(Adds profit beat in paragraphs 1 and 7, analyst comment in paragraph 4, details on results in paragraphs 3 and 9, outlook in paragraph 10)
Aug 8 (Reuters) - Under Armour posted a surprise first-quarter profit and beat revenue estimates on Tuesday, as cost pressures eased while discounts upheld demand for the sportswear maker's clothes and footwear.
Under Armour, like many other clothing brands, has been offering steep discounts in a bid to clear its bloated inventories and attract budget-conscious customers that have otherwise cut back on non-essential purchases to cope with still high inflation.
That hit gross margins which fell 60 basis points to 46.1% in the quarter compared to a year earlier. However, the company's overall expenses declined by 1% to $587 million as some costs, such as those related to freight, eased from their peaks.
"Under Armour's making progress," said BMO Capital Markets analyst Simeon Siegel, adding that for better or worse, promotions would still exist across retail.
Like rivals Nike and Adidas, Under Armour has seen demand decline in North America, its largest market, though this has been partly offset by a strong rebound in China.
Under Armour's Asia-Pacific sales rose 14.5% as demand bounced back in the region following the easing of pandemic-related restrictions, while its North American revenue fell 9.1%.
It reported a profit of 2 cents per share in the first quarter to June 30. Analysts on an average had expected a loss of 2 cents per share, according to Refinitiv data.
Quarterly revenue fell to $1.32 billion from $1.35 billion a year ago, slightly ahead of analysts' estimate of $1.30 billion.
The apparel retailer's inventory was up 38% year-over-year at $1.3 billion. It was also higher than the $1.2 billion at the end of March.
The company reiterated its revenue and profit forecast for the fiscal year 2024.
Shares of the Baltimore, Maryland-based firm rose marginally in premarket trade. (Reporting by Juveria Tabassum and Granth Vanaik in Bengaluru; Editing by Milla Nissi)
