Under Armour Inc managed to reach more customers than expected last quarter, even with most of its stores closed — but the road ahead is looking bumpy.
The athletic-goods maker’s second-half revenue is likely to fall 20% to 25%, with its recently improved gross margin coming under new pressure,
executives warned on a call with analysts. The volatile stock soared in premarket trading after second-quarter revenue beat estimates, but it gave up the gains after the open, falling as much as 7.3% to $10.61 in New York.
The company expects pressure on its gross margin in the second half of the year, and might not have enough inventory if sales recover faster than expected, executives said.
That would be a comedown from a second quarter in which Under Armour’s gross margin rose to 49.3% from 46.5% a year earlier. The company cited fewer off-price sales and more direct-to-consumer transactions as homebound shoppers ordered online.