According to CFO David Bergman, Under Armour inventory reached US $ 1.2 billion for the three months ended 31st March, a 44 per cent rise over the prior year.
Gross margin decreased by a little over three percentage points as the company used discounts to get rid of surplus inventory. Discount losses outweighed the margin-boosting effects of declining freight rates.
According to Bergman, over half of the $366 million in extra inventory compared to last year’s levels are pack-and-hold commodities that can meet future demand.
Under Armour President and CEO Stephanie Linnartz described a “sector-wide inventory malaise” that has driven discounting. That said, the company has made some progress. Its 44% inventory growth is six percentage points below last quarter’s 50 per cent growth. Growth in the most recent period was also better than what management projected, Bergman said.
Bergman described the discounting as a “proactive choice to reduce inventory levels,” and said that “the composition of our inventory is generally current and healthy.”
As the new fiscal year gets off, Under Armour anticipates a little gain in gross margin as the advantages of lower freight costs exceed the challenges of channel mix and working through inventory. By the time the new fiscal year, which started in April, comes to an end, the corporation will have cleaned up its inventory, according to Bergman.
