Six weeks after returning as CEO to the company he founded, Kevin Plank will lead a restructuring at Under Armour that will focus on a premium positioning of fewer products, less promotional pricing, a greater focus on its core men’s apparel business and an accelerated bring-to-market strategy for new offerings. The effort will take at least 18 months to bear results and include an estimated pre-tax restructuring charges of $70 to $90 million. Approximately 25 percent of the brand’s SKU base will be eliminated, and an unspecified number of Under Armour employees will lose their jobs as the company aims to narrow and simplify its “Protect This House” strategy under Plank.
Since most of Under Armour’s new elevated offerings won’t be available until its Fall/Winter 2025 collection, the latter part of its FY26, the company has adjusted its outlook for FY25, which commenced on April 1. The group is forecasting a 15 to 17 percent drop in its home North American business this year and a low-single-digit decline in international sales due to more conservative macro consumer trends. However, gross margin should rise by 75 to 100 basis points this FY, fueled by fewer promotions and less discounting in its Dtc business and lower product costs.
There are signs of retail caution in the EMEA, particularly in the UK, that include softer wholesale outlooks and “increasingly cautious consumer sentiment.” And while there is said to be “significant long-term growth potential in APAC, the current sales environment in China, Southeast Asia, and Japan continues to be “materially promotional.”
| Under Armour- Income ($ thousand) | |||
|---|---|---|---|
| 2024 | 2023 | Change | |
| Three months ended March 31 | |||
| Net revenues | 1,332,197 | 1,398,605 | -4.7% |
| Cost of goods sold | 732,601 | 793,112 | -7.6% |
| Gross profit | 599,596 | 605,493 | -1.0% |
| SG&A expenses | 603,150 | 575,931 | 4.7% |
| Income from operations | -3,554 | 29,562 | – |
| Interest income, net | 2,478 | -1,651 | – |
| Other income, net | -3,708 | -10,204 | 63.7% |
| Pre-tax | -4,784 | 17,707 | – |
| Tax | 11,327 | 153,171 | -92.6% |
| Net income | 6,568 | 170,570 | -96.1% |
| Diluted EPS | 0.02 | 0.38 | -94.7% |
| Year ended March 31 | |||
| Net revenues | 5,701,879 | 5,903,165 | -3.4% |
| Cost of goods sold | 3,071,626 | 3,259,334 | -5.8% |
| Gross profit | 2,630,253 | 2,643,831 | -0.5% |
| SG&A expenses | 2,400,502 | 2,380,245 | 0.9% |
| Income from operations | 229,751 | 263,586 | -12.8% |
| Interest income, net | 268 | -12,826 | – |
| Other income, net | 32,055 | 17,096 | 87.5% |
| Pre-tax | 262,074 | 267,856 | -2.2% |
| Tax | 30,006 | -108,645 | – |
| Net income | 232,042 | 374,459 | -38.0% |
| Diluted EPS | 0.52 | 0.81 | -35.8% |
| Source: Under Armour | |||
In Q4 ended March 31, Under Armour suffered an operating loss of $3.5 million against a year-ago profit of $29.6 million. Net income fell by 96 percent to $6.6 million from $170.6 million, but gross margin grew by 170 basis points to 45.0 percent. Total sales fell by 4.7 percent to $1.33 billion as North American revenues slid by 10 percent to $771.9 million. All three segments reported lower sales in the period, led by a 10.6 percent drop in footwear to $337.7 million. Accessories sales tumbled by 6.6 percent to $89.4 million, and apparel sales inched downward by 1.3 percent to $877.3 million. Direct-to-consumer sales were essentially flat at $454.7 million, but wholesale revenues declined by 6.5 percent to $849.5 million.
| Under Armour - Revenues ($ thousand) | |||
|---|---|---|---|
| 2024 | 2023 | Change | |
| Three months ended March 31 | |||
| By segment | |||
| North America | 771,870 | 861,869 | -10.4% |
| EMEA | 284,134 | 259,514 | 9.5% |
| Asia-Pacific | 226,704 | 224,923 | 0.8% |
| Latin America | 50,241 | 41,806 | 20.2% |
| Corporate other | -752 | 10,493 | – |
| Total | 1,332,197 | 1,398,605 | -4.7% |
| By channel | |||
| Wholesale | 849,805 | 908,505 | -6.5% |
| DTC | 454,690 | 453,853 | 0.2% |
| Net sales | 1,304,495 | 1,362,358 | -4.2% |
| Licensing | 28,454 | 25,754 | 10.5% |
| Corporate other | -752 | 10,493 | – |
| Total | 1,332,197 | 1,398,605 | -4.7% |
| By category | |||
| Apparel | 877,347 | 888,920 | -1.3% |
| Footwear | 337,738 | 377,740 | -10.6% |
| Accessories | 89,410 | 95,698 | -6.6% |
| Net sales | 1,304,495 | 1,362,358 | -4.2% |
| Licensing | 28,454 | 25,754 | 10.5% |
| Corporate other | -752 | 10,493 | – |
| Total | 1,332,197 | 1,398,605 | -4.7% |
| 12 months ended March 31 | |||
| By segment | |||
| North America | 3,505,167 | 3,820,522 | -8.3% |
| EMEA | 1,081,915 | 992,624 | 9.0% |
| Asia-Pacific | 873,019 | 825,338 | 5.8% |
| Latin America | 229,481 | 213,215 | 7.6% |
| Corporate other | 12,297 | 51,466 | -76.1% |
| Total | 5,701,879 | 5,903,165 | -3.4% |
| By channel | |||
| Wholesale | 3,243,187 | 3,468,126 | -6.5% |
| DTC | 2,335,154 | 2,266,827 | 3.0% |
| Net sales | 5,578,341 | 5,734,953 | -2.7% |
| Licensing | 111,241 | 116,746 | -4.7% |
| Corporate other | 12,297 | 51,466 | -76.1% |
| Total | 5,701,879 | 5,903,165 | -3.4% |
| By category | |||
| Apparel | 3,789,016 | 3,871,167 | -2.1% |
| Footwear | 1,383,610 | 1,455,265 | -4.9% |
| Accessories | 405,715 | 408,521 | -0.7% |
| Net sales | 5,578,341 | 5,734,953 | -2.7% |
| Licensing | 111,241 | 116,746 | -4.7% |
| Corporate other | 12,297 | 51,466 | -76.1% |
| Total | 5,701,879 | 5,903,165 | -3.4% |
| Source: Under Armour | |||
For the FY, EMEA generated a 9.0 percent sales gain to reach $1.08 billion and realized a 57 percent increase in annual operating income to $176.2 million. North American operating profit slipped by 5 percent to $677.9 million for the 12 months on an 8.3 percent revenue drop to $3.5 billion. In Asia-Pacific, annual sales grew by 5.8 percent to $873.0 million and reported a 19 percent gain in annual operating income to $119.7 million. Latin America saw a 64 percent increase in annual operating income to $38.4 million and a 7.6 percent gain in annual revenues to $229.5 million.
“We’re really making a commitment to getting back to the fundamentals of what makes Under Armour, Under Armour, our base layer compression, as we call it here, heat gear and cold gear,” Plank told analysts.
