Moody’s expected a turnaround strategy to boost UA’s operating margin and earnings in 2026.
Ratings agency Moody’s has lowered Under Armour’s corporate family rating from Ba3 to Ba2 and downgraded its issue level, as our colleagues at the American edition of SGI are reporting.
Economic headwinds, it is believed, will sap UA’s turnaround strategy, which we detailed back in December. Moody’s had been expecting that strategy to yield a recovery in the brand’s operating margin and earnings in fiscal 2026.
It now expects ratio of adjusted debt to Ebitda to increase from the 2.9x of Dec. 31, 2004, to mid-3x to mid-4x over the coming year. UA should be able to maintain liquidity, according to Moody’s, with lower cash flow supported by solid cash balances and an undrawn revolver of $1.1 billion.
In May 2024 S&P downgraded both UA’s issuer credit rating and its issue-level ratings on UA’s $600 million senior unsecured notes from BB to BB- while maintaining a recovery rating of 3. S&P was expecting UA’s revenue to decline in the low double digits in fiscal 2025, over weakened demand for its products and increased competition in its biggest market, the US – especially at wholesale. Lower revenue and restructuring costs (of $70 to $90 million) were to shrink margins, but S&P thought UA’s outlook remained stable, thanks to a continued strong balance sheet, with relatively low debt and plentiful cash.
