Under Armour’s Earnings Call: Transition and Optimism

Under Armour Inc – Class C ((UA)) has held its Q4 earnings call. Read on for the main highlights of the call.

Under Armour’s recent earnings call reflects a company in transition, with a focus on strategic restructuring and product innovation aimed at regaining its market position. The sentiment expressed during the call was cautiously optimistic, highlighting significant achievements in gross margin improvements and strong performance in the EMEA region, while acknowledging challenges such as revenue declines across various regions.

Exceeded Fiscal ’25 Outlook

Despite a decline in revenue, Under Armour exceeded its fiscal ’25 outlook, showcasing foundational traction as the brand undergoes repositioning. This achievement underscores the company’s efforts to stabilize and potentially grow its market presence in the coming years.

Gross Margin Improvement

The company reported a notable improvement in its gross margin, which increased by 170 basis points year-over-year to 46.7%. This was primarily driven by supply chain benefits and a reduction in discounting, reflecting Under Armour’s strategic focus on operational efficiency.

Successful Restructuring Efforts

Under Armour recognized $89 million in restructuring charges and related transformation expenses, with expectations for total charges to remain within $140 million to $160 million. These efforts are part of the company’s broader strategy to streamline operations and enhance its competitive edge.

Strong Performance in EMEA

The EMEA region stood out as the top-performing area for fiscal ’25, remaining flat on a currency-neutral basis. This performance highlights strong partnerships and a focused approach to product categories, contributing positively to the company’s overall results.

Product Innovation and Brand Strategy

Under Armour is focusing on product innovation and brand strategy by introducing new collections such as the SlipSpeed ECHO and the upcoming Halo collection. The emphasis is on fewer, high-quality products to elevate the brand’s market position and appeal to consumers.

Revenue Decline

The fourth quarter saw an 11% decline in revenue, dropping to $1.2 billion. This decline was observed across key regions, including North America and APAC, posing a challenge to the company’s growth ambitions.

North American Market Challenges

In North America, revenue declined by 11%, primarily due to a decrease in the direct-to-consumer (DTC) business and lower e-commerce sales. This highlights the need for strategic adjustments to address market challenges and consumer preferences.

Footwear Revenue Decline

Footwear revenue experienced a 17% decline, partly attributed to ongoing proactive portfolio management efforts. This indicates a strategic shift in product offerings and market focus.

APAC Revenue Decrease

The APAC region faced a 27% decline in revenue, or 26% when adjusted for currency fluctuations, primarily due to a competitive environment. This underscores the challenges faced in maintaining market share in this dynamic region.

Forward-Looking Guidance

Looking ahead, Under Armour plans to navigate tariff challenges and expects a 4% to 5% decline in first-quarter fiscal 2026 revenue, with a gross margin expansion of 40 to 60 basis points and adjusted operating income of $20 million to $30 million. This guidance reflects the company’s cautious approach to managing future market conditions and operational efficiencies.

In summary, Under Armour’s earnings call reflects a cautiously optimistic outlook as the company navigates its transition phase. While there are notable achievements in gross margin improvements and EMEA performance, challenges such as revenue declines in key regions remain. The company’s focus on restructuring, product innovation, and strategic market positioning will be crucial in its journey towards regaining market strength.