President and Chief Executive Officer, Board Member at Under Armour
Thank you, Lance, and thank you, Carrie. Good morning, everyone, and welcome to our second quarter conference call. At the halfway point of 2021, our better-than-expected results continue to validate that our multi-year transformation is working with a stronger top and bottom line performance relative to our previous outlook. Perhaps more importantly, we're also driving high quality growth, margin expansion and greater profitability against our pre-pandemic 2019 results. In fact, diluted earnings per share through the first six months of 2021 are greater than the full-year 2019, so all in, a great first half.
Reflecting on the past 18 months that made a historically challenging environment due to the COVID-19 pandemic, I am incredibly proud of Under Armour's global team and the way we've worked to hold ourselves accountable to our strategic playbook. By continuing to sharpen our focus, the operating model and financial discipline we have ingrained within our culture serve as a constant check and balance to deliver premium products and the experiences to our consumers and customers. And by driving high-quality revenue through a constant lens of operational excellence and applying what we've learned, consistently refining and orienting towards brand right profitable growth means we are better positioned today to drive greater returns to our shareholders than we were before the pandemic started. And yet, with sustained uncertainty related to COVID which as of late is trending unfavorably in key sourcing countries in Southeast Asia, the resiliency we have earned over the last 1.5 years will continue to serve as an asset while we navigate the second half of 2021.
In this respect, we're focused on the things we can control, staying grounded in our four strategic pillars: strengthening the Under Armour brand, improving our operating model, amplifying a DTC focused approach, and increasing our capacity to return greater profitability across the Company.
Starting with strengthening our brand and the proactive decision we've made to reinvest some of this year's upside into additional marketing efforts, this flexibility is empowering us to amplify our middle-to-top of funnel activations geared at increasing awareness, attraction and consideration for the Under Armour brand. As we work to connect with new athletes and inspire existing ones, we are centered on our brand attributes, resilience, hard work, heart [Phonetic] and edge. In the second half, this will come to light more holistically as we illustrate the journey to compete through the process of training, setting goals, struggling and ultimately realizing the results.
Through a team sports lens, supported by consistent messaging via The Only Way Is Through, our third quarter activations highlight the importance of mental strength and often overlooked aspect of training and its relationship to unlocking an athlete's full potential. Certainly, coming out of the long stretch of COVID restrictions and as team sports hopefully open up more broadly this fall, we believe this is a timely effort to draw consumers into the psyche that is uniquely Under Armour, as we work to make them better. So starting this month via social media, TV, and streaming, be on the lookout for Chase Young, Trent Alexander-Arnold, Ty Harris and Nicmercs, among others helping to highlight mental training and the role it plays in achieving one's personal performance goals. As we say at Under Armour, if you train your mind, you train your game.
So while there is still more work to be done to unlock our full marketing potential, I am pleased with the progress we're making in aligning our go-to-market with focused performers and the evolving needs of our key retail partners around the world. Not to mention, the incremental marketing investments we're making in 2021 are really geared at setting us up for more strongly in 2022 as awareness and consideration should lead to increased conversion as we strengthen our connectivity.
In product, our strategy remains firmly rooted in an athlete's journey to sport, leading with insights and data to provide solutions they didn't know they needed and now can't imagine living without. With quite a few product highlights during the quarter, I'd start by recognizing the incredible milestone that our partners at Virgin Galactic achieved a few weeks ago with their commercial flight into space. To play a part in pushing the boundaries of what is possible, we are excited to see what the future holds as new barriers get broken, inspiring all of us to strive for more.
In apparel, second quarter highlights included strong sell-through of our Iso-Chill running products, featuring a UA innovation that keeps you cool in hot conditions. We also saw a strong sell-through in men's Unstoppable bottoms and women's leggings, including Meridian and our no-slip waistband technology. We are also continuing to build on its momentum as well with meaningful increases in our Infinity and Crossback products. And we also saw solid results in tops featuring our RUSH technology. And finally Project Rock Apparel continued to build on its strong momentum as well with an excellent response to new drops.
In footwear, Flow Velociti performed well in all regions, as did HOVR Phantom and Machina 2, including significant growth against last year's already strong performance. Our charged Pursuit 2 and Assert 9 footwear offerings also posted substantial numbers, demonstrating continued success in our segmentation strategy to bring premium innovations across all price points. In Curry, we saw success on and off court with our Curry Flow 8 signature shoe as well as Retro styles that we pre-released in APAC, all good signs of momentum as we work towards the launch of the Curry 9 late this year. And finally, the Project Rock 3 shoe, which combines UA HOVR and TriBase technologies for a highly comfortable and stable training platform, was also a standout.
Switching gears to our next area of focus, which is continuous operating model improvement. Our second quarter results demonstrate once again that our ability to service increased demand with efficient, effective execution is getting better. Creating product at the right price and getting it to the right place at the right time is at the core of how we'll win. To empower this, the adage holds, success is doing the common things uncommonly well. Simple perhaps, but precisely at the core of our strategic playbook and what we're obsessing on a day-to-day basis.
Turning to our regions, we believe it's most helpful to compare our results to 2019 since last year's second quarter was an incredibly unique period, and we believe this two-year stack better represent some of the progress we're making in the overall performance of our business.
Starting with North America, I'd underscore how happy we are with improving our ability to drive higher quality revenue through sharper segmentation, tighter inventory management and delivering consistent service to our customers. Versus 2019, North American revenue was up 11% in the second quarter and about 3% for the first half of the year. Now, in context, it's important to keep in mind that these comparable periods have some key differences, including a significant increase in our direct-to-consumer business, offset by considerably lower sales to the off-price channel, lower overall promotional and markdown activities, and supply constraints engineered to put us in a more advantaged position in the marketplace. All of this, of course, is geared to continuing to lift the Under Armour brand to a more premium level in our largest market.
And to that point, as evidenced by our gross margin results, this strategy is working. From a channel perspective, we feel good about the pace we're earning back space with our key North American wholesale partners, driving full-price [Phonetic] revenue and showing up both digitally and physically in a more comprehensive way than ever before. Revenue from our owned and operated stores is up meaningfully in the quarter versus the same period in 2019 and includes improved quality and composition of sales.
For the full year, we expect our North American business to be up at a low-20's percentage rate compared to 2020. Versus 2019, North America will be close to the same revenue, which taking into consideration the factors I mentioned, less off-price, lower discounts and promotions and tighter supply constraints, along with our exit of undifferentiated retail which starts in Q3, leaves me confident that we're setting ourselves up for improving brand right profitable growth in 2022 and beyond.
Turning to our international business, we expect revenue to be up at a mid-30s percentage rate versus 2020 or up at a high-20s percentage rate on the two-year stack. In our Asia-Pacific region, we remain laser focused on ensuring our brand remains firmly positioned in athletic performance while staying agile in a quickly evolving marketplace. With second quarter revenue up 25% versus 2019 or up 35% for the first half on a two-year stack, our results gives us confidence that the additional investments we're making into marketing, CRM, digital activations and store expansions are working to drive greater brand affinity amid a highly competitive backdrop.
Next up is EMEA, a region that is also seeing pockets of COVID resurgence, but also delivered strong growth for Under Armour. Second quarter revenue was up 43% over 2019 and up 44% for the first six months on a two-year stack. Within DTC, we recently upgraded our e-commerce site platform to improve our capabilities and functionality as we focus on driving more seamless shopping experiences for our consumers. EMEA wholesale growth was balanced across our full price and distributor businesses. Looking at the rest of the year, we remain confident that our strategies to drive greater reach and connection to our consumers are working well.
And finally, our Latin America region, where second quarter revenue was up 17% over 2019 or is up 7% for the first six months on a two-year stack. As discussed on our last call, we have begun transitioning our business in certain countries to a strategic distributor model, which we expect to impact revenue more negatively in the back half of this year. So still working through this transition as we re-architect this business for improved consistency and we believe better profitability.
Switching to our third pillar, which is our focus on elevating our DTC business. With a 33% increase in revenue for the second quarter and a 32% increase for the first half versus 2019, we're pleased to see the results of our multifaceted strategies come to fruition.
In conjunction with consumer behavioral shifts throughout the pandemic and an even greater appetite for product and brand experiences that are personalized, unique and premium, we are advancing how we show up in stores and online to meet their needs. All of this, of course, starts with our retail and distribution teammates, who are the backbone of our business, playing an essential role in how we serve our focused performers. Ensuring that they feel valued and appreciated, we increased our minimum pay rate to $15 per hour in our US business as part of a larger effort that includes professional learning and development opportunities and additional incentive plans. In combination, these actions will allow us to drive better connectivity across the consumer journey.
From an owned store perspective, we experienced improved traffic trends and higher average selling prices in the quarter, driving better productivity and more normalized promotions. Longer term, we remain focused on building the capabilities necessary to become a best-in-class retailer by creating incredible experiences in our full-priced brand house stores and better leveraging our factory house locations to drive greater overall profit.
In our e-commerce business, revenue was down 18% in the quarter, a result that we anticipated being the most challenging of the year considering the shift to online in 2020 following the retail lock-down. That said, given the work we did to exit the highly promotional elements that this business experienced in 2019, along with the investments we made in our platforms and teams over the last 18 months, and we're very encouraged by a 53% second quarter increase versus 2019 or a 55% increase for the first six months on the two-year stack. Throw in that we expect our e-commerce business to be up at a high-single digit rate in 2021, and that puts our growth up nearly 50% on a two-year stack.
So to wrap it up, I'll end with our last area of focus, driving profitability to increase shareholder value over the long term. Based on our updated full-year outlook, which includes revenue being up at a low-to-mid single-digit rate versus 2019 and our adjusted EPS being up meaningfully, our strategy to return to profitable brand right growth is working. With a high quality and composition of revenue including significantly-reduced off-price sales and less promotions and discounting, we're driving more productive dollars through our P&L, dollars that are contributing nicely to margin improvements and greater EPS, demonstrating the results of our transformation and the stronger foundation we have built over the past couple of years.
And with that, I'll hand it over to Dave.