Under Armour cuts forecasts on weak demand, higher discounts
Reuters
Under Armour
Weaker forecasts follow the Baltimore
After two years of booming sales during the pandemic, sportswear companies have seen their fortunes plummet in the last few months as decades-high inflation forces consumers to cut back on discretionary purchases.
Larger rivals such as NikeAdidas
“On promotions and discounting, we’re not exactly expecting the market to completely get better … but we also do believe that we’ll get better as we go through next year,” Under Armour finance chief David Bergman said.
The company said it expects gross margins to fall about 550 basis points (bps) to 600 bps in the third quarter due to more promotions and the hit from a stronger dollar. Fourth-quarter gross margins are forecast to decline 100 bps to 150 bps.
CFRA analyst Zachary Warring said he still expects Under Armour to use “significant promotions” moving forward due to excess inventory across footwear and apparel retailers.
Under Armour forecast fiscal 2023 net sales to rise in low single-digit percentage, compared with its earlier outlook of a 5% to 7% increase.
It expects adjusted earnings per share of 56 cents to 60 cents, below its previous forecast of 61 cents to 67 cents.
Under Armour second-quarter net revenue rose 2% to $1.57 billion, beating estimates of $1.55 billion, according to Refinitiv IBES data.
