Under Armour Inc raised its annual profit forecast on Wednesday after quarterly results surpassed expectations thanks to resilient consumer spending and deep discounts that attracted holiday shoppers.

Increased promotions offered during the all-important holiday season encouraged customers to look past recession worries and stock up on its athletic shoes and hoodies. Steep discounts had also helped rival Nike deliver a strong quarter in December.

Still, Under Armour's margins came under pressure from its attempt to clear excess inventory, a strong U.S. dollar and higher freight and manufacturing charges. It now expects gross margin for the full year to decline at the higher end of its prior forecast of 375 to 425 basis points.

 ​Elevated sector-wide inventories will result in ongoing promotions lasting longer than previously expected, Chief Finance Officer David Bergman said in a post-earnings call, adding that the macroeconomic backdrop is expected to stay uneven in calendar 2023.

Shares of the company were down about 3% amid broader market declines.

In December, Under Armour named veteran hotelier Stephanie Linnartz as its top boss, betting on her experience in branding strategy and e-commerce to help revive sales.
E-commerce sales rose 7% in the reported quarter.

BMO Capital Markets analyst Simeon Siegel said it would be too early to say Linnartz was a key reason behind the profit-forecast raise, but "the company clearly sounds excited about their future prospects and direction."

The Baltimore, Maryland-based apparel firm posted third-quarter adjusted profit of 16 cents, beating analysts' average estimate of 9 cents, according to Refinitiv IBES data.

It expects adjusted profit of 52 cents to 56 cents per share for fiscal 2023, compared with its previous forecast of 44 cents to 48 cents.