Under Armour Reports Third Quarter 2025 Results; Raises Fiscal 2025 Outlook
Under Armour, Inc. (NYSE: UAA, UA) has released its unaudited financial results for the third quarter of fiscal year 2025, which concluded on December 31, 2024. The company has reported mixed results, with a notable decline in revenues, but also a positive shift in its operational outlook for the remainder of the fiscal year.
1. Key Financial Highlights
- Revenue Performance: Under Armour's revenue for the third quarter was $1.4 billion, reflecting a 6% decrease compared to the same period last year. This decline was uniform across currency-neutral measures as well.
- Regional Breakdown: North American revenue fell by 8% to $844 million, while international revenue decreased 1% to $558 million. Noteworthy regional performances included a 5% revenue increase in EMEA, a 5% decline in Asia-Pacific, and a significant 16% drop in Latin America.
- Product Category Insights: Apparel sales decreased by 5% to $966 million, while footwear sales fell by 9% to $301 million. Conversely, accessories revenue rose by 6% to $110 million.
- Margin Improvement: The company's gross margin improved by 240 basis points to 47.5%, driven by less discounting in direct-to-consumer channels and reductions in product and freight costs.
- Net Income: Under Armour reported a net income of $1 million and an adjusted net income of $35 million for the quarter. The diluted earnings per share remained flat at $0.00, while adjusted diluted earnings per share were reported at $0.08.
2. Strategic Initiatives and Future Outlook
Under Armour's President and CEO, Kevin Plank, expressed optimism about the company's performance, stating, “We are pleased our quarterly results exceeded expectations.” He attributed this to a sharpened focus on brand strengthening, a revamped product strategy, and a disciplined marketplace approach.
Plank also announced the launch of an extensive multi-year marketing initiative aimed at storytelling that will highlight the company’s innovative products and partnerships with athletes and creators. This initiative is expected to enhance brand visibility and strengthen connections with consumers.
Updated Fiscal 2025 Outlook
In light of the third-quarter results, Under Armour raised its fiscal 2025 outlook:
- Revenue is now expected to decline by approximately 10%, an improvement over prior expectations of a low double-digit decline. Specific expectations include a 12-13% drop in North America and a mid-single-digit decrease in international sales.
- The company anticipates a gross margin improvement of approximately 160 basis points, up from earlier estimates of 125-150 basis points.
- Selling, general, and administrative expenses are expected to increase at a high single-digit rate, primarily due to litigation settlement expenses.
- Adjusted operating income is projected to range between $185 million to $195 million, a noticeable increase from previous estimates.
Share Buyback Program
Under Armour has actively engaged in share repurchases, buying back $25 million of its Class C common stock during the third quarter, equating to 2.8 million shares. By the end of the quarter, the company had repurchased a total of 8.7 million shares for $65 million as part of a broader three-year, $500 million buyback program initiated in May 2024.
3. Restructuring Efforts
As part of its ongoing restructuring plan aimed at enhancing financial and operational efficiency, Under Armour has recognized $42 million in restructuring and impairment charges, with plans to continue realizing the expected benefits from this initiative throughout fiscal years 2025 and 2026.
Conclusion
Under Armour's third-quarter results present a mixed bag of challenges and opportunities. While revenues have declined, the company is actively transforming its marketing strategy and operational efficiencies. The optimistic adjustments to the fiscal 2025 outlook indicate a potential recovery path as Under Armour seeks to strengthen its brand and enhance consumer engagement in the competitive athletic apparel market.
4. Upcoming Events
Under Armour will host a conference call to discuss these results and future strategies today at 8:30 a.m. Eastern Time, which will be available for live streaming and later replay on their investor relations website.
For more detailed financial information, investors and stakeholders can refer to the full press release and supplementary materials available on Under Armour's official site.
