Under Armour has today 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.
Shares of the company fell 4.5% in premarket trading to $19.30 on Wall Street, after having risen 23% last year.
Corporate America has raised prices of everything from burgers to hoodies to offset the pandemic-led inflation across the supply chain from labour 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 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 December 31.
The company's net revenue rose to $1.53 billion in the quarter ended December 31, from $1.40 billion, a year earlier.
Analysts polled by Refinitiv were expecting $1.47 billion.
Athletic wear has become a major part of everyday fashion since the onset of the Covid-19 pandemic.
This has helped Under Armour and its rivals Lululemon Athletica and Nike book outsized gains in sales.
