Patrik Frisk
President, Chief Executive Officer and Board Member at Under Armour
Thank you, Lance. And good morning everyone and welcome to our fourth quarter and year end 2021 conference call.
At the beginning of last year, we were confronted with significant uncertainty about our business due to impacts from the COVID-19 pandemic. With dynamic changes in purchase behavior and marketplace demand, we faced several obstacles as we work through what we believe to be a recovery year following a difficult 2020.
At that point, it would have been easy to stay conservative and adopt a wait and see strategy, yet the tremendous progress we made following our multi-year transformation, including healthier demand for the Under Armour brand and the passion that this team shows up with every day, meant going on offense was the only path for 2021. And because cost we stayed on offense, Under Armour delivered a record year of financial results, a year that exemplifies the power of our long-term strategic plan and our ability to stay hyper-focused on execution by leveraging our core strengths to position us more strongly for our next chapter of growth.
Throughout 2021, we worked methodically to expand our brand's awareness and engagement, ensuring we showed up more consistently, louder and with a sharper point of view about the distinct role we play in an athlete's journey to compete. We underscored our commitment to performance by delivering some of the most innovative products that we've ever produced. We forged deeper and more productive relationships with our key wholesale partners. We saw significant progress in our largest long-term growth drivers, our international, direct consumer, women's and footwear businesses. And we're stronger financially than we've ever been.
In this respect, looking at some of our highlights, while our year-over-year comparisons benefited from the significant COVID-19 impacts we experienced in 2020, we are equally pleased with our performance over the past two years. For the full year 2021, revenue was up 27% to reach $5.7 billion, which is a record, versus 2019 revenues up 8%, so solid progress from before the pandemic and the result driven by several strategies that have lifted the quality and composition of our sales compared to a few years ago.
Breaking that down, wholesale revenue increased 36% to $3.2 billion in 2021. On a two-year basis, wholesale is up 3%. As detailed on previous calls, this performance has been tempered by the strategic decisions we've made to improve brand health by reducing our sales with the off-price channel and exiting approximately 2,500 undifferentiated retail doors in North America, an effort which is now concluded.
Our direct-to-consumer business was up 26% to $2.3 billion in 2021 versus 2019 direct consumers 29% with strong momentum in our owned and operated stores and our e-commerce business. Following a 40% increase in 2020, our e-commerce business was up 4% in 2021, equating to 45% growth on a two-year stack. This result gives us confidence that this business is well-positioned, following a prolonged period of elevated promotional activities.
2021 gross margin was up 210 basis points to a record 50.3% versus 2019 gross margin is up 340 basis points, so excellent progress over two years, driven by benefits from pricing and a more favorable channel mix being offset by supply chain headwinds related to COVID-19 and the absence of MyFitnessPal, which we sold at the end of 2020.
Rounding out the P&L, our full year operating income reached $486 million, net income was $360 million and our diluted earnings per share was $0.77, all three of which are records. We also realized strong balance sheet and cash flow performances with inventory down 9% to an absolute dollar value that is only slightly higher than in 2015 when we were a $4 billion business.
And finally, one more record, having ended the year with $1.7 billion in cash. All in, what an incredible period for Under Armour. Having operated for nearly two years amid a global pandemic, I am proud of the progress we've made, the resilience we've shown and the potential we have to do even better in the future. By staying focused on our key strategies, we are competing and executing at progressively higher levels, helping us unlock value and returns for our shareholders.
Driving us forward, at the heart of why we exist is our purpose. We empower those who strive for more. For Under Armour, everything is about the journey. From an awful workout when you want to quit but don't to pushing through that last rep and adding one more to earning that PR because you put in the work. Under Armour makes you better.
We do this by delivering innovative product experiences and styles influenced by athlete insight and real-world data, innovations [Indecipherable]. Engineered to empower the journey to support through training competition and recovery, 2021 was an exceptional year for Under Armour products. There are too many to list, but a few stand-outs on the apparel side include RUSH, Iso-Chill, Rival Fleece, Crossback, Infinity, Unstoppable and Meridian, all names that deliver the 33% increase in revenue we achieved.
On the footwear side, franchises like HOVR Sonic, Machina and Infinite, UA Flow, Velociti Wind, Charged Pursuit, Assert, Aurora, Curry and Project Rock contributed nicely to 35% growth, validating one of our largest long-term growth opportunities. 2021 was also an exceptional year in Under Armour's progress to connect our brand even more deeply with consumers.
From the optionality we created in our P&L, we were able to make incremental marketing investments, which we expect to fuel even stronger brand momentum in the years ahead. At the center of these efforts, product, experience and inspiration fits the only ways through, more than a mantra, it's become an ethos, synonymous with the hard work necessary to power the journey, and it's always a journey.
From an initial product drawing to shopping bag to the closet, we obsess athletes and those who strive for more. However, being purpose-led means that it's about more than just shirts and shoes. And sport is so much more than just a game. It teaches us to push past our limits to be collaborators, to be leaders. It increases confidence, reduces stress and improves mental health. Yet many young athletes face barriers that prevent them from starting their journey to sport, with the lack of fields and courts, gaps in coaching, shrinking leagues and the shortage of gear to play, train and compete with, we recognize that not everyone has access to sport.
Addressing this opportunity, a few weeks ago, we announced the long-term commitment of our resources, focus and energy to break down these barriers. As we laid the foundation for our Access to Sport initiative, we are excited to share more in the years ahead as we build opportunities for millions of you to engage in sport by 2030, ensuring that the next generations of focused performers are inspired even more holistically than those before them.
Now back to our business. And the last two years have proven to be one of the most dynamic, yet opportunistic times in Under Armour's history. Managing the marketplace prudently through a constant focus on operational excellence to ensure we're keeping the brand healthy and moving forward, we are delighted with our results.
That said, let's look at how our regions performed in 2021, starting with North America, where revenue was up 29% to $3.8 billion or up 4% since 2019. In our largest market, we continue to focus on three fundamentals: first, it's becoming a better retailer by creating more compelling in-store experiences and delivering best-in-class service across our fleet. Additionally, this means continuing to build on the momentum we've seen in our e-commerce business, realizing we'd likely see traffic declines compared to the abnormality that was 2020, we stayed focused on quality by investing in high return vehicles like targeted PLAs and improved product way finding to improve our online shopping experience, and it's working. In 2021, while we did experience a year-over-year traffic decline, it was more than offset by meaningful increase in conversion and, therefore. solid revenue growth.
Second, with the critical mass of undifferentiated wholesale door exits behind us, we are encouraged by the productivity KPIs we're seeing across this channel in North America. A more premium position driven by outstanding inventory management and promotional discipline is translating nicely to additional shelf space opportunities with our largest strategic partners, higher AURs and significantly better turns. And that last point turns, which is really about execution is a core element that gives me confidence that we're in an excellent position to adapt to however the environment may develop over the short-term.
Third, we are continuing to drive performance by investing more smartly in marketing, which shows up and improve brand affinity scores around awareness, consideration and conversion. Gaining better productivity from how and where we spend has always been the goal. By delivering higher-quality traffic through strategic paid media and targeted email activations, our ability to connect more meaningfully across key moments and multiple platforms has never been greater.
Turning to our international business. Revenue in EMEA was up 41%, driven by nearly 50% growth in our wholesale business and continued momentum in direct-to-consumer. We are encouraged by the quality of business results delivered in 2021. Our efforts to position Under Armour as premium performance, healthier wholesale relationships and improved retail capabilities continue to validate the power of our playbook. Our two-year performance is strong as well with revenue in EMEA up 36% versus 2019.
Next up is Asia-Pacific, where revenue was up 32% in 2021, driven by nearly 50% growth in our wholesale business and a strong increase in direct-to-consumer sales. Clearly, the story here is about a more challenging environment that has developed in China as of late. As evidenced by a 6% decline in our fourth quarter APAC revenue, the recent market trends in China are impacting our business. However, our focus in China remains the same, staying premium, continuing to invest in digital innovation, including working to deliver a much improved end-to-end consumer engagement platform and ensuring that store expansions are done at an appropriate pace amid dynamic market conditions. Versus 2019, revenue in Asia-Pacific was up 31%, so strong growth on a two-year basis.
And finally, revenue in our Latin America region in 2021 was up 18%, driven by strength in our full-price wholesale and distributor businesses. As a reminder, we have transitioned certain countries in this region to a strategic distributor model, a decision we believe will begin to optimize this region's ability to grow and contribute more profitably in the years to come. Versus 2019, revenue in Latin America is about flat on a two-year basis.
So in closing, we remain both confident and cautious in this operating environment. And while current macro factors are having material impact on our business, we have no intentions of sitting idle. Innovation, consumer connectivity and inspiring those who strive for more are not tactics at Under Armour, they're our way of life.
Moving forward, we believe that the things we can't control will continue to serve us as strengths, just as they did in fiscal 2021. Regardless of the short-term environment, we are running a stronger, better company, one that is increasingly more capable of delivering sustainable, profitable growth and value creation for our shareholders over the long-term.
I am pleased with where Under Armour is sitting, incredibly proud of this team and, in my nearly five years here, I have never been more excited about our future.
And with that, I'll hand it over to Dave.
