. And