UAA — 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 expectations due to a timing shift of wholesale deliveries.
• North America: Revenue down 10%, primarily due to a decrease in wholesale.
• EMEA: Revenue increased 6% (2% currency-neutral).
• APAC: Revenue decreased 5%, showing sequential improvement.
• Latin America: Revenue increased 20% (13% currency-neutral).
• Gross Margin: Declined 310 basis points to 44.4%, impacted by supply chain headwinds and tariffs.
• SG&A Expenses: Increased 4% to $665 million, primarily due to a litigation reserve; adjusted SG&A down 7%.
• Operating Loss: Reported at $150 million; adjusted operating income was $26 million, exceeding expectations.
• Diluted Loss per Share: Reported at $1.01, with adjusted EPS at $0.09, benefiting from favorable tax developments.

2. Strategic Updates and Business Highlights

• Under Armour is focusing on simplifying operations and reducing SKU complexity, with a goal of enhancing speed to market and product accountability.
• Leadership changes were made to accelerate execution, including new roles for key executives in merchandising and marketing.
• Product performance is improving, particularly in core categories like heat and cold gear, with new styles driving higher average selling prices (ASPs).
• The company is emphasizing intentional product segmentation and storytelling to enhance brand connection with consumers.
• Digital engagement remains strong, particularly among younger athletes, and wholesale relationships are improving.

3. Forward Guidance and Outlook

• Full-year revenue is now expected to decline approximately 4%, an improvement from previous forecasts.
• Adjusted operating income for the full year is projected at approximately $110 million.
• The company anticipates stabilization in North America and expects to see improvements in the footwear category by fiscal 2027.
• Adjusted diluted EPS is expected to be between $0.10 and $0.11 for the full year.

4. Bad News, Challenges, or Points of Concern

• Footwear Sales: Year-to-date sales down 14%, attributed to structural issues and an overextended product assortment.
• Gross Margin Pressure: Continued headwinds from tariffs and a promotional environment affecting pricing.
• North America Decline: The region continues to face challenges, with significant declines in wholesale impacting overall performance.
• Inventory Management: Although inventory is down 2% year-over-year, there are ongoing concerns about managing excess stock and reducing SKUs effectively.

5. Notable Q&A Insights

• Stabilization Confidence: CEO Kevin Plank expressed confidence that North America has reached a turning point, with improved order books and relationships with wholesale partners.
• Footwear Strategy: Plank emphasized a shift towards fewer, more intentional product offerings to stabilize the footwear category, moving away from trying to grow through volume.
• EMEA Performance: The EMEA region is performing well, with a strong growth trajectory, although promotional pressures are noted.
• APAC Region: Leadership changes are expected to drive improvements, with a focus on stabilizing the region amidst a challenging environment.
• Emotional Connection: Plank highlighted the importance of creating emotional connections with consumers through storytelling and authentic brand engagement.

Overall, Under Armour is navigating a complex turnaround, focusing on operational simplification and product strategy while facing challenges in certain regions and product categories. The leadership transition and strategic initiatives are aimed at fostering growth and stabilizing the brand's performance moving forward.