Under Armour's revenue rose 3% year over year to $1.3 billion in the quarter ending on March 31. Its results were dampened by coronavirus-related lockdowns in China, which led sales in its Asia-Pacific region to fall by 14%.
Supply chain disruptions made it impossible for Under Armour to obtain the inventory it needed to satisfy the demand for its products among consumers. Higher shipping costs further dented the company's profitability. The company's gross margin, in turn, declined by 3.5 percentage points to 46.5%. At the same time, its selling, general, and administrative expenses rose by 16%.
All told, Under Armour generated an operating loss of $46 million and a net loss of $60 million. After adjusting for restructuring charges and other items, the company posted a loss per share of $0.01. Analysts had expected it to report adjusted earnings per share of $0.06.
Ongoing supply chain challenges will likely continue to weigh on Under Armour's results in the coming quarters. Management expects revenue to grow by only 5% to 7% in fiscal 2023, due in part to manufacturing capacity restraints.
The company also projects that its gross margin will fall by as much as 2 percentage points, due to higher freight costs and other inflationary pressures. Under Armour thus estimates that its operating income will decline to $375 million to $400 million, compared with $424 million in the prior-year period.