Under Armour Reports First Quarter Fiscal 2026 Results Amidst Strategic Transformation

Under Armour's revenue saw a decline of 4%, amounting to $1.1 billion compared to the same quarter the previous year. This decline was mirrored in currency-neutral terms. Notably, North American revenue decreased by 5% to $670 million, while international revenue fell 1% to $467 million. Within the international segment, the EMEA region showed resilience with a 10% increase, contrasting sharply with 10% and 15% declines in the Asia-Pacific and Latin America regions, respectively.

Direct-to-consumer revenue also faced challenges, dropping 3% to $463 million, with eCommerce sales declining 12%, representing 31% of the total direct-to-consumer business in the quarter.

Breaking down the revenue by product category, apparel revenue saw a slight decrease of 1% to $747 million, while footwear revenue suffered a more significant decline of 14%, totaling $266 million. On a positive note, accessories revenue rose by 8% to $100 million, demonstrating some pockets of growth amidst overall revenue declines.

Under Armour's gross margin improved by 70 basis points to 48.2%, attributed to favorable foreign exchange rates, pricing strategies, and product mix, although higher supply chain costs and an unfavorable channel mix partially offset this benefit.

The company's selling, general, and administrative (SG&A) expenses witnessed a substantial 37% reduction to $530 million. This reduction was influenced by the absence of significant legal reserve expenses seen in the prior year. Adjusted SG&A expenses were down 6% to $522 million, excluding transformation expenses.

Despite these measures, Under Armour reported an operating income of $3 million, while an adjusted operating income, excluding transformation expenses and restructuring charges, stood at $24 million. The company recorded a net loss of $3 million, but an adjusted net income of $9 million reflected some operational improvements.

Under Armour's inventory levels increased by 2% to $1.1 billion, and cash and cash equivalents rose significantly to $911 million, bolstered by the issuance of $400 million in senior notes during the quarter. The company plans to utilize these proceeds to manage existing debt effectively.

In line with its commitment to enhance financial and operational efficiencies, Under Armour's restructuring plan initiated in May 2024 is projected to cost between $140 million and $160 million. As of the end of Q1 FY 2026, the company recorded $71 million in restructuring and impairment charges, with $39 million in related transformation expenses.

Looking ahead, Under Armour's outlook for the second quarter of fiscal 2026 is cautious. The company anticipates a 6% to 7% decline in revenue, with expectations of low double-digit decreases in North America, high single-digit growth in EMEA, and a low-teens decline in the Asia-Pacific region.

Gross margins are projected to decline by 340 to 360 basis points primarily due to anticipated supply chain challenges and tariff impacts. SG&A expenses are expected to rise at a low double-digit percentage rate, driven by increased marketing investments.

Operating income for Q2 is forecasted to range from a $10 million loss to breakeven, with adjusted operating income anticipated between $30 million and $40 million. Diluted loss per share is expected to range from $0.07 to $0.08, while adjusted diluted earnings per share are projected between $0.01 and $0.02.

Under Armour's President and CEO, Kevin Plank, expressed optimism despite the challenges, stating, “We are pleased our quarterly results met or exceeded our expectations as we drive a bold transformation – sharpening Under Armour into a brand where sports credibility, innovation, and style meet operational discipline.” He emphasized the focus on strengthening brand positioning through premium products and operational excellence.

As Under Armour continues to navigate through a complex landscape, the company's latest financial results underline its commitment to transformation and operational efficiency. The outlook for the upcoming quarter suggests cautious optimism, balancing growth initiatives with the realities of a challenging market environment. Investors and stakeholders will be closely watching the implementation of the restructuring plan and its impacts on future performance.