(Reuters) -Under Armour Inc raised its annual profit forecast on Wednesday, sending shares up 8% premarket, after quarterly results got a boost from resilient consumer spending and deep discounts that reeled in holiday shoppers.
The increased promotions offered during the all-important holiday season encouraged customers to look past recession worries and stock up on Under Armour’s athletic shoes and hoodies. Steep discounts had also helped rival Nike deliver a strong quarter in December.
Still, Under Armour’s attempt to clear excess inventory has pinched its margins. It expects gross margin for the full year to decline at the higher end of its prior forecast of 375 to 425 basis points.
A strong U.S. dollar and higher freight and manufacturing charges pushed down its third-quarter gross margins by 650 basis points to 44.2%.
In December, Under Armour named veteran hotelier Stephanie Linnartz as its top boss, betting on her experience in branding strategy and e-commerce to help revive sales.
E-commerce sales rose 7% in the reported quarter.
The Baltimore, Maryland-based apparel firm posted third-quarter adjusted profit of 16 cents, beating analysts’ average estimate of 9 cents, according to Refinitiv IBES data.
It expects adjusted profit of 52 cents to 56 cents per share for fiscal 2023, compared with its previous forecast of 44 cents to 48 cents.
(Reporting by Ananya Mariam Rajesh in Bengaluru; Editing by Devika Syamnath)
