Under Armour (NYSE:UA) executives told investors the company is moving into what management described as the next phase of its turnaround, with an emphasis on execution, simplification, and more consistent operating rhythms. On the company’s fiscal 2026 third-quarter earnings call, President and CEO Kevin Plank said the “most disruptive phase” of the reset is now behind the business, while CFO Dave Bergman said the company met or exceeded its outlook across major line items despite several non-recurring items in reported results.
Management frames turnaround around simplification and “intentionality”
Plank said the company has worked to reduce complexity across the organization by narrowing focus, moving decisions earlier, and reducing friction from “too many handoffs” and approvals. He said inventory is down year-over-year, assortments are tighter, and planning is more precise. Plank also pointed to structural changes intended to improve speed to market, SKU productivity, athlete insight, and accountability.
Plank also outlined targeted leadership changes aimed at accelerating execution:
- Kara Trent named Chief Merchandising Officer with end-to-end responsibility for product mix, pricing, and margin performance.
- Adam Peake named President of the Americas.
- Eric Liedtke named Chief Marketing Officer and EVP of Strategy.
- Yassine Saidi transitioned to an external senior advisor role, which Plank said is intended to ensure design continuity.
Product focus: building pricing power in apparel while resetting footwear
Plank repeatedly emphasized product as the engine of the turnaround, describing it as Under Armour’s “currency.” He said base layer remains a steady driver, highlighting HeatGear and ColdGear and noting that refreshed designs and modern colorways are driving higher average selling prices (ASPs) and “strong double-digit growth” in those products. He also cited performance in Icon Fleece and the Women’s Meridian franchise, and said Spring-Summer 2026 will bring more elevated product with a more consistent design language, including an improved Women’s Vanish Elite collection.
In accessories, Plank said products like the StealthForm hat and No Way backpack are “pushing the price ceiling,” supported by premium performance attributes and a focused product story. He said sell-through for newer franchises is improving year over year and full-price realization is trending higher, while wholesale partners are responding more positively to upcoming assortments.
Footwear remained a major focus, with Plank acknowledging the category is still in a “long, challenging recovery path.” He said year-to-date footwear sales are down about 14%, which he attributed to structural issues stemming from prior assortment expansion that diluted volume, pressured margins, and increased inventory risk. Plank said the company is exiting low-productivity styles, reducing redundant SKUs, and eliminating launches without a defined role, strong margin profile, or scalable growth opportunity.
He offered several examples of newer footwear initiatives, including strong sell-through for the Velociti Elite 3 at launch and the ongoing performance of the Assert 11, which he said is delivering a meaningfully higher ASP than the prior version. Plank also discussed sportswear footwear launches including HB Low at $100, the $120 Sola model, and Arc 96 at $125, noting encouraging early indicators such as social response and sell-through. He said the company is becoming more intentional with fewer, higher-impact franchises and expressed confidence it can stabilize footwear next year.
Third-quarter results: revenue down, gross margin pressured by tariffs and promotions
Bergman said fiscal third-quarter revenue declined 5% to $1.3 billion, slightly better than the company’s November outlook, aided by roughly 1 percentage point of growth from a timing shift of some wholesale deliveries from the fourth quarter into the third quarter.
Regional performance included:
- North America: Revenue declined 10%, primarily due to lower wholesale, with a slightly smaller decline in direct-to-consumer (DTC).
- EMEA: Revenue increased 6% reported and 2% currency-neutral, with growth in both wholesale and DTC.
- APAC: Revenue decreased 5% reported and currency-neutral, which Bergman described as a sequential improvement versus the first half; the decline was driven primarily by full-price wholesale, while DTC was down only slightly, partially offset by licensing growth.
- Latin America: Revenue increased 20% reported and 13% currency-neutral, with balanced growth.
By channel, wholesale revenue decreased 6% due to lower full-price and third-party off-price sales, partially offset by distributor growth. DTC revenue declined 4%, driven by a 7% drop in e-commerce; sales in owned-and-operated stores fell 2%. Licensing revenue grew 14%, led by international licensees and modest North America growth.
By product type, apparel revenue declined 3% due largely to softness in training, golf, and running, while sportswear was flat. Footwear revenue decreased 12%, with declines across most categories partially offset by outdoor growth. Accessories revenue fell 3%, driven by declines in golf, outdoor, and team sports, partially offset by sportswear growth.
Gross margin declined 310 basis points year over year to 44.4%, which Bergman said was in line with guidance. He attributed the decline primarily to supply chain headwinds, including pressure from higher U.S. tariffs, pricing impacts in a more promotional North America environment, and unfavorable channel and regional mix, partially offset by foreign currency and a favorable product mix.
Non-recurring items weigh on GAAP results; adjusted operating income tops outlook
SG&A expenses increased 4% to $665 million, primarily driven by a $99 million litigation reserve related to a previously disclosed insurance carrier dispute. The company also recorded approximately $3 million in transformation costs tied to its fiscal 2025 restructuring plan. Excluding those items, adjusted SG&A declined 7% to $563 million, which Bergman said reflected marketing timing, restructuring benefits, and cost discipline.
Under the fiscal 2025 restructuring plan, Under Armour recorded $75 million in restructuring charges and $3 million in transformation-related SG&A expenses in the quarter, bringing total charges and transformation expenses since inception to $224 million. Bergman reiterated expectations for total charges of up to $255 million, with remaining amounts incurred by the end of fiscal 2026, and said the plan delivered about $35 million in savings in fiscal 2025 and is on track for an additional $55 million in fiscal 2026.
Under Armour reported a third-quarter operating loss of $150 million, while adjusted operating income was $26 million. Reported diluted loss per share was $1.01, which included the insurance appeal decision, restructuring and transformation charges, and a $247 million non-cash valuation allowance against certain U.S. federal deferred tax assets. Bergman said the valuation allowance has no impact on current cash flow, does not indicate deterioration in the underlying business, and should reverse over the next few years as U.S. profitability improves. Adjusted diluted EPS for the quarter was $0.09, aided in part by a tax development tied to IRS approval of a tax method change; Bergman said the tax update contributed about $0.06 to quarterly EPS.
Outlook: modestly improved revenue expectations; operating income guided to high end
With one quarter left in fiscal 2026, Bergman said the company updated its expectations toward the high end of prior ranges. Under Armour now expects full-year revenue to decline about 4% (versus prior guidance for a 4% to 5% decline), with North America down about 8%, APAC down about 6%, and EMEA up about 9%.
The company expects full-year gross margin to decline about 190 basis points, slightly better than the prior 190-210 basis-point decline outlook, with tariffs still driving most of the pressure. Under Armour maintained expectations that adjusted SG&A will decline at a mid-single-digit rate, which Bergman said implies a “considerable” fourth-quarter decline in SG&A due to marketing timing and lower compensation-related costs.
Adjusted operating income is now expected to be about $110 million, at the high end of the prior $95 million to $110 million range. Under Armour expects adjusted diluted EPS of $0.10 to $0.11, reflecting the favorable tax planning developments discussed on the call.
Bergman also reviewed balance sheet items, noting inventory declined 2% year over year to just over $1 billion. The company ended the quarter with $465 million in cash and cash equivalents and $600 million in restricted investments set aside to cover remaining principal and interest on senior notes due in June. Under Armour repaid about $200 million of revolver borrowings during the quarter and ended with no amounts outstanding under its $1.1 billion revolving credit facility.
To close the call, Bergman said it was his last earnings call as CFO after 21 years at the company, and Plank thanked him for his tenure while welcoming incoming CFO Reza. Management said it plans to provide more detail on fiscal 2027 as it approaches its early May call.
About Under Armour (NYSE:UA)
Under Armour, Inc is a global designer, marketer and distributor of branded performance apparel, footwear and accessories. The company’s product portfolio spans a wide range of athletic categories, including running, training, basketball, outdoor and golf, with specialized lines for men, women and youth. Under Armour emphasizes innovative fabrics and technologies designed to enhance athletic performance, such as moisture-wicking HeatGear®, cold-weather ColdGear® and UV-protective UA Tech™ materials.
The company was founded in 1996 by former University of Maryland football captain Kevin Plank, who sought to create a superior moisture-wicking T-shirt to keep athletes cool and dry.
