UAA - Under Armour trims full year forecast amid inflation inventory headwinds

Under Armour topped earnings estimates for its fiscal 2023 first quarter, though its full-year forecasts were pulled in significantly.

The Baltimore-based apparel company notched a slight beat on the top line and in-line EPS figures for the reported quarter. The company was able to meet expectations for profits despite a 280 basis point decline in margins from fiscal 2022 amid supply chain impacts, inventory issues prompting promotions, as well as inflationary and foreign exchange issues. Inventory grew 8% in the quarter, adding to the already-inflated metric for the company.

Many of these issues are expected to continue into the coming quarters, causing management to cut guidance on many metrics for the full 2023 fiscal year.

Gross margin is expected to fall 375 to 425 basis points from the prior year, a greater decline than the 150 to 200 basis point decline previously anticipated. The company blamed the need for “higher promotional activities” to clear inventory as well as foreign exchange impacts for the change. Diluted earnings per share is expected to be $0.61 to $0.67 compared to the previous expectation of $0.79 to $0.84.

Despite the cut to bottom line estimates, management clarified that the full-year revenue outlook remains unchanged and that demand remains robust.

"We delivered our quarter, are holding our full-year revenue outlook, and remain bullish on our brand strength while we navigate the current environment," Under Armour Interim President and CEO Colin Browne said. "Our relentless approach of delivering groundbreaking innovation will continue to manifest through 2022 and beyond as we work to unleash the full potential of the Under Armour ( NYSE: UAA ) brand."

Under Armour ( UAA ) shares rose about 2% in premarket trading on Wednesday.

Read more on inventory issues hitting the retail sector broadly .

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