Under Armour Inc (UAA) Q1 2026 Earnings Call Highlights: Navigating Revenue Declines and ...

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Revenue: Declined 4% to $1.1 billion.
North America Revenue: Declined 5% due to decreased full price wholesale and lower e-commerce sales.
EMEA Revenue: Increased 10% (6% adjusted for currency), with growth across all channels.
APAC Revenue: Decreased 10% on both reported and currency-neutral basis.
Latin America Revenue: Declined 15%, 8% on a currency-neutral basis.
Wholesale Revenue: Declined 5% with lower full price and distributor sales.
Direct-to-Consumer Revenue: Declined 3%, with a 12% decline in e-commerce sales.
Licensing Revenues: Increased 12%.
Apparel Revenue: Declined 1%.
Footwear Revenue: Down 14% across all categories.
Accessories Revenue: Grew 8%.
Gross Margin: Increased by 70 basis points to 48.2%.
SG&A Expenses: Decreased 37% to $530 million.
Operating Income: $3 million; adjusted operating income was $24 million.
Adjusted Diluted EPS: $0.02 for the quarter.
Inventory: $1.1 billion, a 2% increase year-over-year.
Cash Balance: $911 million.
Tariff Costs: Estimated $100 million in additional costs for fiscal '26.
Warning! GuruFocus has detected 3 Warning Sign with UAA.
Release Date: August 08, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
Under Armour Inc (NYSE:UAA) is undergoing a bold reinvention to become a sharper, more focused brand, blending sports, style, and innovation with financial discipline.
The company is seeing brand health improvements, with cultural relevance returning and increased interest from talent wanting to join.
EMEA is outperforming, and North America and APAC are on paths toward better stability, with team sports heating up and digital engagement increasing.
Under Armour Inc (NYSE:UAA) has achieved significant progress in realigning its product engine, simplifying operations, and positioning itself to better serve athletes, customers, and shareholders.
The company is on track to meet its goal of reducing SKUs by 25%, which is expected to lead to sharper execution and better pricing.
Negative Points
Under Armour Inc (NYSE:UAA) is facing challenges from limited spending, higher promotions, and a dynamic domestic tariff policy.
The company reported a 4% decline in first-quarter revenue, with North America revenue declining 5% due to decreased full-price wholesale business and lower e-commerce sales.
APAC revenue decreased 10% due to weak consumer confidence amid a highly competitive and promotional market.
Footwear revenue was down 14% in the quarter, reflecting a challenging consumer demand environment and deliberate work to optimize the business.
The company is facing approximately $100 million in additional tariff-related costs, which, along with softer-than-expected demand, is projected to reduce profitability to about half of last year's levels.
Q & A Highlights
Q: How are tariffs impacting demand from your wholesale channel partners, and what are some signs of improving brand health in North America? A: Kevin A. Plank, President and CEO, explained that while the tariff environment is challenging, Under Armour is focusing on creating unique products that only UA can make, which helps mitigate tariff impacts. He noted that brand health is improving, with increased traction in base layer products and rising brand perception among 18 to 34-year-olds. Retailer confidence is also growing, with positive comps in men's and women's apparel at key retailers.
Q: Can you discuss the SKU cleanup and promotional strategy in the context of the Q2 revenue guide? A: David Bergman, CFO, stated that Q2 is expected to be the toughest quarter, with North America facing a low double-digit decline due to order book challenges and traffic issues. While progress was made last year in reducing promotions, the current environment makes further progress difficult. The focus remains on maintaining discipline and not regressing in promotional strategies.
Q: How is Under Armour engaging the 16 to 24-year-old demographic, and what improvements are being seen? A: Kevin A. Plank highlighted that brand perception is improving among 18 to 34-year-olds, with increased brand awareness. The company is seeing positive engagement with new sportswear styles and partnerships with influencers, which are helping to give the brand more relevance and permission among younger consumers.
Q: What are the key factors contributing to the North America sales decline in Q2, and are there any cancellations tied to price increases? A: David Bergman noted that the decline is due to a challenging Spring/Summer '25 order book, traffic challenges, and a promotional e-commerce environment. There have been no significant cancellations tied to price increases, but footwear is facing more headwinds than apparel. The company expects improvement in the back half of the year as new products are introduced.
Q: How is Under Armour addressing the current macroeconomic challenges in North America, and what actions are being taken in DTC channels? A: Kevin A. Plank expressed confidence in the brand's momentum, particularly with core products like base layers. David Bergman added that the company is maintaining discipline in e-commerce promotions and enhancing product assortments in Factory House stores to drive conversion despite traffic declines. The focus is on improving sales quality and creating a premium marketplace.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.