Under Armour’s operating income in Q4 slipped by 81%

Coming out of a Q3 where results exceeded projections and gross margin increased by a whopping 240 basis points, Under Armour raised its FY outlook and outlined a new strategic direction in 2025 under Brand President Eric Liedtke that will enhance its premium brand positioning. 

The group is transitioning to a consumer-focused, category-managed model “that emphasizes singular accountability leadership in team sports, training, golf, basketball, running, sportswear, outdoor, and other key sports…,” according to President and CEO Kevin Plank. Later in 2025, the company intends to deploy a significant chunk of its existing marketing budget on a new multi-year, brand marketing campaign. 

Work on the “new” Under Armour, however, has already commenced. Efforts to date have included moving into a new corporate headquarters in Baltimore, Maryland; developing an improved product line-up for Fall/Winter’ 25, and launching initiatives to trim its overall SKU assortment by 25 percent. 

“We’re dedicated to strengthening our brand with the understanding that this journey is not a sprint, but a marathon that requires resilience and thoughtful strategy,” Plank told analysts. 

In Q4, Under Armour’s operating income slipped by 81 percent to $13.5 million from $71.4 million for the period ended Dec. 31. Net income was down by a whopping 99 percent to $1.23 million from $110.8 million. By channel, wholesale contracted by 1 percent to $704.8 million, and DTC sales slipped by 9.1 percent to $672.9 million. By product category, apparel sales declined by 5.0 percent to $966.1 million and footwear revenues stepped down by 9.0 percent to $301.2 million. Accessories revenues rose by 5.7 percent in Q3 to $110.4 million. 

EMEA was strongest region 

By region, EMEA was the only in Q3 to report higher year-over-year sales, rising by 4.9 percent (3% C$) to $297.9 million with growth in both Dtc and wholesale that was offset by a drop in sales to third-party off-price channels. EMEA’s Q3 operating profit dipped by 14.3 percent to $42.1 million. The only region to report a higher, quarterly operating profit was Latin America, up by 6.1 percent to $14.2 million despite a 15.5 percent decline in sales to $59.0 million. 

APAC sales declined by 5 percent (6% C$) to $201.1 million and the region’s quarterly operating profit dropped by 12.5 percent to $14.0 million. The APAC business was impacted by the geography’s highly competitive and promotional landscape. In its home North American market, the group’s Q3 revenues declined by 7.8 percent to $843.6 million from $915.3 million as operating profit slipped by 1.3 percent to $164.1 million. 

FY Outlook raised 

Under Armour is now projecting full-year revenues to decline by approximately 10 percent instead of prior guidance of a low double-digit percentage sales drop. The outlook for flat annual revenues in the EMEA remains, but the group improved its North American forecast to -12 to -13 percent versus a prior forecast of -14 to -16 percent for the FY. Meanwhile, the annual gross margin outlook calls for 160 basis points of improvement versus prior guidance of 125 to 150 basis points of expansion. Adjusted operating income for the year, increased by $15 million at the mid-point, is now pegged at $185 to $195 million.

While admitting it takes time to gain back shelf space, Under Armour believes it’s heading in the right direction for that to occur. The company will open new accounts this year, but most will be boutiques.