Under Armour Inc has announced its annual sales and profit forecast, falling short of Wall Street's expectations.

The company attributes this underperformance to persistent inflation hindering consumer demand and lower profit margins resulting from increased discounts. As recession concerns loom in the United States, cost-conscious consumers are limiting their spending on non-essential items such as home goods, apparel, and electronics, prioritizing essential purchases instead.

Under Armour's gross margins have declined by 310 basis points, reaching 43.4%, as the company offered greater discounts and promotions to clear excess inventory.

The company's fourth-quarter revenue exceeded expectations, driven by a 3% increase in its primary market, North America, while the Asia Pacific region witnessed a remarkable surge of 31% on a currency-neutral basis. Footwear sales experienced a significant jump of 27%, while apparel sales only grew by 1%, and accessories sales declined by 1%.

Looking ahead, Under Armour anticipates its net sales for fiscal year 2024 to remain flat or experience slight growth, in contrast to analysts' predictions of 3.7% growth.

In the quarter ending March 31, Under Armour achieved a 7.5% increase in net revenue, reaching approximately $1.40 billion, surpassing the average estimate of $1.36 billion by analysts.

This underperformance indicates the challenges Under Armour faces due to inflationary pressures, reduced consumer demand, and increased competition in the apparel industry.