Under Armour Faces a Challenging Demand Environment Ahead
Under Armour Inc. sees softer demand ahead, mostly in North America and Asia-Pacific.
That softness saw the sports firm revise its outlook for fiscal 2027. It now expects revenue to decline at a mid-single digit percentage rate. The prior forecast called for just a slight decline. The diluted loss per share is now expected to range from 1 cent to 5 cents. That compares with the prior expectation of breakeven to a loss per share of 4 cents. On an adjusted basis, excluding anticipated transformation expenses and restructuring charges, adjusted diluted earnings per share (EPS) remained in the prior guidance range of 8 cents to 12 cents.
“The company remains focused on balancing near-term revenue opportunities with actions that strengthen long-term brand health, including disciplined marketplace management and protection of full-price selling,” Under Armour said.
“As we navigate a challenging consumer demand environment, we continue to make progress in building a more focused Under Armour, despite updating our full-year revenue outlook,” Under Armour president and chief executive officer Kevin Plank said in a statement. “By simplifying the business, we are operating with greater discipline and better positioned to protect profitability, while still investing in a sharper product portfolio through clearer storytelling with the goal of driving a more premium Under Armour that will consistently earn demand at full price.”
The Baltimore, Md.-based sportswear company posted net income of $545,000, or 0 cents a diluted share, against a net loss of $2.6 million, or 1 cent, in the same year-ago quarter. Net revenues fell 3.2 percent to $1.1 billion from $1.34 billion a year ago. The company said that wholesale revenue slipped 1.6 percent to $638.5 million, but that direct-to-consumer revenue was down 5.8 percent to $436.5 million.
On an adjusted basis, excluding one-time charges such as restructuring costs, the company said adjusted net income was $21 million, with adjusted diluted EPS of 5 cents.
By category, footwear sales in the quarter fell 7.7 percent to $245.3 million, while accessories sales were down 4.4 percent to $95,694. Apparel sales slipped 1.7 percent to $734,035. The company also posted a 1.8 percent increase in licensing revenue to $24,806.
By region, North American revenue fell 9 percent to $609.8 million, while Asia-Pacific was down 6.6 percent to $152.6 million. EMEA (Europe, Middle East and Asia) sales rose 12.1 percent to $278.7 million, while Latin America revenue was up 7.7 percent to $58.8 million.
The company said it posted $4 million in restructuring charge and $2 million in transformation-related SG&A (selling, general and administrative) expenses, for a total of $6 million under its fiscal 2025 restructuring plan. Total program costs under the plan are expected to be $305 million and Under Armour expects that plan to be substantially complete by Dec. 31. Thus far, the company has incurred $266 million in total restructuring and transformation costs, including $116 in cash and $150 million in noncash charges.
In June, the company closed it Portland office, retaining a small presence there as it moved more staff to New York and its Baltimore headquarters.
Shares of Under Armour on Friday fell 2.1 percent to $6.12 in pre-market trading after its first-quarter report was released.
While the first quarter report wasn’t what some investors might have hoped, there’s a chance that the revenue could start to turn up in the third quarter if the wholesale order book continues to improve, as suggested by Williams Trading analyst Sam Poser.
