Under Armour Q4 Earnings Call Highlights
Under Armour (NYSE:UA) executives said the athletic apparel company is entering fiscal 2027 with a sharper focus on premium products, disciplined inventory management and marketing efficiency after a fiscal 2026 marked by revenue declines, tariff pressure and a continued business reset.
On the company’s fourth-quarter earnings call, President and CEO Kevin Plank said Under Armour has spent the past two years making “more intentional choices about where and how we compete,” including walking away from certain unprofitable business, reducing complexity and implementing a category management model.
“Under Armour is becoming a more focused, disciplined, and intentional company, which is reflected in our execution,” Plank said.
Revenue Declines as North America Remains Under Pressure
Chief Financial Officer Reza Taleghani, who joined the company earlier this year, said fiscal 2026 revenue declined 4% to $5 billion. North America revenue fell 8%, EMEA rose 9%, and APAC declined 5%.
For the fourth quarter, revenue declined 1% to $1.2 billion. North America revenue fell 7%, primarily due to a decrease in wholesale and a slight decline in direct-to-consumer sales. EMEA revenue rose 7%, while APAC increased 13% and Latin America grew 22%.
By channel, wholesale revenue declined 3%, driven by lower full-price sales, partially offset by distributor growth. Direct-to-consumer revenue increased 5%, including 8% growth in owned and operated stores and flat e-commerce revenue. Licensing revenue rose 11%, driven by strength in international markets.
By product type, apparel revenue was flat, with growth in training, outdoor and sportswear offset by softness in running, team sports and golf. Footwear revenue was also flat, with strength in running and team sports offset by weakness in other categories. Accessories revenue increased 2%.
Tariffs and Promotions Weigh on Margins
Under Armour’s adjusted gross margin for fiscal 2026 declined 220 basis points to 45.7%, which Taleghani attributed primarily to higher U.S. tariffs and a more promotional second half, partially offset by favorable foreign exchange and product mix.
In the fourth quarter, gross margin fell 470 basis points to 42%. Excluding restructuring efforts, adjusted gross margin declined 360 basis points to 43.1%. Taleghani said the decline included 315 basis points of supply chain headwinds, including roughly 260 basis points from U.S. tariffs, along with 90 basis points of promotional pressure and 20 basis points from unfavorable regional mix. These were partially offset by 65 basis points of favorable foreign currency and channel mix.
Fourth-quarter SG expenses decreased 15% to $518 million, primarily due to lower marketing spend related to timing, lower incentive compensation and other cost reductions. Excluding $15 million in transformation costs, adjusted SG declined 14% to $503 million.
The company reported a fourth-quarter operating loss of $34 million. Excluding transformation expenses and restructuring charges, adjusted operating income was $3 million. The diluted loss per share was $0.10, while the adjusted diluted loss per share was $0.03.
Company Expands Transformation Plan
Taleghani said Under Armour has conducted a comprehensive business review and is initiating a targeted expansion of its transformation plan. Total anticipated costs are now expected to be approximately $305 million, with the plan substantially complete by Dec. 31.
The company ended the fiscal year with $915 million in inventory, down 3% from a year earlier. Taleghani said the reduction reflected “continued discipline” and deliberate fourth-quarter actions to further reduce inventory.
“Importantly, this is not just lower inventory, but better inventory with improved quality driven by tighter buys, a more focused assortment, and stronger alignment with demand,” Taleghani said.
Under Armour closed the year with $309 million in cash and $605 million in restricted investments set aside to cover principal and interest on senior notes due in June. The company also had $200 million in borrowings under its revolving credit facility.
Fiscal 2027 Outlook Calls for Slight Revenue Decline
For fiscal 2027, Under Armour expects revenue to be down slightly, including an approximately 1-point impact from the Curry Brand exit. Excluding that impact, Taleghani said revenue would be roughly flat. The company expects a low-single-digit decline in North America, partially offset by low-single-digit growth in EMEA and APAC.
Under Armour forecast gross margin expansion of approximately 220 to 270 basis points versus fiscal 2026. That outlook includes a potential refund related to IEEPA tariffs expensed through the fiscal 2026 income statement, which is expected to contribute about 150 basis points, with most of the benefit recognized in the first quarter.
Excluding anticipated transformation expenses and restructuring charges, the company expects fiscal 2027 adjusted operating income of $140 million to $160 million. The outlook includes approximately $70 million of benefit from the expected tariff refund, which Taleghani said absorbs about $35 million of headwinds related to the Middle East conflict and $30 million in strategic marketing investments.
Adjusted diluted earnings per share are expected to range from $0.08 to $0.12. For the first quarter, revenue is expected to decline 2% to 3%, driven by a high-single-digit decline in North America, partially offset by a low-teens percentage increase in EMEA. APAC revenue is expected to be roughly flat.
Product and Marketing Strategy Centers on Premiumization
Plank said Under Armour is prioritizing revenue quality over volume and is focused on fewer, more purposeful products. He pointed to a 25% reduction in SKUs over the past two years and said further reductions are expected under Kara, the company’s new chief merchandising officer.
The company is also emphasizing innovation in core apparel, including the UA Bouncy Cotton Tee, a $65 product launching in APAC and through Dick’s Sporting Goods and Under Armour’s direct-to-consumer channels in the U.S. Plank described the product as an example of the company’s broader premiumization effort.
“This is what we mean by premiumization, delivering greater performance, versatility, and value through fewer, more purposeful products,” Plank said.
Plank also highlighted Sharon Lokedi’s second consecutive Boston Marathon victory in Under Armour’s Velociti Elite 3, calling it a proof point for the brand’s performance footwear ambitions. He said growing the company’s $1 billion-plus footwear business remains central to its midterm strategy, even as apparel remains a core strength.
Marketing will also receive additional focus. Plank said Under Armour plans to spend an additional $30 million on Marketing in fiscal 2027, aimed at supporting product launches and better activating existing assets, including its NFL and collegiate partnerships.
“This isn’t just us throwing money at something,” Plank said. “We believe that this will actually help us drive more efficiency.”
Executives said the company’s goal is to stabilize in fiscal 2027 and position the business for more sustainable growth beyond that period. Plank said the company is seeing early signs of cleaner inventory, improved sell-through and stronger engagement with key wholesale partners, though he acknowledged that Under Armour is “not improving our bottom line fast enough” and must continue tightening execution.
About Under Armour (NYSE:UA)
Under Armour, Inc is a global designer, marketer and distributor of branded performance apparel, footwear and accessories. The company's product portfolio spans a wide range of athletic categories, including running, training, basketball, outdoor and golf, with specialized lines for men, women and youth. Under Armour emphasizes innovative fabrics and technologies designed to enhance athletic performance, such as moisture-wicking HeatGear®, cold-weather ColdGear® and UV-protective UA Tech™ materials.
The company was founded in 1996 by former University of Maryland football captain Kevin Plank, who sought to create a superior moisture-wicking T-shirt to keep athletes cool and dry.
This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected].
Where Should You Invest $1,000 Right Now?
Before you make your next trade, you'll want to hear this.
MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis.
Our team has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and none of the big name stocks were on the list.
They believe these five stocks are the five best companies for investors to buy now...
Source MarketBeat
