Updated 4:58 p.m. ET May 12
Under Armour‘s stock took a hit on Tuesday after the company missed analyst expectations with its fourth-quarter results and provided a lackluster outlook for the next fiscal year.
The stock closed down 16.7 percent at $4.90, leaving it with a market capitalization of $2.1 billion.
Before the market opened, the Baltimore-based sports brand reported an operating loss of $34 million and adjusted operating income of $3 million for the period ended March 31. The net loss was $43 million and the adjusted net loss was $11 million, which excludes transformation and restructuring charges. The diluted loss per share was 10 cents and the adjusted diluted loss per share was 3 cents, below analyst expectations of 1 cent.
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Sales, which were in line with expectations, decreased 1 percent to $1.2 billion.
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The company said its results were hurt by higher costs, mainly from tariffs, and increased promotional pressure, particularly in its direct-to-consumer channels. As a result, the company said it will need to extend its restructuring plan to at least the end of this year, which will increase costs to $305 million from the previously expected $255 million.
Breaking down the quarterly results by region, North America sales continued to decline, falling 7 percent to $641 million in the period, while international revenue increased 10 percent to $539 million. By region, EMEA revenue increased 7 percent, Asia-Pacific increased 13 percent and Latin America increased 22 percent.
Wholesale revenue decreased 3 percent to $748 million and direct-to-consumer revenue increased 5 percent to $406 million. The company’s owned-and-operated store revenue grew 8 percent, while e-commerce sales, which represent 35 percent of total DTC volume, were flat.
By category, apparel revenue was also flat at $778 million despite growth in train, outdoor and sportswear which was offset by oftness in run, team sports and golf. Footwear was also flat at $282 million, while accessories grew 2 percent to $94 million.
“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,” said Kevin Plank, president and chief executive officer. “Over the past two years we’ve addressed structural and macro challenges head-on while elevating our product strategy. We’re streamlining our operating model and increasing accountability in execution, driving a more controlled and predictable business.
“As our top line 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.”
In a call with analysts, Plank acknowledged the “difficult trade-offs” the company has had to make as it claws it way back to profitability. That includes a focus on its core 16- to 24-year-old consumer, creating innovative products that result in “stronger margins and greater brand impact.” He singled out a $65 pima cotton T-shirt with Neolast recycable stretch fiber as a “defining product” that showcases the company’s ability to move from the field to the gym to consumers’ daily lives.
Over the past two years, he said, stock keeping units have been reduced by 25 percent and the company is expecting “further reductions as we continue to sharpen the assortment.” That same strategy will be applied to marketing, with a goal to become more “product led and more intentional. We’re concentrating investment behind the products, athletes and stories…[that] differentiate UA.”
Turning to his home country, Plank projected “stabilization” in North America as the company focused on “restoring marketplace discipline and rebuilding momentum with both consumers and wholesale partners.” He cited cleaner inventories and postive engagement with key accounts as moves in the first direction.
He summed it up this way: “Over the past two years, we’ve rebuilt important parts of the company with greater clarity, discipline and accountability. Now following the progress we’ve made in reengineering our product organization, we are now applying that same focus and lens with rigor to marketing with the goal of amplifying our product strengths, deepening consumer connection and driving more consistent demand.”
Looking ahead to fiscal 2027, the company said revenue is expected to decline slightly year-over-year, with a low-single-digit decrease in North America partially offset by low-single-digit growth in EMEA and Asia-Pacific. Included in the outlook is a 1 percent point of impact from the Curry brand exit.
Operating income is expected to be in the range of $96 million to $116 million and adjusted operating income is seen coming in at $140 million to $160 million. Diluted loss per share is expected to range from breakeven to $0.04 and adjusted diluted earnings per share are expected to range from 8 to 12 cents.
Analysts were underwhelmed by the results. As Neil Saunders, managing director of GlobalData, wrote in a note: “Under Armour has only shown very modest signs of improvement in the U.S. and remains significantly below many other brands. Many consumers remain confused and somewhat nonplussed with the brand. We don’t believe there is sufficient evidence to say there is a sustainable recovery at Under Armour…and it ties back to the fact that Under Armour has still not found its groove in terms of brand positioning or having truly innovative and interesting products that stand out from rivals.”
Gaston Dimant of BNP Paribas, wasn’t quite as dour. He remained “neutral” on the company as he waited for “more clarity on the turnaround.”