However, the company's footwear business is struggling and the profit outlook was conservative given the strong results, said Susquehanna International Group analyst Christopher Svezia, who has a "neutral" rating on the stock.
"At the end of the day, good numbers, apparel continues just to be very impressive, footwear continues to be challenged," he said. "That being said, it was good execution on the margin."
Under Armor, a smaller but fast-growing rival of Nike Inc (NKE.N), makes products touted for their moisture-wicking qualities. It has made efforts to reach more women shoppers and cater to a wider swath of athletes.
Net income in the second quarter more than doubled to $3.5 million, or 7 cents a share, compared with $1.44 million, or 3 cents a share, in the year-earlier quarter. This year's profit was more than double the 3 cents per share analysts polled by Thomson Reuters I/B/E/S had expected.
Sales rose 24 percent to $204.8 million, topping the $189.9 million analysts had expected. Sales of athletic clothes increased 34 percent -- the highest growth rate in 10 quarters -- as the company saw strong demand for both men's and women's apparel.
The company's direct-to-consumer revenue surged 60 percent due to the addition of new factory outlet stores, strong retail same-store sales growth and higher demand on the Internet. However, footwear sales fell 4.5 percent to $35.8 million.
Chief Executive Kevin Plank said the company expects the footwear business to grow again in 2011 after a decline that the company previously warned it had expected this year.
"After years of growing pains, we are now starting to see the initial payback take hold," Jefferies analyst Taposh Bari said in a research note.
"Apparel is set to expand its addressable market through new silhouettes, styles, and fabric while we see 2011 as the break-out year for footwear," added Bari, who has a "buy" rating on the stock.
Under Armor raised its full-year financial outlook, citing the strong second quarter and a better ability to predict future results.
It now expects 2010 earnings per share of $1.11 to $1.13, up from a range of $1.05 to $1.07 that had disappointed analysts when the company provided it in April. Analysts have been expecting $1.10 a share.
Under Armor also boosted its full-year sales outlook, saying it now expects a range of $990 million to $1.01 billion, up from $965 million to $985 million before. Analysts were expecting $982 million.
It said it will bring its accessories business -- hats and bags -- in house from a licensing partner in January, adding $60 million in revenue next year. It said that would increase operating income in 2011, but not by how much.
Under Armor said it would add 17 to 19 factory outlet stores this year, hitting 52 to 54 by year-end, and would add a similar number next year.
Chief Financial Officer Brad Dickerson expects the company's gross profit margin to be higher year-over-year in the next two quarters. He also said product costs are locked in through spring 2011, meaning there would be a minimal near-term impact from cost inflation.
Under Armor shares initially rose to $40 a share -- the highest level since $43 in September 2008 -- but were off 40 cents at $37.83 in midday trading on the New York Stock Exchange.
SOURCE: Reuters
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