“We're comfortable doing that.” At the same time, Bergman noted that the company does not “not have a lot of aged inventory.”Įxecutives expect Under Armour’s own inventory levels to remain at 50% above last year through the current period, the last quarter in the company’s fiscal year. “So we're in a position to be able to do that,” Bergman said. “So as a product category, it's been more promotional activity there, which definitely challenges the revenue growth a little bit.”Īgainst that backdrop, Bergman said the company also took a sizable amount of inventory it deemed seasonless to pack and hold for next year, rather than liquidate or discount too heavily. “I think across the industry, apparel was impacted with higher inventory,” the executive said. The drop was larger than Under Armour expected, and CFO Dave Bergman attributed it to unplanned markdowns and more promotions in the brand’s direct-to-consumer business - revenue for which fell 1% YoY - as the company tried to “manage through inventory.” Revenue companywide rose 3% to $1.6 billion in the quarter.īergman signaled that there was more discounting ahead as the sector continues to work through slow-moving piles of inventory. But that offset only a small fraction of the 650 basis point margin decline. Lower freight costs - driven by an improving ocean landscape and reduced air freight - made a positive impact on Under Armour’s gross margin of 40 basis points. More efficiency and lower costs in Under Armour’s supply chain was a bright spot in a quarter otherwise challenged by slowing demand and high inventory levels across the sector, which executives described as “bloated” and “stagnant” on its earnings call.
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