BALTIMORE, United States— Under Armor Inc reported a smaller-than-expected quarterly loss on Friday, as it sold more merchandise online with customers who stayed at home during the corona virus lockouts, pushing its shares up about 10 percent in premarket trading.
Even when the stores were temporarily closed, activewear companies like Under Armor have benefited from the demand for home training apparel and equipment as people change their training schedule due to the pandemic.
Under Armor said it showed a “significant” increase in e-commerce sales around the world.
Gross margin increased 280 basis points to 49.3 percent in the reported quarter, as it sold fewer goods on wholesale and off-price channels.
The lower margin wholesale business, which sells goods to department stores and other off-price channels, experienced a 58 percent drop in sales when the stores closed. Sales for its direct-to-consumer activities decreased by 13 percent.
“Although we performed better than expected, we still experienced a significant drop in sales in all markets,” said Chief Executive Officer Patrik Frisk.
Net sales decreased approximately 41 percent to $ 707.6 million in the second quarter ending June 30, but beat estimates of $ 558.5 million, according to Refinitiv’s IBES data.
A majority of the company’s stores have reopened, and traffic trends remain significantly lower, said Under Armor, adding that more purchases were made during consumer visits. The company expects traffic trends to remain lower for the rest of the year.
Under Armor reported a larger net loss of $ 182.9 million compared to a year earlier, reflecting a restructuring and impairment of $ 39 million.
On an adjusted basis, the company lost 31 cents per share, compared to analyst estimates of 41 cents.
Rival Nike Inc also posted an increase in online sales, but made a rare loss due to canceled orders and inventory costs.
By Nivedita Balu; editor: Shounak Dasgupta.