Rising raw material costs and efforts to bolster demand hurt Under Armour’s margins, prompting the sportswear company to downgrade its profit estimates for the year.
Garment companies in recent months have sounded the alarm over rising costs due to rising prices of raw materials, from cotton to resin, coronavirus outbreaks and the fallout from the war in Ukraine.
Under Armor said it expects full-year 2023 gross margins to fall as much as 425 basis points from 200 basis points previously, also hit by a stronger dollar.
The company’s adjusted earnings are expected to be in the range of $0.47-0.53 per share, compared to the previous estimate of $0.63-0.68.
The lowered estimates follow a similar move by German rival Adidas.
However, the company’s stock rose 1.6% in premarket trading as easing supply chain woes helped the company beat estimates for third-quarter revenue.
Source: Capital
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