Under Armour reported a smaller-than-expected decline in fourth-quarter revenue on Tuesday, as the sportswear brand’s turnaround efforts begin to take hold.
The company’s revenue dropped 11% year over year to $1.18 billion, better than the 12.4% decline analysts had forecast, according to LSEG data.
Shares rose 2.4% in premarket trading following the results.
The Maryland-based retailer has spent the past year resetting its business, focusing on full-price sales and reducing promotional activity, excess inventory, and headcount in a bid to stabilise its performance.
“Under Armour continues along in its revenue reset, posting better gross margins, and effectively generating healthier but fewer sales,” said Simeon Siegel, analyst at BMO Capital Markets.
Gross margin improved by 170 basis points to 46.7%, driven by lower freight and product costs, supply chain efficiencies, and scaled-back discounting.
Still, challenges remain, particularly in Under Armour’s core North American market, where revenue fell 11% in the quarter.
The company also continues to face weak international demand and broader macroeconomic pressures.
Under Armour declined to issue a full-year outlook, citing uncertainty around trade policies and a volatile economic environment. For the current quarter, it expects revenue to decline between 4% and 5%, a deeper drop than analysts’ estimates of a 1.9% fall.
The company is also contending with external risks, including looming trade tensions.
A significant portion of its products are manufactured in Vietnam, which could soon face a 46% tariff on US exports if a reduction isn’t negotiated before a moratorium expires in July.
Despite the revenue drop, Under Armour reported an adjusted per-share loss of 8 cents, in line with analyst expectations.
Click here to sign up to Retail Gazette‘s free daily email newsletter
