Under Armour has today posted a smaller-than-expected drop in fourth-quarter revenue, helped by the sportswear maker’s turnaround efforts.
The retailer has been attempting to reverse revenue declines it suffered in the last two years, by focusing on increased full-price sales of its apparel and footwear, while cutting promotions, inventory and workforce.
“Under Armour continues along in its revenue reset, posting better gross margins, and effectively generating healthier but fewer sales,” said BMO Capital Markets analyst Simeon Siegel.
The retailer has cut discounts and inventory in its off-price channels as well as streamlined its product lines with fresh and trendier merchandise.
These efforts helped it to lure in more shoppers and boosted its gross margin, which grew 170 basis points to 46.7% in the reported quarter.
But sales in its biggest market, North America market, have remained muted due to recessionary fears fueled by US President Donald Trump’s tariffs.
The company also refrained from providing an annual forecast, citing economic uncertainty.
“It’s still too early to expect significant improvements from product innovation and brand marketing,” said Sky Canaves, analyst at EMarketer, adding that a better indication of progress would emerge in the second half of the year.
The company expects first-quarter revenue to decline 4% to 5%, compared with analysts’ expectations of a 1.9% fall, according to data compiled by LSEG.
A bulk of Under Armour’s products are manufactured in Vietnam, which currently faces a 46% tariff on exports to the US if a reduction cannot be negotiated before a moratorium expires in July.
The company’s revenue for the fourth quarter ended March 31 fell 11% to $1.18 billion, compared with analysts’ estimate of a 12.4% drop to $1.17 billion.
Under Armour logged a loss of eight cents per share on an adjusted basis, in line with analysts’ estimates.
