8-K: Under Armour Reports Q4 Fiscal 2025 Results; Provides Q1 Fiscal 2026 Outlook

Under Armour's Q4 fiscal 2025 results show a revenue decline but improved gross margins, with a cautious outlook for Q1 fiscal 2026 due to macroeconomic uncertainties.

Summary

• Under Armour announced its Q4 and full fiscal year 2025 results, which ended March 31, 2025.
• Q4 revenue decreased by 11% to $1.2 billion, or 10% on a currency-neutral basis.
• North American revenue decreased 11% to $689 million, while international revenue declined 13% to $489 million (down 10% currency neutral).
• Gross margin increased 170 basis points to 46.7%, driven by supply chain benefits and reduced discounting.
• The company reported a net loss of $67 million, or an adjusted net loss of $35 million.
• For the full fiscal year 2025, revenue decreased 9% to $5.2 billion (down 9% currency neutral).
• Gross margin for the full year increased 180 basis points to 47.9%.
• The company reported a net loss of $201 million, or an adjusted net income of $135 million.
• Under Armour expects Q1 fiscal 2026 revenue to decrease 4% to 5%.
• Gross margin for Q1 2026 is expected to increase 40 to 60 basis points.
• The company anticipates an operating income of $5 million to $15 million for Q1 2026.
• Under Armour repurchased $25 million of its Class C common stock in Q4, retiring 4.1 million shares.
• As of March 31, 2025, a total of 12.8 million shares had been repurchased for $90 million as part of a three-year, $500 million program approved in May 2024.
• The company recognized $58 million in restructuring and impairment charges and $31 million in other related transformational expenses under the Fiscal 2025 Restructuring Plan.

Sentiment

Score: 5

Explanation: The sentiment is neutral. While gross margins improved and restructuring efforts are underway, revenue declined and the company reported a net loss. The outlook is cautious due to macroeconomic uncertainties.

Positives

• Gross margin increased both in Q4 (170 basis points) and for the full year (180 basis points), driven by supply chain benefits and reduced discounting.
• Adjusted selling, general, and administrative expenses decreased 2% to $2.3 billion for the full year.
• Under Armour is executing a share buyback program, repurchasing $25 million of its Class C common stock in Q4.
• Cash and cash equivalents totaled $501 million, and there were no outstanding borrowings under the company's $1.1 billion revolving credit facility.

Negatives

• Q4 revenue decreased by 11% to $1.2 billion, or 10% on a currency-neutral basis.
• The company reported a net loss of $67 million in Q4 and $201 million for the full year.
• North American revenue decreased 11% to $689 million in Q4.
• eCommerce revenue dropped 27% in Q4 due to planned reductions in promotional activities.
• The company expects Q1 fiscal 2026 revenue to decrease 4% to 5%.

Risks

• The company cites uncertainty surrounding evolving trade policies and the macroeconomic environment, including potential demand-related and cost impacts from tariffs.
• The company is providing an outlook solely for the first quarter of fiscal 2026 due to macroeconomic uncertainty.
• The company's restructuring plan has an anticipated range of $140 million to $160 million, with up to $90 million expected to be cash-related.

Future Outlook

Under Armour expects Q1 fiscal 2026 revenue to decrease 4% to 5%, with gross margin increasing 40 to 60 basis points and operating income between $5 million and $15 million. The company is only providing guidance for Q1 due to macroeconomic uncertainties.

Management Comments

• Under Armour President and CEO Kevin Plank stated that the company is laying the groundwork for a more focused Under Armour by elevating products and storytelling, tightening distribution, and refining the operating model.
• Kevin Plank stated that the company's Q4 performance contributed to fiscal 2025 results that were better than expectations set a year ago and that they are demonstrating traction in their efforts to reposition the brand.
• Kevin Plank stated that the company is confident in the agility they've built and are raising the bar of excellence at Under Armour.

Industry Context

The announcement comes amid a challenging macroeconomic environment and evolving trade policies, impacting consumer spending and supply chains. Under Armour's focus on brand repositioning and operational efficiency aligns with industry trends of companies seeking sustainable growth and profitability in a competitive market.

Comparison to Industry Standards

• Nike, a major competitor, has also been focusing on direct-to-consumer sales and supply chain optimization.
• Adidas has been similarly navigating global economic challenges and trade uncertainties.
• Lululemon has demonstrated strong growth in recent years, driven by innovative products and a focus on customer experience.
• Under Armour's gross margin improvements are a positive sign, but the company needs to address its revenue decline to remain competitive.

Stakeholder Impact

• Shareholders may be concerned about the revenue decline and net loss, but encouraged by the improved gross margins and share repurchase program.
• Employees may be affected by the restructuring plan, which could involve job cuts or changes in roles.
• Customers may benefit from the company's focus on elevating products and storytelling.
• Suppliers may be impacted by changes in the company's distribution strategy.

Next Steps

• The company will continue to execute its restructuring plan to improve financial and operational efficiencies.
• Under Armour will focus on elevating products and storytelling, tightening distribution, and refining its operating model.
• The company will navigate ongoing volatility with resilience, bolstered by the move to a category-led operating model.

Key Dates

Keywords

Under Armour, financial results, revenue, gross margin, restructuring, outlook, share repurchase, net loss, earnings, apparel, footwear, accessories