8-K: Under Armour Reports FY26 Results, Outlines FY27 Outlook

Under Armour announced its fourth quarter and full-year fiscal 2026 financial results, reporting a revenue decrease and providing an initial outlook for fiscal 2027 with expected gross margin improvement.

Summary

• Under Armour reported a 1% revenue decrease to $1.2 billion for the fourth quarter of fiscal 2026, with North America revenue down 7% and international revenue up 10%.
• For the full fiscal year 2026, revenue decreased 4% to $5.0 billion, with North America down 8% and international revenue up 4%.
• Gross margin declined in both the fourth quarter (42.0%) and full year (45.5%) due to higher tariffs, product costs, and pricing headwinds.
• Selling, general, and administrative (SG&A) expenses decreased significantly in the fourth quarter (15%) and full year (12%) due to lower marketing spend and expense management.
• The company reported an operating loss of $34 million for the fourth quarter and $163 million for the full year.
• Net loss for the full year was $496 million, impacted by a valuation allowance on U.S. federal deferred tax assets.
• The fiscal 2025 Restructuring Plan has been extended, with total program costs now expected to be approximately $305 million, substantially complete by December 31, 2026.
• The fiscal 2027 outlook projects a slight year-over-year revenue decline, with expected gross margin improvement of 220 to 270 basis points.

Sentiment

Score: 3

Explanation: StockSavvy.ai views this as a negative sentiment score due to declining revenues, reduced gross margins, and an increased restructuring plan, despite a cautiously optimistic outlook for fiscal 2027.

Positives

• International revenue increased 10% in the fourth quarter (3% constant currency) and 4% for the full year (flat constant currency).
• Direct-to-consumer (DTC) revenue increased 5% in the fourth quarter, with owned-and-operated store revenue growing 8%.
• Apparel revenue was flat in the fourth quarter.
• SG&A expenses decreased 15% in the fourth quarter and 12% for the full year, indicating improved cost management.
• The company expects significant gross margin improvement of 220 to 270 basis points in fiscal 2027, partly due to an assumed reversal of IEEPA tariff costs.
• Adjusted operating income is projected to be between $140 million and $160 million for fiscal 2027.

Negatives

• Total revenue decreased 1% in the fourth quarter and 4% for the full fiscal year 2026.
• North America revenue declined 7% in the fourth quarter and 8% for the full fiscal year.
• Gross margin declined significantly in the fourth quarter (470 basis points) and full year (240 basis points) due to tariffs and cost pressures.
• The company reported an operating loss of $34 million for the fourth quarter and $163 million for the full year.
• Net loss for the full fiscal year 2026 was $496 million.
• Inventory decreased only 3% to $915 million, suggesting potential for ongoing management challenges.
• The fiscal 2025 Restructuring Plan costs have increased to approximately $305 million.

Risks

• Higher tariffs, product costs, pricing headwinds, and unfavorable regional mix impacted gross margin.
• The Middle East conflict is creating supply chain headwinds.
• The company faces ongoing competition and potential loss of market share.
• Fluctuations in raw material and commodity costs, including labor, pose a risk.
• The company's ability to accurately forecast consumer preferences and manage inventory remains a challenge.
• Potential impacts from global economic conditions, including inflation and changes in trade policy.
• Risks related to foreign currency exchange rate fluctuations.

Future Outlook

For fiscal 2027, Under Armour anticipates a slight year-over-year decline in revenue, with low single-digit decreases in North America offset by low single-digit growth in EMEA and Asia-Pacific. Gross margin is expected to increase by 220 to 270 basis points, driven by an assumed reversal of IEEPA tariff costs, pricing actions, and a more favorable channel mix. SG&A expenses are projected to decrease at a low single-digit rate, excluding transformation expenses. Adjusted operating income is forecasted to be between $140 million and $160 million, and adjusted diluted earnings per share are expected to range from $0.08 to $0.12.

Management Comments

• "Our fiscal 2026 performance reflects the ongoing intentional steps we're taking to reset the business and restore the discipline required to operate as a best-in-class brand."
• "We're streamlining our operating model and increasing accountability in execution, driving a more controlled and predictable business."
• "As our topline stabilizes in fiscal 2027, we are applying the same rigor that is strengthening our product engine to our storytelling capabilities."
• "Building world-class, modern marketing excellence is now our highest priority that we believe will accelerate consumer demand and help reshape Under Armour's profit profile."

Industry Context

StockSavvy.ai notes that Under Armour's results reflect broader challenges in the athletic apparel and footwear sector, including persistent supply chain issues, inflationary pressures, and shifting consumer demand. The company's focus on resetting the business and prioritizing marketing excellence aligns with industry trends emphasizing brand storytelling and direct-to-consumer engagement to drive growth and profitability.

Comparison to Industry Standards

• Nike reported revenue growth of 5% for its fiscal third quarter ended February 29, 2024, indicating stronger top-line performance compared to Under Armour's revenue decline.
• Adidas reported a slight increase in revenue for its fiscal year 2023, demonstrating resilience in a challenging market, though gross margins faced pressure.
• Puma's recent financial updates have shown mixed results, with some regions experiencing growth while others face headwinds, similar to Under Armour's international segment performance.

Legal Proceedings

• The company incurred $99 million in litigation reserve expense in fiscal 2026, which impacted adjusted SG&A and operating income.

Stakeholder Impact

• Shareholders may be concerned by the continued revenue decline, net losses, and increased restructuring costs, although the fiscal 2027 outlook offers some potential for margin improvement.
• Employees may face uncertainty due to the ongoing restructuring plan and the focus on operational efficiencies.
• Suppliers and creditors may be monitoring the company's liquidity and debt repayment plans, particularly the senior notes due in June 2026.

Next Steps

• Continue execution of the reset business strategy.
• Focus on building world-class, modern marketing excellence.
• Accelerate consumer demand through enhanced storytelling.
• Reshape the company's profit profile.
• Substantially complete the Fiscal 2025 Restructuring Plan by December 31, 2026.

Key Dates

Recommendation

While Under Armour is undertaking significant restructuring and aims for margin improvement in FY27, the continued revenue decline and net losses in FY26 suggest a cautious approach. The positive outlook on gross margin and adjusted operating income provides a basis for holding the stock, awaiting clearer signs of sustained revenue growth and profitability.

Keywords

Under Armour, Fiscal 2026 Results, Fiscal 2027 Outlook, Revenue, Gross Margin, Restructuring Plan, Apparel, Footwear