By Neil J Kanatt
(Reuters) – Under Armour on Tuesday posted a smaller-than-expected drop in fourth-quarter revenue, helped by the sportswear maker’s turnaround efforts.
The Maryland-based retailer has been attempting to reset its business and reverse last year’s sales slump by focusing on full-price sales of its apparel and footwear and lowering 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 company’s gross margin for the quarter jumped 170 basis points to 46.7%, driven by supply chain benefits, lower product and freight costs and reduced promotions.
Shares of the company were up 2.4% in trading before the bell.
The company, however, refrained from providing an annual forecast, citing uncertainty surrounding trade policies and a turbulent macroeconomic environment.
Despite its turnaround efforts, Under Armour has been struggling with weak demand in North America, its biggest market, as well as internationally.
The company expects current-quarter revenue to decline 4% to 5%, hurt by pressure in its North American segment, compared with analysts’ expectations of a 1.9% fall.
North American revenue slumped 11% in the reported quarter.
A bulk of Under Armour’s products are manufactured in Vietnam, which currently faces a 46% tariff on exports to the U.S. if a reduction cannot be negotiated before a moratorium expires in July.
The company’s quarterly revenue fell 11% to $1.18 billion from a year ago, compared with analysts’ average estimate of a 12.4% drop to $1.17 billion, according to data compiled by LSEG.
Under Armour posted a loss per share of 8 cents on an adjusted basis, in line with analysts’ estimates.
(Reporting by Neil J Kanatt and Savyata Mishra in Bengaluru; Editing by Shinjini Ganguli)
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