Under Armour (NYSE:UAA) reported holiday quarter earnings Wednesday that beat Wall Street’s expectations, but the retailer reported Wednesday it is contending with a growing inventory glut that heavy promotions and discounting failed to alleviate.
Despite the inventory challenges, the athletic apparel company raised its earnings outlook for the fiscal year. It now expects to see per share earnings 52 cents to 56 cents, compared to the previously expected range of 44 cents to 48 cents.
Third-quarter earnings per share proved to be 16 cents adjusted vs. the expected nine cents, on revenues of $1.58 billion vs. $1.55 billion expected
The company’s reported net income for the three-month period that ended Dec. 31 was $121.62 million, compared with $109.66 million a year earlier. Sales rose to $1.58 billion, compared to $1.53 billion a year earlier.
Like other retailers, the athletic apparel company has been grappling with an inventory glut brought on by supply chain woes and shifting trends in consumer demand. During its fiscal third quarter, Under Armour’s inventory was up 50% year-over-year. Despite heavy promotions and discounting during its crucial holiday quarter, inventory was up slightly from its previous quarter.
Promotions and discounts continued to cut into Under Armour’s margins, which declined 6.5% compared to the prior year period.
In December, the company announced former Marriott executive Stephanie Linnartz would be taking over as CEO and starting in the role on Feb. 27. Colin Browne has been serving as interim CEO since June after the retailer’s previous top executive, Patrik Frisk, unexpectedly resigned in May.
UAA shares lost 39 cents, or 3.2%, to $11.83.
