Under Armour Q1 2027 Earnings Call Summary

1Key Financial Results and Metrics

Revenue: Declined 3% year-over-year to $1.1 billion.

North America: Down 9% due to weaker wholesale and e-commerce performance.

EMEA: Increased 12% (10% constant currency), driven by distributor strength.

APAC: Decreased 7% (10% constant currency), impacted by softness in China and Southeast Asia.

Latin America: Increased 8%, driven by favorable foreign exchange.

Adjusted Operating Income: $52 million, exceeding the outlook of $30 million to $40 million.

Gross Margin: Increased 590 basis points to 54.1%, aided by tariff refunds and supply chain benefits.

SG&A Expenses: Increased 2% to $543 million, reflecting ongoing investments and cost management.

Diluted EPS: Breakeven; adjusted diluted EPS was $0.05.

2Strategic Updates and Business Highlights

Under Armour is focusing on simplifying its product line by reducing SKUs by an additional 25% over the next 18 months, aiming for fewer, higher-quality products.

The company is emphasizing full-price sales rather than discounting, with successful product launches like the Bouncy Tee, which has exceeded expectations.

A significant marketing reset is underway, aiming for more effective spending and alignment with product launches.

The company is consolidating its innovation footprint and improving operational efficiency, including rightsizing its Portland office.

3Forward Guidance and Outlook

Revenue Outlook: Expected to decline at a mid-single-digit rate for the full year, reflecting a cautious approach due to market conditions.

Adjusted Operating Income: Maintained guidance of $140 million to $160 million despite lower revenue expectations.

Gross Margin: Expected to expand by approximately 220 to 270 basis points for the year.

Q2 Expectations: Anticipated revenue decline at a high single-digit rate, with adjusted operating income projected between $10 million and $20 million.

4Bad News, Challenges, or Points of Concern

Consumer Demand: Softer than expected, particularly in North America and Asia Pacific, leading to a cautious revenue outlook.

Promotional Environment: Increased competition and discounting in the marketplace, particularly in Europe and North America, affecting brand positioning.

Inventory Management: While inventory levels are generally in line with revenue declines, there is a risk of excess inventory due to SKU reductions and the need to clear out less productive products.

Traffic Trends: Deteriorating traffic in retail and e-commerce, particularly noted from mid-May onwards.

5Notable Q&A Insights

Bouncy Tee Success: Kevin Plank highlighted the intentionality behind the Bouncy Tee's development, emphasizing the need for Under Armour products to tell a compelling story to drive consumer interest and full-price sales.

Marketing Strategy: The company is reallocating marketing spend to focus on more effective campaigns rather than simply increasing overall spending, with a target of 10% to 11% of revenue.

SKU Reduction Strategy: The additional SKU cuts are aimed at improving product quality and brand clarity, with a focus on fewer, higher-performing products.

North America and China Traffic: Traffic trends in North America and China remain challenging, with a cautious approach to managing inventory and promotions in response to market conditions. In summary, Under Armour is navigating a challenging consumer environment while focusing on strategic initiatives to simplify its product offerings and enhance brand positioning. The company is maintaining its profitability outlook despite a cautious revenue forecast, indicating a commitment to long-term brand health and operational efficiency.