Amid ongoing challenges, Under Armour is working to reshape business

In reporting its Q4 and FY results, Under Armour CEO Kevin Plank confirmed the company hasn’t experienced any order cancellations from key partners thus far despite tariffs and market uncertainties. The company is aiming to restructure its product portfolio to a mix of 25 percent good products, 50 percent better, and 25 percent best. And with three new board members in Dawn Fitzpatrick, Gene Smith, and Rob Sweeney, Under Armour intends to re-allocate its $500 million a year marketing budget to generate “greater brand heat and engagement.”

In the final period ended March 31, the company reported a net loss of $67.5 million, which included $16 million in restructuring charges, on an 11.4 percent decline in revenues to $1.18 billion. Wholesale revenues fell 11 percent to $1.2 billion and Direct-to-consumer sales slid by 11 percent to $386.1 million. By product segment, apparel sales slipped by 11 percent to $780.4 million; footwear sales stepped down 16.5 percent year-over-year to $281.8 million; and accessories revenues rose by 2.3 percent to $91.5 million. Gross margin improved by 170 basis points to 46.7 percent, fueled by lower product and freight costs coupled with lower direct-to-consumer discounting and favorable currency impact.

Revenue in the EMEA was flat on a currency-neutral basis and down 1.9 percent on a reported basis at $278.6 million as the region generated a 43.5 percent decline in operating income to $33.0 million. The home North American market suffered a 10.7 percent sales decline to $689.4 million, and 28 percent drop in operating income at $100.3 million. APAC sales fell by 27 percent to $164.8 million and produced $15.0 million in operating income.

For the FY, Under Armour’s revenues declined by 9 percent to $5.2 billion North American sales down by 11 percent to $3.1 billion and international sales off by 6 percent on a reported basis to $2.1 billion. Annual EMEA sales were flat at $1.09 billion and North American sales fell by 11 percent to $3.1 billion. Annual gross margin increased by 180 basis points to 47.9 percent.

The company is currently evaluating a range of mitigation strategies to address recent trade policy changes. Among them: cost sharing, further sourcing diversification, and potential price increases. Given the current climate, Under Armour only provided an outlook for Q1. The company expects high-single-digit growth in the EMEA, bolstered by currency impact and an Easter calendar shift; a 4 to 5 percent overall sales drop for the period ending June 30; and a mid-teen percentage decline in APAC.