To The Moon

Under Armour Class A/C Shares  Both Slid 7% in Morning Trading. Under Armour Warned of Margin Hit Due to Higher Freight Expenses.

Under Armour Inc on Friday warned that its profit margin would be under pressure in the current quarter, as the sportswear maker incurs high transportation costs due to COVID-19-led disruptions to its supply chain.

Corporate America has raised prices of everything from burgers to hoodies to offset the pandemic-led inflation across the supply chain from labor to raw materials, but many companies could not fully offset the impact.

Under Armour has been forced to use pricier air freight to bring in its products from its manufacturing hubs in Asia to ensure its shelves are sufficiently stocked.

The company said on Friday its gross margin would be down 200 basis points in the quarter ending March 31, compared with last year's adjusted gross margin, hurt by a 240 basis points hit from higher freight expenses.

Under Armour added that supply chain constraints forced it to reduce its orders for spring-summer of 2022, as many factories that make its clothing are only just recovering from COVID-19 outbreaks and employee shortages.

However, strong demand for its athletic wear during the holiday season and higher prices of its hoodies and leggings helped it beat revenue estimates for the quarter ended Dec. 31.

The company's net revenue rose to $1.53 billion in the quarter ended Dec. 31, from $1.40 billion, a year earlier. Analysts polled by Refinitiv were expecting $1.47 billion.