Revenue: Fourth quarter revenue down 11% to $1.2 billion. North American Revenue: Declined 11%, primarily due to a decrease in DTC business and lower e-commerce sales. EMEA Revenue: Decreased 2%, flat on a currency-neutral basis. APAC Revenue: Down 27%, or 26% adjusted for currency fluctuations. Latin America Revenue: Declined 10%, but rose 3% on a currency-neutral basis. Wholesale Revenue: Decreased 10%, with lower full-price sales offset by growth in the off-price channel. Direct-to-Consumer Revenue: Down 15%, mainly due to a 27% decrease in e-commerce sales. Apparel Revenue: Down 11%, with softness across most categories. Footwear Revenue: Declined 17%, reflecting proactive portfolio management efforts. Accessories Revenue: Up 2%, with strength in team sports and run. Gross Margin: Increased 170 basis points to 46.7%. SG&A Expenses: Increased 1% to $607 million; adjusted SG&A up 7% to $586 million. Operating Loss: Reported operating loss of $72 million; adjusted operating loss of $36 million. Net Loss Per Share: Reported diluted loss per share of $0.16; adjusted diluted loss per share of $0.08. Inventory: Down 1% year-over-year to $946 million. Cash Balance: $501 million at the end of the quarter. Share Repurchase: $25 million worth of Class C stock repurchased, retiring 4.1 million shares. Full-Year Revenue: Declined 9% to $5.2 billion. Full-Year Gross Margin: Increased 180 basis points to 47.9%. Full-Year SG&A Expenses: Rose 8% to $2.6 billion; adjusted SG&A decreased by 2% to $2.3 billion. Full-Year Operating Loss: $185 million; adjusted operating income of $198 million. Full-Year Net Loss Per Share: $0.47; adjusted diluted earnings per share of $0.31.

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Release Date: May 13, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

Under Armour Inc (NYSE:UAA) exceeded its fiscal '25 outlook, demonstrating foundational traction in repositioning the brand. The company achieved a 170 basis point increase in gross margin year-over-year, driven by supply chain benefits and reduced discounting. Under Armour Inc (NYSE:UAA) is focusing on high-return categories and markets, streamlining operations, and exiting lower-value activities to boost efficiency. The company is making significant progress in reshaping its narrative and aligning storytelling with product innovation to enhance brand relevance. Under Armour Inc (NYSE:UAA) is implementing a category management operating model to execute faster and create greater impact, aligning product, marketing, and regional teams around key categories.

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Negative Points

Revenue declined by 11% in the fourth quarter, with significant decreases in North America and APAC regions. The company experienced a 27% decrease in e-commerce sales due to efforts to establish a more premium online presence. Footwear revenue declined by 17%, reflecting ongoing portfolio management efforts to optimize segmentation and assortment. Under Armour Inc (NYSE:UAA) reported an operating loss of $72 million in the fourth quarter, with an adjusted operating loss of $36 million. The company is facing significant uncertainty due to recent changes in trade policy, impacting its ability to provide a full-year outlook.

Q & A Highlights

Q: Can you provide more details about the North American reset and its progress in fiscal '26? A: Kevin Plank, President and CEO, explained that the reset is led by Kara Trent, who successfully executed a similar strategy in Europe. The focus is on reducing constant discounting and enhancing product storytelling. The goal is to build brand affection and confidence among wholesale partners, with a disciplined approach to product and market engagement.

Q: What are the upcoming major brand activations, and when will they be visible? A: Kevin Plank stated that the brand activation will embrace Under Armour's underdog DNA, focusing on storytelling rather than price. The campaign will be rolled out in smaller, channel-specific content rather than a single large campaign. The activation will primarily occur in the back half of the year, aiming to enhance brand relevance and differentiation.

Q: How is Under Armour planning to normalize e-commerce with reduced promotional activity? A: Kevin Plank highlighted that the focus is on creating a brand-inspired e-commerce experience rather than a transactional one. The strategy includes enhancing storytelling, leveraging loyalty programs, and utilizing social commerce. The aim is to build a healthier, brand-right e-commerce foundation for sustainable growth.

Q: Can you discuss the expected savings from the restructuring plan and its impact on SG&A expenses? A: David Bergman, CFO, noted that the restructuring plan brought $35 million in savings in fiscal '25, with an expected run rate savings of $75 million by the end of fiscal '26. The focus is on maintaining cost discipline while ensuring sustained investment in brand marketing to support long-term growth.

Q: How is the inventory situation, and what is the outlook for units and dollars in revenue? A: David Bergman explained that inventory was down 1% year-over-year, aligning with expectations. The company is managing inventory tightly amid demand uncertainties. The focus is on maintaining a balance between cost per unit and pricing power, with an emphasis on selling more premium products at higher full prices.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

This article first appeared on GuruFocus.

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