Under Armour Joins Parade of Retailers Citing Profit Crunch From Discounts

By Liz Moyer

Investing.com -- It’s back to school shopping season, and parents aren’t the only ones juggling priorities.

Under Armour (NYSE:UAA) is the latest retailer to cut its outlook, this time as promotional sales cut into margins. The footwear and casual clothing seller met expectations for the first quarter but said fiscal 2023 results would be lower than previously forecast. Shares rose 2%.

It now expects adjusted earnings per share in the fiscal year in a range between 47 cents and 53 cents, versus 63 cents to 68 cents. Revenue is still seen growing 5% to 7%.

It’s not the only retailer to struggle with margins. Walmart warned about profit after saying consumers were holding off on buying higher-margin items such as clothing because inflation had forced them to spend more of their money on necessities such as food.

Target Corporation (NYSE:TGT) and Walmart Inc (NYSE:WMT) are slashing prices to clear out inventory, which will cut into profit.

The National Retail Federation estimates back to school spending will match 2021’s record, or $37 billion, with families of children from kindergarten through high school planning to spend an average of $864 on school items. That’s about $15 more than last year.

As inflation increases, about 38% of people surveyed by NRF said they were cutting back on spending in other areas so they could cover the cost of items for the coming school year.

Back to college spending is expected to be $74 billion, up from 2021’s record $71 billion.

Prices have increased roughly 15% for back to school stuff, according to the Associated Press, which cited analytics firm DataWeave. Backpack prices are up an average of 12%, to around $70.