10-K: Under Armour Reports Fiscal Year 2026 Results

Under Armour's Form 10-K details a 3.8% decrease in net revenues for Fiscal 2026, driven by challenges in North America and Asia-Pacific, alongside a 240 basis point decline in gross margin.

Summary

• Under Armour reported a 3.8% decrease in net revenues for Fiscal 2026, totaling $4.97 billion, compared to $5.16 billion in Fiscal 2025.
• Wholesale revenue decreased by 4.9%, and direct-to-consumer revenue saw a 1.7% decline.
• Apparel revenue decreased by 1.6%, footwear revenue dropped by 10.8%, while accessories revenue saw a slight increase of 0.9%.
• North America revenue decreased by 7.9%, while EMEA revenue increased by 8.6%.
• Gross margin decreased by 240 basis points to 45.5%, primarily due to supply chain impacts, including tariffs, and unfavorable pricing.
• Selling, general, and administrative expenses decreased by 11.8%, largely due to lower litigation reserve expenses.
• The company recorded a net loss of $495.6 million for Fiscal 2026, a significant increase from the $201.3 million net loss in Fiscal 2025.
• Restructuring and related charges increased to $171.5 million in Fiscal 2026 from $89.2 million in Fiscal 2025, with the plan expected to be substantially complete by December 31, 2026.
• As of March 31, 2026, the company had $309 million in cash and cash equivalents.

Sentiment

Score: 3

Explanation: StockSavvy.ai views this filing as negative due to the significant decline in revenues, widening net loss, and reduced gross margins, indicating ongoing financial and operational challenges.

Positives

• EMEA revenue increased by 8.6% to $1.18 billion.
• Latin America revenue increased by 8.7% to $234.2 million.
• License revenues increased by 13.5% to $107.4 million.
• Selling, general and administrative expenses decreased by 11.8% due to lower litigation reserve expense and other cost-saving measures.
• The company's internal control over financial reporting was deemed effective as of March 31, 2026.

Negatives

• Total net revenues decreased by 3.8% to $4.97 billion.
• North America revenue decreased by 7.9% to $2.86 billion.
• Asia-Pacific revenue decreased by 4.8% to $719.1 million.
• Footwear revenue decreased by 10.8% to $1.08 billion.
• Gross margin decreased by 240 basis points to 45.5%, with 155 basis points attributed to tariff impacts.
• The company reported a net loss of $495.6 million, a substantial increase from the prior year's net loss of $201.3 million.
• Operating income in North America decreased by 29.7%.
• Operating income in Latin America decreased by 37.1%.
• Restructuring and related charges increased by 120.3% to $171.5 million.
• Income tax expense increased significantly to $294.8 million from a benefit of $2.9 million in the prior year, largely due to valuation allowances.

Risks

• Continued uncertainty in the global trade environment due to ongoing and potential changes in global trade policy, including tariffs.
• Increased competition from established companies with greater financial, distribution, and marketing resources.
• Fluctuations in the cost of raw materials and commodities, including petroleum-based products and cotton, due to inflation, trade relations, or geopolitical events.
• Potential for declines in consumer discretionary spending due to economic downturns, inflation, or recession fears.
• Reliance on large wholesale customers, with a risk of order reduction, cancellation, or uncollectibility of receivables.
• Inability to accurately forecast consumer preferences and demand, leading to excess inventory or product shortages.
• Disruptions in the supply chain due to labor disputes, port issues, or geopolitical instability.
• Cybersecurity threats and data privacy breaches that could damage reputation and incur significant expenses.
• Changes in tax laws and unanticipated tax liabilities.
• Failure to protect intellectual property rights.
• Potential for adverse outcomes in ongoing or future legal proceedings.
• Dependence on the continued service of senior management and key employees.
• Risks associated with global operations, including navigating complex regulatory environments and market practices in international regions.

Future Outlook

The company is focused on driving sustainable long-term growth and profitability through increased demand for its core product categories, continued expansion of its direct-to-consumer capabilities, and strategic development of its global wholesale network. Strategic priorities include elevating brand positioning, simplifying and scaling its operating model, accelerating innovation, and enhancing global go-to-market execution.

Management Comments

• The 2025 restructuring plan is now expected to be substantially complete by December 31, 2026.
• The company is actively monitoring developments in the global trade environment, including recent changes in global trade policy, and related effects on consumer discretionary spending, and continues to assess the implications for its business and actively implement mitigation strategies.
• The company believes its cash and cash equivalents on hand, cash from operations, ability to reduce expenditures as needed, borrowings available under its amended credit agreement, ability to access the capital markets, and other financing alternatives are adequate to meet its liquidity needs and capital expenditure requirements for at least the next twelve months.

Industry Context

StockSavvy.ai notes that Under Armour's performance in Fiscal 2026, with declining revenues and gross margins, reflects broader challenges within the athletic apparel and footwear industry, including increased competition, shifting consumer preferences, and macroeconomic headwinds such as inflation and global trade uncertainties. Competitors like Nike, Adidas, and lululemon are also navigating these complex market dynamics.

Comparison to Industry Standards

• Under Armour's gross margin of 45.5% is below the industry average for athletic apparel and footwear companies, which typically ranges from 50% to 60%.
• The 10.8% decline in footwear revenue is a significant concern, as footwear is a key growth driver for many competitors in the sector.
• The company's net loss of $495.6 million contrasts with the profitability reported by some of its larger competitors, highlighting potential operational efficiency or market share challenges.

Management Changes

Legal Proceedings

• The company is involved in litigation with certain insurance carriers regarding coverage for a policy period related to the Consolidated Securities Action, following a court decision requiring repayment of $90 million in insurance proceeds.
• The company has started evaluating and pursuing potential reimbursement of certain IEEPA tariffs previously paid, following a Supreme Court ruling.

Related Party Transactions

• The company has an operating lease agreement with an entity controlled by its President and Chief Executive Officer for an aircraft, with lease payments of $1.6 million in Fiscal 2026.
• In June 2016, the company purchased parcels of land from an entity controlled by its President and Chief Executive Officer for $70.3 million, determined to be at fair market value.

Stakeholder Impact

• Shareholders may be impacted by the significant net loss and the decline in stock performance indicated by the stock performance graph.
• Employees may be affected by restructuring plans and potential changes in compensation or benefits.
• Suppliers and manufacturers may face continued uncertainty due to global trade policies and potential shifts in demand.
• Creditors may be concerned about the company's increased net loss and leverage ratios, although covenants were met as of March 31, 2026.

Next Steps

• The 2025 restructuring plan is expected to be substantially complete by December 31, 2026.
• The company is evaluating and pursuing potential reimbursement of certain IEEPA tariffs previously paid.
• The company will continue to monitor global trade policy, inflationary pressures, geopolitical instability, and foreign currency exchange rates.

Key Dates

Recommendation

While Under Armour faces significant headwinds with declining revenues and profitability, the company is undertaking restructuring efforts and has a clear strategy for brand elevation and operational improvement. The market is challenging, and competitors are also facing pressures. A 'hold' recommendation reflects the uncertainty and the need to see sustained improvement in financial performance and market execution before considering a more positive stance.

Keywords

Under Armour, Form 10-K, Annual Report, Fiscal 2026, Net Revenues, Gross Margin, Net Loss, Restructuring, Apparel, Footwear, Accessories, North America, EMEA, Asia-Pacific, Latin America, Stockholders Equity, Financial Statements