Under Armour Reports Mixed Fiscal Results Amidst Tariff Concerns
Under Armour, Inc. (NYSE: UAA) recently announced financial results that garnered attention, even as the company warned of potential profit impacts due to tariffs. The company reported adjusted earnings per share (EPS) of 4 cents, surpassing analyst estimates of 2 cents. Furthermore, revenue reached $1.33 billion, which also exceeded expectations of $1.31 billion. However, total revenue reflected a 5% decline year-over-year, leading to significant concern among investors.
Performance Insights Across Regions
The North American market saw an 8% revenue drop, totaling $792 million, while international sales grew by 2% to $551 million. This growth can be attributed to a remarkable 12% increase in sales from the EMEA region and a 15% rise in Latin America, although these gains were partially offset by a 14% decline in the Asia-Pacific region. Meanwhile, wholesale revenue slipped by 6% to $775 million, and direct-to-consumer (DTC) sales fell by 2% to $538 million.
Decline in eCommerce Performance
eCommerce, a critical component of Under Armour's strategy, experienced an 8% decline, now making up 28% of total direct-to-consumer sales. This change underscores the shifting landscape of retail where online sales are pivotal to growth, yet currently underperforming expectations.
Trends in Product Categories
Examining product performance reveals that apparel revenue decreased by 1% to $936 million, footwear saw a significant 16% decline to $264 million, and accessories dipped by 3% to $113 million. The overall gross margin fell by 250 basis points to 47.3%, primarily driven by increased tariffs and a less favorable product mix, creating further pressure on profitability.
Cost Management and Financial Outlook
Under Armour's selling, general and administrative expenses (SG&A) rose by 12% to $582 million, with adjusted SG&A increasing by 9% to $577 million. The company's operating income stood at $17 million, while the net loss amounted to $19 million, significantly impacting their financial stability.
Despite the challenges, Under Armour concluded the quarter with $396 million in cash reserves, alongside $200 million drawn from its $1.1 billion credit facility. Notably, the company repurchased $25 million in Class C shares, raising total buybacks to $115 million under its ongoing $500 million program.
Future Projections and Adjustments
Looking forward, Under Armour anticipates a decline in revenue for fiscal 2026 by approximately 4% to 5%, with notable decreases in North America and the Asia-Pacific regions. Conversely, EMEA may experience high-single-digit growth. The company has also lowered its fiscal 2026 earnings guidance, expecting a GAAP EPS loss of 17 to 15 cents, while the consensus estimate was for a loss of 7 cents.
In response to the changing market dynamics, Under Armour aims for a tighter SG&A strategy moving forward, projecting mid-single-digit declines through reduced discretionary spending, along with more focused marketing initiatives.
Leadership Changes and Strategic Direction
In addition to financial restructuring, Under Armour has announced the appointment of Reza Taleghani as the new Executive Vice President and Chief Financial Officer, effective from early 2026. President and CEO Kevin Plank expressed confidence in Taleghani's global perspective and strategic acumen, which align with the company's future ambitions.
As the company navigates these economic challenges, share prices reflected market sentiment with UAA trading lower by 2.28%. Analysts and investors alike maintain a watchful eye on the effectiveness of Under Armour's adaptation strategies in this turbulent financial environment.
Frequently Asked Questions
What financial results did Under Armour recently announce?
Under Armour reported adjusted EPS of 4 cents and revenue of $1.33 billion, exceeding Wall Street expectations despite a 5% revenue decline year-over-year.
How have tariffs impacted Under Armour's financial outlook?
The company indicated that rising tariffs have led to decreased gross margins and overall profitability, forecasting continued challenges into fiscal 2026.
What are Under Armour's revenue projections for fiscal 2026?
Under Armour expects revenue to decline by 4% to 5% in fiscal 2026, with specific decreases anticipated in North America and the Asia-Pacific region.
Who is the new CFO of Under Armour?
Reza Taleghani has been appointed as Executive Vice President and Chief Financial Officer, taking over in early 2026.
What strategies is Under Armour implementing to address current challenges?
The company plans to tighten its SG&A spending and focus on targeted marketing to navigate ongoing economic pressures.
