The company faces its 13th consecutive quarter of declining revenue, a shrinking footwear business and sustained weakness in North America. Despite significantly improved profitability, it remains unclear whether a $500 million marketing push can revive demand.
A weaker-than-expected start to fiscal 2027 has prompted the company to lower its revenue outlook. Although Under Armour improved profitability in the first quarter, persistently weak demand in North America continued to weigh on sales. At the same time, competition from fast-growing brands such as On and Hoka is making it even harder to return to sustainable growth.
In addition to subdued consumer sentiment, the US sporting goods manufacturer is also facing intensified competition. While consumers in North America are spending more cautiously overall, younger, innovation-driven brands are gaining ground. This is also evident in the footwear business: Under Armour generated $245 million in footwear revenue in the first quarter – 7.7 percent less than in the previous year. On, whose revenue comes almost entirely from footwear, continues to grow at a significant double-digit rate in this segment and now generates nearly as much revenue from footwear as Under Armour does across the entire company.
| Under Armour - Income | |||
|---|---|---|---|
| Q1, ended June 30 ($ thousand) | |||
| 2026/27 | 2025/26 | Change | |
| Net revenues | 1,097,927 | 1,134,068 | -3.2% |
| Cost of goods sold | 504,095 | 587,572 | -14.2% |
| Gross profit | 593,832 | 546,496 | 8.7% |
| SG&A expenses | 543,085 | 530,345 | 2.4% |
| Restructuring charges | 4,008 | 12,828 | -68.8% |
| Income from operations | 46,739 | 3,323 | 1306.5% |
| Interest income, net | -10,645 | -4,051 | 162.8% |
| Other income, net | -7,013 | -4,695 | 49.4% |
| Income before income taxes | 29,081 | -5,423 | -636.3% |
| Income tax expense | 28,314 | -2,658 | -1165.2% |
| Income from equity method investments | -222 | 153 | -245.1% |
| Net income | 545 | -2,612 | -120.9% |
| Diluted net income per share | 0.00 | -0.01 | – |
| Source: Under Armour | |||
Apparel is performing better
Unlike the footwear business, the US company’s apparel segment remained relatively stable. Revenue from apparel, which continues to account for about two-thirds of consolidated revenue, fell by only 1.7 percent to $734 million in the first quarter. As a result, the category performed better than footwear and accessories but was also unable to offset the decline in the North American market. Accessories – at $96 million, or just under 9 percent of consolidated revenue – played only a minor role. Revenue in this category declined by 4.4 percent in the first quarter.
| Under Armour - Revenues | ||||
|---|---|---|---|---|
| Q1, ended June 30 ($ thousand) | ||||
| 2026/27 | 2025/26 | Change | ||
| Segments | ||||
| North America | 609777 | 670319 | -9.0% | |
| EMEA | 278680 | 248607 | 12.1% | |
| Asia-Pacific | 152586 | 163386 | -6.6% | |
| Latin America | 58754 | 54575 | 7.7% | |
| Corporate Other | -1870 | -2819 | NM | |
| Total net revenues | 1097927 | 1134068 | -3.2% | |
| Channels | ||||
| Wholesale | 638468 | 649050 | -1.6% | |
| Direct-to-consumer | 436523 | 463475 | -5.8% | |
| Net sales | 1074991 | 1112525 | -3.4% | |
| License revenues | 24806 | 24362 | 1.8% | |
| Corporate Other | -1870 | -2819 | NM | |
| Total net revenues | 1097927 | 1134068 | -3.2% | |
| Categories | ||||
| Apparel | 734035 | 746592 | -1.7% | |
| Footwear | 245262 | 265855 | -7.7% | |
| Accessories | 95694 | 100078 | -4.4% | |
| Net sales | 1074991 | 1112525 | -3.4% | |
| Licensing revenues | 24806 | 24362 | 1.8% | |
| Corporate Other | -1870 | -2819 | NM | |
| Total net revenues | 1097927 | 1134068 | -3.2% | |
| Source: Under Armour | ||||
13th consecutive quarter of declining revenue
Overall, consolidated revenue fell by 3 percent to $1.10 billion in the first quarter. In the company’s largest market – its home market – revenue declined again by 9 percent. International business, by contrast, performed well, growing by 5 percent. The second-largest region, EMEA, recorded the strongest growth, with an increase of 12.1 percent, while revenue in the Asia-Pacific region fell by 6.6 percent. Latin America, the smallest market, also made a positive contribution, with growth of 7.7 percent.
Profitability improves significantly
Despite the decline in revenue, Under Armour significantly improved its profitability. The gross margin rose by 590 basis points to 54.1 percent, with refunds of prior IEEPA tariff costs accounting for a significant portion of the increase. At the same time, operating income increased from $3 to $47 million, while inventory declined by 3 percent. This indicates that the restructuring is increasingly taking effect – even if it has not yet been able to offset weaker demand.
More than just an economic issue
Behind the regional differences lie quite distinct challenges. New CFO Reza Taleghani said during the earnings call that he attributed growth in EMEA primarily to a strong distributor business, while DTC and regular wholesale saw slight declines. In North America, however, weaker spring and summer wholesale orders, as well as declining foot traffic in stores and e-commerce, weighed on results. The situation in Asia is even more complex: In China and Southeast Asia, demand fell short of expectations; additionally, key models and sizes were missing in China, while aggressive discounts by individual licensing partners cannibalized the company’s own demand.
CEO Kevin Plank himself acknowledged that the weaker performance cannot be explained solely by the macroeconomic environment. There are competitors that are succeeding even in the current market environment – “some of this is on us.” Under Armour therefore does not intend to try to compensate for declining foot traffic with additional discounts, but rather to focus more on full-price sales, fewer products and clearer marketing.
Outlook for fiscal year 2027 lowered
For the full year, Under Armour now expects a decline in the mid-single-digit percentage range. For North America, the company anticipates a revenue decline in the mid-single-digit percentage range instead of a low-single-digit decline. Even for EMEA and Asia-Pacific, a slight decline in revenue is expected in each case, after slight growth had previously been forecast. “As we navigate a challenging consumer demand environment,” Plank explained, Under Armour continues to work on sharpening the brand while protecting profitability.
Millions in investments to address the storytelling problem
This is precisely where the company’s strategy comes into play. During his first earnings call in the spring, CFO Taleghani argued that the brand had less of a product problem than a storytelling problem – an assessment Plank has repeatedly reinforced. The company invests approximately $500 million annually in marketing and increased the 2026 budget by another $30 million. Alongside campaigns featuring new global ambassadors, such as actor François Arnaud and K-pop group BOYNEXTDOOR, Under Armour aims to sharpen its brand positioning and reconnect with consumers. However, given the lowered forecast, it remains to be seen whether these investments in brand-building and storytelling will translate into higher demand in the current fiscal year.
