(Reuters) – Under Armour raised its annual profit forecast again after topping quarterly results, as the sportswear maker reaps the benefits of dialing down on discounts and a recovery in demand in North America and Asia.
The company’s shares rose about 10% in premarket trading on Thursday.
Under Armour has introduced newer product styles such as Phantom Fore Golf shoes and Unstoppable Fleece joggers to fend off competition from fresh and innovative brands including Roger Federer-backed On and Deckers Outdoor’s Hoka.
The company expects annual adjusted earnings per share to be between 28 cents and 30 cents, compared with its prior forecast of 24 cents to 27 cents.
Customers seeking trendy shoes and apparel also lifted sales for athleisure brands during the crucial holiday quarter.
Revenue in Under Armour’s North America segment, a major revenue contributor, fell 8% in the third quarter, while in the Asia-Pacific region it dropped 5%. This was an improvement from the prior quarter when revenue had slumped.
“We believe Under Armour needs to regain investor appreciation but believe recent string of results are doing just that,” said Simeon Siegel, analyst with BMO Capital Markets.
Since returning as CEO in April, Kevin Plank has pushed the company to sell apparel and footwear at full prices. He has also beefed up marketing investments to boost brand visibility and appeal to younger customers.
In contrast, Nike in December forecast muted sales as the company scrambles to regain market dominance.
Under Armour’s quarterly gross margins expanded by 240 basis points to 47.5%, with some support from lower raw material and freight costs.
Revenue fell 5.7% to $1.40 billion in the quarter ended Dec. 31, compared with analysts’ estimates of $1.34 billion, as per data compiled by LSEG.
Adjusted earnings per share of 8 cents, beat estimates of 4 cents.
(Reporting by Anuja Bharat Mistry in Bengaluru; Editing by Shailesh Kuber and Sriraj Kalluvila)
