Under Armour lifts profit forecast on cost strategy, lower input costs

(Reuters) -Sportswear maker Under Armour (NYSE:UA ) raised its annual profit forecast on Thursday, betting on lower input costs and cost-saving strategies such as offering lower discounts at its own stores and website.

Shares of the company rose 6.3% in premarket trading.

Following several quarters of poor results, Under Armour founder Kevin Plank returned as CEO to reset the business and has been reducing headcount and cutting down on inventory of some products.

Customers are increasingly picking newer, more innovative brands such as Roger Federer-backed On and Deckers Outdoor (NYSE:DECK )'s Hoka in a blow to Under Armour and Nike (NYSE:NKE ), prompting a revamp of their businesses to galvanize demand and win back market share.

Under Armour is also aiming to sell apparel and footwear at full prices.

Weakness in China has impacted demand too, with higher youth unemployment and a property crisis limiting a post-pandemic demand rebound in the world's second-largest economy.

Telsey Advisory Group analysts have said Under Armour has been reducing both the frequency and magnitude of promotions, but was still maintaining them during key periods such as Back-to-School, Labor Day weekend, and Amazon (NASDAQ:AMZN ) Prime Day.

The lower discounts boosted its gross margin by 200 basis points to 49.8%.



Under Armour now expects annual adjusted per-share profit of between 24 cents and 27 cents, compared with its prior forecast of 19 cents to 21 cents.

Its net sales fell 10.7% to $1.40 billion in the second quarter, while analysts were expecting a 11.6% fall to $1.39 billion, according to data compiled by LSEG.

Source: Investing.com