Under Armor shares rise 25% as company raises profit forecast due to cost-cutting strategies

Under Armor shares rose 25% on Thursday after the sporting goods giant raised its annual profit forecast, citing lower input costs and effective cost-saving measures such as reduced discounts in its stores and on-site his web.

The strong performance followed several quarters of disappointing results and prompted company founder Kevin Plank to return as CEO.

Plank’s plans to realign the company include reducing the number of employees and investment levels of selected products.

Under Armor and Nike are working to regain market share

The company’s efforts to refocus its business are in line with a broader trend in the athletics market, where both Under Armor and Nike are working to regain market share from emerging brands. crop such as Roger Federer with the support of On and Deckers Outdoor’s Hoka.

Under Plank’s leadership, Under Armor is focused on selling apparel and footwear at full price, correcting previous mistakes associated with deep discounting.

In the second quarter, full-price sales accounted for about 50 percent of total e-commerce sales. This is a significant increase compared to just 30 percent last year.

This move, along with lower discounts, resulted in a 200 basis point improvement in the company’s gross margin to 49.8 percent.

“Success in the athletic market requires more than just the right pricing strategy.

“Creating attractive products for which consumers are willing to pay full price is essential,” said Danni Hewson, head of financial analysis at AJ Bell.

Under Armor now expects adjusted annual earnings per share between 24 cents and 27 cents, up from its previous forecast of 19 cents to 21 cents.

The company reported a profit of 30 cents per share for the quarter, beating analysts’ expectations of 20 cents.

Despite a 10.7 percent decline in net sales to $1.4 billion in the second quarter, Under Armor beat analysts’ forecasts, which had predicted a decline of 11.6 percent.

Analysts had expected revenue to fall to $1.39 billion, according to LSEG data reported by Reuters.

Simeon Siegel, an analyst at BMO Capital Markets, noted: “We have long believed that Under Armor should focus on improving its health rather than growth at any cost.”

As the company continues to implement its turnaround plan, investors will be watching closely to see if Under Armor can regain its competitive advantages in a market that increasingly full.