Under Armour has reported a decline in first-quarter net revenue, but still slightly beat estimates, as a dip in expenses and e-commerce demand helped mitigate the broader impact of a recent slowdown in consumer spending.
Although this strategy and pressure on input costs have reduced margins, the company has been offering greater discounts in an effort to entice inflation-hit customers wary of forking over cash for its form-fitting athletic shirts and other workout gear.
In the three months ending in June, net revenue decreased by 2 per cent to $1.32 billion, just barely above average projections from Bloomberg of $1.3B. Under Armour’s e-commerce operation, which helped grow direct-to-consumer sales by 4 per cent to $544M, helped offset a decline in wholesale revenue.
The impact of a 9 per cent decline in sales in its crucial North American division was significantly eased by a 12 per cent increase in overseas revenue, driven particularly by good returns in the Asia-Pacific and Latin American areas.
As a result of increased promotional efforts and foreign exchange headwinds, which were somewhat offset by lower freight costs, the gross margin decreased by 60 basis points to 46.1 per cent.
According to the most recent quarterly results, Under Armour reaffirmed its outlook for its 2024 fiscal year, noting that its direct-to-consumer and international businesses are continuing to perform “aside from a challenging consumer retail environment in North America.” President and Chief Executive Officer Stephanie Linnartz.
