US' Under Armour posts Q1 loss, sees 7% dip ahead in Q2
Under Armour has posted a 4 per cent YoY revenue drop to $1.1 billion in Q1 FY26, with a net loss of $3 million. North America sales fell 5 per cent, while EMEA rose 10 per cent. Footwear revenue declined 14 per cent, but gross margin rose to 48.2 per cent. Adjusted operating income was $24 million. Q2 revenue is expected to fall 6â€'7 per cent due to tariff and supply chain headwinds.
The company recorded a net loss of $3 million, or $0.01 per diluted share, while adjusted net income stood at $9 million. North American revenue dropped 5 per cent to $670 million, while international revenue slipped 1 per cent to $467 million.
By product category, apparel revenue edged down 1 per cent to $747 million, footwear fell 14 per cent to $266 million, and accessories rose 8 per cent to $100 million.
Within international markets, Europe, the Middle East and Africa (EMEA) grew 10 per cent, Asia-Pacific fell 10 per cent, and Latin America declined 15 per cent.
Wholesale revenue declined 5 per cent to $649 million, while direct-to-consumer (DTC) sales decreased 3 per cent to $463 million. Revenue from owned and operated stores rose 1 per cent, but e-commerce revenue fell 12 per cent, making up 31 per cent of the total DTC business.
Gross margin improved 70 basis points to 48.2 per cent, supported by favourable foreign exchange, pricing, and product mix, though partially offset by higher supply chain costs and an unfavourable channel mix.
Operating income came in at $3 million but adjusted operating income—excluding $8 million in transformation costs and $13 million in restructuring charges—stood at $24 million.
Selling, general, and administrative (SG&A) expenses fell 37 per cent to $530 million due to the absence of a large legal reserve recorded in the prior year. On an adjusted basis, SG&A expenses were down 6 per cent to $522 million. Inventory increased 2 per cent to $1.1 billion.
The company held $911 million in cash and cash equivalents at quarter end, including $400 million in newly issued senior notes intended to help retire $600 million in notes due June 2026.
"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. Despite ongoing uncertainty, our brand is gaining strength and we're executing our strategic plan with clarity and confidence," said Under Armour president and CEO Kevin Plank.
Under Armour's ongoing FY25 Restructuring Plan, launched in May 2024, has led to $110 million in charges so far—$65 million in cash-related costs and $45 million in non-cash charges. The total expected cost remains between $140 million and $160 million, to be completed by fiscal year-end 2026, the company said in a release.
For the second quarter of FY26, Under Armour expects revenue to decline by 6 to 7 per cent compared to the prior year. This includes a low-double-digit percentage drop in North America, high-single-digit growth in EMEA, and a low-teens percentage decline in Asia-Pacific.
Gross margin is projected to contract by 340 to 360 basis points, mainly due to supply chain challenges and tariffs. SG&A expenses are forecast to rise at a low double-digit rate, with adjusted SG&A growing at a high-single-digit pace.
Operating income is expected to range from a $10 million loss to breakeven, with adjusted operating income forecast between $30 million and $40 million.
"Moving ahead, we're focused on strengthening our brand positioning with premium products and increasing our average selling prices through innovative offerings, optimising our top-volume programs, and creating a more compelling full, price-to-value proposition. Regardless of the backdrop, this is about building a fearless, thoughtful, and stronger Under Armour," Plank continued.
Fibre2Fashion News Desk (HU)
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