UA — Under Armour, Inc.

Under Armour Q3 2026 Earnings Call Summary

1. Key Financial Results and Metrics

• Revenue: Declined 5% year-over-year to $1.3 billion, slightly better than expected due to a timing shift of wholesale deliveries.
• North America: Revenue down 10%, primarily from wholesale; direct-to-consumer also saw a slight decline.
• EMEA: Revenue increased 6% (2% currency-neutral), showing growth in both wholesale and direct-to-consumer.
• APAC: Revenue decreased 5%, with slight improvements noted from earlier declines.
• Gross Margin: Declined 310 basis points to 44.4%, impacted by supply chain headwinds and higher tariffs.
• Operating Loss: Reported at $150 million; adjusted operating income was $26 million, exceeding expectations.
• EPS: Reported diluted loss per share of $1.01; adjusted diluted EPS was $0.09, aided by favorable tax developments.
• Inventory: Down 2% year-over-year to over $1 billion.
• Cash Position: Ended the quarter with $465 million in cash and $600 million in restricted investments.

2. Strategic Updates and Business Highlights

• Turnaround Focus: Under Armour is in a pivotal phase of its turnaround, emphasizing execution and simplification of operations.
• Leadership Changes: New appointments include Kara Trent as Chief Merchandising Officer and Adam Peak as President of The Americas, aimed at enhancing product mix and market responsiveness.
• Product Strategy: Focus on intentional product segmentation and reducing SKUs to improve efficiency and brand clarity. Notable successes in heat and cold gear, with new styles driving higher average selling prices (ASPs).
• Brand Engagement: Improved brand health indicators in the U.S., particularly among younger athletes, with strong digital engagement and positive consumer response to new product launches.

3. Forward Guidance and Outlook

• Fiscal 2026 Expectations: Revenue expected to decline approximately 4%, improved from prior estimates. North America projected to decline 8%, while EMEA is expected to grow by 9%.
• Gross Margin Outlook: Anticipated to decline by approximately 190 basis points, slightly better than previous forecasts.
• Adjusted Operating Income: Expected to be around $110 million, reflecting improved revenue trends and cost management.
• Adjusted EPS: Forecasted between $0.10 and $0.11 for the full year.

4. Bad News, Challenges, or Points of Concern

• Revenue Declines: Continued challenges in North America, particularly in wholesale, which is a key revenue driver.
• Footwear Sales: Year-to-date footwear sales down 14%, indicating ongoing structural issues that the company is working to address.
• Gross Margin Pressure: Significant headwinds from tariffs and a promotional environment affecting pricing strategies.
• Inventory Management: While inventory is down, the need for further SKU rationalization remains a focus to reduce complexity and improve margins.

5. Notable Q&A Insights

• Stabilization Confidence: Kevin Plank expressed optimism about stabilization in North America, citing improved wholesale order books and a more confident team culture.
• Footwear Strategy: Emphasis on reducing the number of styles to focus on higher-quality, higher-margin products, aiming for a clearer segmentation in the footwear line.
• EMEA Performance: Strong growth in EMEA, with management confident in maintaining momentum despite increased promotional activity.
• APAC Region: New leadership is expected to drive a quicker turnaround in APAC, which has faced challenges but shows signs of stabilization.
• Emotional Connection: Plank highlighted the importance of creating emotional connections with consumers through storytelling and authentic athlete engagement.

Overall, while Under Armour faces challenges, particularly in North America and footwear, the company is making strategic adjustments aimed at stabilizing and improving its business performance moving forward.