By Anuja Bharat Mistry
(Reuters) -Under Armour on Thursday 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.
Since returning as CEO in April, founder Kevin Plank has kept a tight leash on inventory of some products, pushed for fewer promotions and slashed its workforce.
Under Armour also introduced products such as Phantom Fore Golf shoes to fend off competition from newer brands including Roger Federer-backed On and Deckers Outdoor’s Hoka.
“Although the goal of resetting the brand to a more premium positioning while narrowing the focus to core fundamentals could prove to be a meaningful catalyst over the longer term, we believe it will take time to unfold,” said Sharon Zackfia, analyst with William Blair.
Under Armour 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.
Shares of the company rose as much as 5% at $8.65.
Revenue in Under Armour’s North America segment, a major revenue contributor, fell 8% in the third quarter, after declining 13% in the prior quarter and 12% in the same period a year earlier.
In contrast, Nike in December forecast muted sales as the company scrambles to regain market dominance.
Meanwhile, Baltimore, Maryland-based Under Armour said the latest U.S. tariffs were not expected to have a significant impact.
It said about 3% of its goods imported into the U.S. come from China, and even less from Mexico. It has no manufacturing relationships in Canada.
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)
