Under Armour, Inc. raised its sales and EPS guidance for its fiscal year ended March 31 after third-quarter results topped expectations. Sales were down 6 percent in the quarter with an 8 percent decline in the North America region.

“We are pleased our quarterly results exceeded expectations,” said Under Armour President and CEO Kevin Plank. “As we sharpen our focus on strengthening the Under Armour brand, our updated product strategy and enhanced marketplace discipline combined with the shift to a category-led operating model are driving our transformation. Additionally, we will enter a pivotal new chapter in our marketing strategy by launching a dynamic, multi-year initiative of storytelling that showcases our incredible products, talented athletes, and influential creators,” Plank continued. “This will greatly enhance our visibility and empower our authentic connection with athletes to elevate our brand like never before.”

Third Quarter Fiscal 2025 Review
Revenue was down 6 percent to $1.4 billion (down 6 percent currency neutral).

  • North America revenue decreased 8 percent to $844 million, and International revenue decreased 1 percent to $558 million (down 2 percent currency neutral).
  • In the International business, revenue in EMEA was up 5 percent (up 3 percent currency neutral), down 5 percent in Asia-Pacific (down 6 percent currency neutral), and down 16 percent in Latin America (down 9 percent currency neutral).
  • Wholesale revenue decreased 1 percent to $705 million, and direct-to-consumer revenue was down 9 percent to $673 million. Revenue from owned and operated stores declined 1 percent, while eCommerce revenue was down 20 percent due to ongoing planned decreases in promotional activities, representing 39 percent of the total direct-to-consumer business for the quarter.
  • Apparel revenue decreased 5 percent to $966 million, footwear revenue was down 9 percent to $301 million, and accessories revenue was up 6 percent to $110 million.

Income Statement Summary
Gross margin increased 240 basis points to 47.5 percent, driven primarily by less direct-to-consumer discounting, lower product and freight costs and a favorable impacts from changes in foreign currency.

Selling, general, and administrative expenses increased 6 percent to $638 million, primarily due to increased marketing investments. 

Adjusted selling, general, and administrative expenses increased 5 percent to $606 million, which excludes an impairment of $28 million related to exiting our previous global headquarters and approximately $4 million in transformation expenses related to our Fiscal 2025 restructuring program.

Restructuring charges were $14 million.

Operating income was $14 million. Excluding the impairment charge, transformation expenses, and restructuring charges, adjusted operating income was $60 million.

Net income was $1 million for the fiscal third quarter, compared to earnings of $110.8 million in the prior-year Q3 period. Adjusted net income was $35 million in Q3 compared with $84 million a year ago. Diluted earnings per share was $0.00 versus 25 cents a year ago. Adjusted diluted earnings per share was 8 cents, down from 19 cents a year ago.

Balance Sheet Summary
At the end of the quarter, cash and cash equivalents totaled $727 million, and no borrowings were outstanding under the company’s $1.1 billion revolving credit facility.

Inventory was reportedly flat at $1.1 billion at quarter-end.

Share Buyback Program
Under Armour repurchased $25 million of its Class C common stock in the third quarter, retiring 2.8 million shares. By December 31, 2024, 8.7 million shares had been repurchased for $65 million as part of a three-year, $500 million program that the Board of Directors approved in May 2024.

Fiscal 2025 Restructuring Plan
In May 2024, Under Armour announced a restructuring plan to improve the company’s financial and operational efficiencies. After further evaluation, in September 2024, the company disclosed additional restructuring actions, mainly centered on the decision to close one of its distribution centers in Rialto, California. This decision increased the anticipated range of its restructuring plan to between $140 million and $160 million, with up to $75 million expected to be cash-related and as much as $85 million projected as non-cash charges.

By the end of the third fiscal quarter of 2025, the company had recognized $42 million in restructuring and impairment charges and $15 million in other related transformational expenses under the plan. Of the total $57 million incurred thus far, $40 million is cash-related, and $17 million is non-cash-related. The company anticipates that the remaining charges outlined in the updated restructuring plan will be realized during fiscal years 2025 and 2026.

Updated Fiscal 2025 Outlook
Key points related to Under Armour’s fiscal 2025 outlook include:

  • Revenue is expected to decline by approximately 10 percent compared to the prior expectation of a low double-digit percentage decline, which includes an expected 12 percent to 13 percent decline in North America versus the previous expectation of a 14 percent to 16 percent decline and a mid-single-digit decrease in international sales compared to the prior expectation of a low single-digit decline. In the International business, the company expects flat results in EMEA (no change) and a low-teen percent drop in the Asia-Pacific region compared to the prior expectation of a high single-digit decline.
  • Gross margin is expected to increase by approximately 160 basis points, compared to the prior expectation of 125-to-150 basis points. The annual improvement is driven primarily by less direct-to-consumer discounting and lower product and freight costs.
  • Selling, general, and administrative expenses are expected to increase at a high single-digit percentage rate, primarily due to litigation settlement expenses. Excluding these litigation settlement expenses, related insurance recoveries, anticipated transformation expenses, and impairment charges, adjusted selling, general, and administrative expenses are expected to decrease at a low single-digit percentage rate versus the prior expectation for a low-to-mid single-digit percentage decline.
  • Operating loss is expected to be $179 to $189 million, compared to the previous expectation of $176 to $196 million. Excluding the midpoint of anticipated restructuring charges and transformation expenses, litigation settlement expenses and related insurance recoveries, and impairment charges, adjusted operating income is expected to be $185 to $195 million, compared to the prior expectation of $165 to $185 million.
  • Diluted loss per share is expected to be 48 cents to 50 cents per share, compared to the prior expectation of 48 cents to 51 cents. 
  • Adjusted diluted earnings per share is expected to be $0.28 to $0.30, compared to the previous expectation of 24 cents to 27 cents per diluted share.
  • Capital expenditures are expected to be $170 to $180 million, compared to the previous estimate of $190 to $210 million.

Image courtesy Under Armour