Apparel maker Under Armor saw its stock jump by 6 per cent after raising its annual profit and margin forecasts despite a third straight quarter of declining sales in its key North American market.
The brand missed market expectations for profit in Q3 by 6 per cent Y-o-Y. Its revenues during Q3 were $1.49 billion, missing analyst estimates of $1.50 billion.The brand expects gross margin to improve by 120-130 basis points due to lower production costs.
To offset weak demand and heavy discounting, Under Armour is leveraging lower production costs. The company is struggling to reignite growth despite promotions, particularly in its core North American market. Analysts like David Swartz from Morning star, have expressed concerns about the stagnant sales. David Bergman, CEO, also warmed of potential margin impact from ongoing promotions.
