(Reuters) -Under Armour ( UAA ) posted a surprise first-quarter profit on Thursday, benefiting from its efforts to reduce inventory amid a challenging wholesale business and softer demand for its athletic wear in North America.

Inventory dropped 15% to $1.1 billion and the company raised its annual profit forecast, sending its shares up nearly 8% before the bell.

Under Armour ( UAA ) is attempting to reset its business by reducing the pace of promotions, cleaning up its inventory, limiting online discounts and focusing more on profitable items such as men's apparel.

Despite its efforts, quarterly revenue from its biggest North America market declined 14% as persistent inflation stretched customer budget, while revenue from international business fell 2%.

Softer demand, meanwhile, has led wholesale retailers to reduced orders, resulting in an 8% fall in Under Armour's ( UAA ) wholesale revenue.

Its first-quarter revenue dropped 10% to $1.18 billion smaller than a nearly 13% decline analysts had anticipated.

On an adjusted basis, it earned 1 cent per share compared with its expectation of an 8 cents to 10 cents loss.

Under Armour ( UAA ) expects fiscal 2025 adjusted earnings per share between 19 cents and 22 cents, slightly above its prior expected range of 18 cents to 21 cents.

"Under Armour ( UAA ) needs more product newness, more full price stores, a better presentation at wholesale and more effective marketing to drive hype around the brand," Telsey Advisory Group analyst Dana Telsey said in a client note earlier this week.

(Reporting by Savyata Mishra in Bengaluru; Editing by Arun Koyyur)