Under Armour Inc (NYSE:UAA) exceeded its fiscal '25 outlook, demonstrating foundational traction in repositioning the brand.
The company achieved a 170 basis point increase in gross margin year-over-year, driven by supply chain benefits and reduced discounting.
Under Armour Inc (NYSE:UAA) is focusing on high-return categories and markets, streamlining operations, and exiting lower-value activities to boost efficiency.
The company is making significant progress in reshaping its narrative and aligning storytelling with product innovation to enhance brand relevance.
Under Armour Inc (NYSE:UAA) is implementing a category management operating model to execute faster and create greater impact, aligning product, marketing, and regional teams around key categories.
Negative Points
Revenue declined by 11% in the fourth quarter, with significant decreases in North America and APAC regions.
The company experienced a 27% decrease in e-commerce sales due to efforts to establish a more premium online presence.
Footwear revenue declined by 17%, reflecting ongoing portfolio management efforts to optimize segmentation and assortment.
Under Armour Inc (NYSE:UAA) reported an operating loss of $72 million in the fourth quarter, with an adjusted operating loss of $36 million.
The company is facing significant uncertainty due to recent changes in trade policy, impacting its ability to provide a full-year outlook.
Q & A Highlights
Q: Can you provide more details about the North American reset and its progress in fiscal '26? A: Kevin Plank, President and CEO, explained that the reset is led by Kara Trent, who successfully executed a similar strategy in Europe. The focus is on reducing constant discounting and enhancing product storytelling. The goal is to build brand affection and confidence among wholesale partners, with a disciplined approach to product and market engagement.
Q: What are the upcoming major brand activations, and when will they be visible? A: Kevin Plank stated that the brand activation will embrace Under Armour's underdog DNA, focusing on storytelling rather than price. The campaign will be rolled out in smaller, channel-specific content rather than a single large campaign. The activation will primarily occur in the back half of the year, aiming to enhance brand relevance and differentiation.
Q: How is Under Armour planning to normalize e-commerce with reduced promotional activity? A: Kevin Plank highlighted that the focus is on creating a brand-inspired e-commerce experience rather than a transactional one. The strategy includes enhancing storytelling, leveraging loyalty programs, and utilizing social commerce. The aim is to build a healthier, brand-right e-commerce foundation for sustainable growth.
Q: Can you discuss the expected savings from the restructuring plan and its impact on SG&A expenses? A: David Bergman, CFO, noted that the restructuring plan brought $35 million in savings in fiscal '25, with an expected run rate savings of $75 million by the end of fiscal '26. The focus is on maintaining cost discipline while ensuring sustained investment in brand marketing to support long-term growth.
Q: How is the inventory situation, and what is the outlook for units and dollars in revenue? A: David Bergman explained that inventory was down 1% year-over-year, aligning with expectations. The company is managing inventory tightly amid demand uncertainties. The focus is on maintaining a balance between cost per unit and pricing power, with an emphasis on selling more premium products at higher full prices.
