Under Armour Earnings Reveal Margin Pressure

Under Armour (UA, UAA) said in a press release on 2026-05-12 that cost pressures and tariffs squeezed gross margins, prompting the company to expand its restructuring plan and forecast a slight fiscal 2027 revenue decline as it shifts focus toward stabilization rather than growth.

Quarter and Full-Year Results

The company reported fourth-quarter revenue of $1.17 billion, down 1% year-over-year. North America revenue fell 7%, while international sales rose 10%, making international markets the only growth area for the quarter ended 2026-03-31.

Gross margin declined 470 basis points to 42.0% (adjusted margin 43.1%, down 360 basis points). Under Armour posted an adjusted net loss of $11 million, or $0.03 per share, and a GAAP net loss of $43 million, or $0.10 per share. Selling, general, and administrative expenses fell 15% to $518 million. The company attributed the margin decline primarily to higher tariffs, increased product costs, pricing headwinds, and an unfavorable regional mix.

For fiscal 2026, revenue totaled $5.0 billion, down 4% from $5.16 billion. Apparel revenue was $3.4 billion, down 2%; footwear revenue fell 11% to $1.1 billion; accessories rose 1% to $414 million. Gross margin for the year was 45.5% (adjusted 45.7%, down 220 basis points). Adjusted net income was $49.6 million, and inventory declined 3% to $915 million. The company’s GAAP net loss widened to $495.6 million, which included a $247 million deferred-tax valuation allowance.

Outlook and Restructuring

Under Armour’s fiscal 2027 guidance calls for a slight revenue decline and adjusted earnings per share between $0.08 and $0.12, while projecting higher gross margins. Management said the outlook assumes weak North American consumer spending and broader macroeconomic uncertainty, prioritizing stabilization over growth. This contrasts with analysts’ expectations for about 1.6% revenue growth to $5.05 billion and consensus EPS near $0.23.

The company expanded its restructuring program to about $305 million in total costs, of which $261 million has been incurred, and expects to complete the plan by 2026-12-31. Combined with the cautious guidance, the larger restructuring highlights a near-term focus on margin recovery and cost rationalization rather than revenue expansion as Under Armour seeks to convert international momentum into sustained profitability.

"Gross margin declined 470 basis points to 42.0 percent, primarily due to higher tariffs, as well as higher product costs, pricing headwinds, and unfavorable regional mix," the company said in its press release.