Under Armour raised its annual profit and margin forecasts on Thursday, betting that easing input and freight costs would help offset weak demand in North America.
At a time when demand for its clothing and footwear has slowed despite steep discounts to consumers holding back on spending owing to high inflation, the company is relying on decreased production costs to boost earnings.
In its largest market, North America, lower expenditure resulted in a fall in sales for a third consecutive quarter, and the company’s third-quarter sales fell short of market forecasts.
It has also suffered from lower orders coming in from US distributors like Dick’s Sporting Goods and Foot Locker.
During the quarter, DTC sales increased 4 per cent due to deeper promotions that attracted more customers to this channel, while wholesale revenue declined 13 per cent.
Over the past few quarters, the company has pushed to eliminate excess inventory as the industry battled with a long-standing buildup of merchandise. More than economists had anticipated, inventories dropped 9 per cent to US $ 1.1 billion in the third quarter.
