Core Insights - Under Armour, Inc. (UAA) reported a decline in first-quarter fiscal 2026 results, primarily due to regional weaknesses and a challenging macroeconomic environment [1][9] - North America, the largest revenue contributor, experienced a 5.5% year-over-year decline, attributed to lower wholesale orders and weaker retail traffic [1][9] - Management anticipates continued pressure in the second quarter, forecasting a low double-digit revenue decline [2][6] Regional Performance - International revenues fell 1.4% year over year to $466.6 million, with EMEA showing a 9.6% increase while APAC and Latin America faced declines [3][4] - APAC revenues dropped 10%, reflecting weaker consumer confidence and a competitive retail environment [4] - Latin America saw a 15.3% revenue decline, partly due to foreign currency headwinds, with a currency-neutral decline of 8% [5] Strategic Focus - Under Armour's strategy in APAC emphasizes rebuilding premium positioning through tighter distribution and disciplined pricing [4] - The company aims to restore sustainable growth momentum in fiscal 2026 despite current challenges [4][6] - Management is focused on strengthening regional operations and improving long-term revenue quality [6] Financial Metrics - UAA shares have declined 29.8% over the past three months, compared to a 5.5% decline in the industry [7] - The company is trading at a forward 12-month price-to-sales ratio of 0.41X, significantly lower than the industry average of 1.50X [8] - The Zacks Consensus Estimate for fiscal 2026 earnings indicates an 83.9% year-over-year decline, while fiscal 2027 estimates suggest a 310.9% increase [11]

Core Insights - Under Armour, Inc.'s first-quarter fiscal 2026 performance shows significant improvements due to ongoing cost optimization and restructuring efforts [1] Cost Optimization and Restructuring - The company has streamlined operations by reducing SKUs, consolidating materials, and tightening product assortments, leading to improved sourcing and lower costs while focusing on core product categories [2] - The restructuring plan has generated $35 million in savings for fiscal 2025, with an additional $45 million expected in fiscal 2026 [2] - Selling, general and administrative (SG&A) expenses improved, with adjusted SG&A declining by 5.9% year over year, and reported SG&A falling by 37% [3] - The restructuring program has included operational streamlining, such as the planned closure of the Rialto distribution center, resulting in $110 million in charges since the plan's launch [4] Gross Margin and Profitability - Under Armour achieved a gross margin expansion of 70 basis points to 48.2%, supported by favorable foreign currency effects, pricing advantages, and a favorable product mix [5] - The margin expansion reflects the company's strategy to elevate its brand by premiumizing core products and focusing on higher full-price sell-through, moving away from discount-driven sales [6] Valuation and Market Performance - Under Armour's shares have declined by 27.7% over the past six months, compared to an 18% decline in the industry [7] - The company is trading at a forward 12-month price-to-sales ratio of 0.41X, significantly lower than the industry average of 1.53X [8] Earnings Estimates - The Zacks Consensus Estimate for Under Armour's fiscal 2026 earnings indicates a year-over-year decline of 80.7%, while fiscal 2027 estimates suggest a recovery with a 280% increase [11]

Core Thesis - Under Armour, Inc. is experiencing renewed investor interest due to significant insider activity and a turnaround strategy under CEO Mr. Liedtke, which mirrors successful tactics from his time at Adidas [2][5]. Company Performance - As of September 16th, Under Armour's share price was $4.8600, with trailing and forward P/E ratios of 22.09 and 81.30 respectively [1]. - The brand maintains strong resonance in North America and is gaining traction in EMEA, while competitors like Nike may face spending constraints, allowing Under Armour to capitalize on emerging trends [3]. Insider Activity - All board members accepted RSU grants without selling shares, and key members made outright purchases, indicating strong insider confidence in the company's future [2]. - Notably, Mohamed El-Erian purchased shares for the first time since becoming Chairman, further emphasizing insider alignment with the company's strategy [2][5]. Strategic Initiatives - Under Armour is selectively expanding its retail presence through boutiques to preserve brand value and is underrepresented in specialty running retailers, presenting opportunities for enhanced exposure, particularly with the Halo shoe line [3]. - Current guidance for EPS ranges from $0.05 to $0.25, suggesting potential upside if operational execution improves [3]. Financial Considerations - Tariffs are expected to pressure North American gross margins by approximately 200 basis points in 2Q26, but this does not fully account for the significant EBIT margin compression indicated by guidance [4]. - A $27 million insurance benefit in 2Q25 was disclosed but not factored into adjustments, highlighting conservative accounting practices [4]. Investment Narrative - With strong brand equity, strategic flexibility, and insider alignment, Under Armour presents a compelling investment narrative with multiple catalysts for upside if operational execution and market recognition accelerate [5][6].

Core Viewpoint - The analyst issued a sell rating for Under Armour, citing concerns over high valuation and lack of growth potential [1] Group 1: Company Analysis - Under Armour's valuation is considered too high, leading to a sell recommendation [1] - The investment strategy focuses on identifying undervalued companies with long-term growth potential [1] Group 2: Investment Philosophy - The investment approach combines value investing principles with a focus on long-term growth [1] - The belief is in purchasing quality companies at a discount to their intrinsic value and holding them for compounding earnings and shareholder returns [1]

Group 1 - The article reflects on a visit to a sporting goods store in Europe, highlighting the presence of a prominent Under Armour logo, suggesting a nostalgic connection to the brand [1] - The author emphasizes a belief in the efficiency of financial markets, indicating that most stocks generally reflect their true current value [1] - The best investment opportunities are identified as those in stocks that are less followed by average investors or those that do not accurately represent existing market opportunities [1]

Core Viewpoint - Under Armour Inc (UAA) has potential for a long-term turnaround but faces near-term margin pressure due to tariffs and wholesale uncertainty [1] Group 1: Analyst Ratings and Price Target - Analyst Lorraine Hutchinson from BofA Securities reiterated a Neutral rating and reduced the price target from $8 to $6.50 [1] - The company is expected to generate weaker sales and lower margins through fiscal years 2026 and 2027 primarily due to tariffs [1] Group 2: Financial Performance and Guidance - Under Armour reported adjusted earnings in line with expectations for the first quarter, with softer sales offset by cost control [2] - Management guided for second-quarter sales and margins to fall short of market expectations, anticipating a 6%-7% decline in sales and a gross margin contraction of 340-360 basis points [2] Group 3: Market Behavior and Stock Performance - Management noted that both consumers and wholesale partners have shown hesitance in purchasing behavior, with the second quarter expected to be the weakest sales growth quarter of the year [3] - At the time of publication, shares of Under Armour had declined by 4.50% to $5.20 [3]

Group 1 - Under Armour, Inc. reported fiscal Q1 results for the April-June period on August 8, showing a moderate decline in sales [1] - The company provided weak guidance for Q2, indicating potential challenges ahead [1] Group 2 - The company operates in the athletic apparel and footwear industry, which is facing competitive pressures [1]

Core Insights - Under Armour, Inc. reported first-quarter fiscal 2026 results with revenues exceeding estimates but earnings missing expectations, indicating a mixed performance [1][3] - The company emphasized brand momentum and strategic focus on premium products and pricing innovation despite a challenging environment [2] Financial Performance - Adjusted earnings were 2 cents per share, missing the Zacks Consensus Estimate of 3 cents, but increased from 1 cent per share in the prior year [3][10] - Net revenues were $1,134.1 million, beating the consensus estimate of $1,132 million but down 4.2% year over year [3][10] - Wholesale revenues fell 4.6% to $649.1 million, while direct-to-consumer revenues declined 3.5% to $463.5 million [4] Revenue Breakdown - Apparel revenues decreased 1.5% to $746.6 million, exceeding the estimate of $729.4 million, while footwear revenues dropped 14.3% to $265.9 million, missing the estimate of $286.4 million [5] - Revenues from North America declined 5.5% to $670.3 million, missing the estimate of $675.6 million, while international revenues decreased 1.4% to $466.6 million [6] Margin Analysis - Gross profit was $546.5 million, down 2.9% year over year, but gross margin expanded 70 basis points to 48.2% due to favorable foreign exchange rates and improved pricing [8] - Adjusted selling, general and administrative expenses decreased 5.9% to $522.1 million, excluding transformation costs [9] Future Outlook - For Q2 fiscal 2026, revenues are expected to decline 6-7% compared to the same period in fiscal 2025, with varying performance across regions [15] - Gross margin is projected to contract 340-360 basis points due to supply-chain headwinds and unfavorable channel mix [16] - Adjusted operating income is estimated between $30 million and $40 million, with a forecasted loss per share of 7 to 8 cents [18]

Core Insights - Under Armour reported revenue of $1.13 billion for the quarter ended June 2025, a decrease of 4.2% year-over-year, with an EPS of $0.02 compared to $0.01 in the same quarter last year [1] - The revenue matched the Zacks Consensus Estimate, indicating a surprise of +0.2%, while the EPS fell short of expectations by 33.33% [1] Revenue Performance - Total revenue from North America was $670.32 million, below the average estimate of $675.6 million, reflecting a year-over-year decline of 5.5% [4] - Asia-Pacific revenues were reported at $163.39 million, exceeding estimates of $153.59 million, but still down 10.2% year-over-year [4] - Latin America generated $54.58 million, below the average estimate of $57.58 million, marking a 15.3% decline year-over-year [4] - EMEA revenues reached $248.61 million, slightly above the estimate of $244.35 million, showing a year-over-year increase of 9.6% [4] Product Revenue Breakdown - Apparel sales were $746.59 million, surpassing the estimate of $729.4 million, but down 1.5% year-over-year [4] - Footwear revenue was $265.86 million, significantly below the estimate of $286.42 million, representing a 14.4% decline [4] - Accessories generated $100.08 million, exceeding the estimate of $92.39 million, with an 8.1% year-over-year increase [4] - License revenues were reported at $24.36 million, above the estimate of $21.59 million, reflecting a 12.4% increase year-over-year [4] Distribution Channel Performance - Wholesale revenues were $649.05 million, below the average estimate of $663.75 million, indicating a 4.6% decline year-over-year [4] - Direct to Consumer revenues reached $463.48 million, exceeding the estimate of $444.5 million, but down 3.5% year-over-year [4] Stock Performance - Under Armour's stock has returned -6.2% over the past month, contrasting with the S&P 500 composite's +1.9% change, and currently holds a Zacks Rank 4 (Sell) [3]

[PART I - FINANCIAL INFORMATION](index=3&type=section&id=PART%20I%20-%20FINANCIAL%20INFORMATION) [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) This section presents Under Armour's unaudited condensed consolidated financial statements, including balance sheets, income, comprehensive income, equity, and cash flows, with detailed notes for recent periods [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) | Metric | June 30, 2025 (in thousands) | March 31, 2025 (in thousands) | | :----- | :--------------------------- | :---------------------------- | | Total Assets | $4,865,191 | $4,300,871 | | Total Liabilities | $2,990,762 | $2,410,593 | | Total Stockholders' Equity | $1,874,429 | $1,890,278 | | Cash and Cash Equivalents | $910,985 | $501,361 | | Inventories | $1,141,829 | $945,836 | | Current Maturities of Long-Term Debt | $599,757 | $0 | [Condensed Consolidated Statements of Operations](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) | Metric | Three Months Ended June 30, 2025 (in thousands) | Three Months Ended June 30, 2024 (in thousands) | Change (%) | | :----- | :---------------------------------------------- | :---------------------------------------------- | :--------- | | Net Revenues | $1,134,068 | $1,183,665 | -4.2% | | Gross Profit | $546,496 | $562,675 | -2.9% | | Income (Loss) from Operations | $3,323 | $(299,728) | +101.1% | | Net Income (Loss) | $(2,612) | $(305,426) | +99.1% | | Basic Net Income (Loss) per Share | $(0.01) | $(0.70) | +98.6% | | Diluted Net Income (Loss) per Share | $(0.01) | $(0.70) | +98.6% | [Condensed Consolidated Statements of Comprehensive Income (Loss)](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income%20(Loss)) | Metric | Three Months Ended June 30, 2025 (in thousands) | Three Months Ended June 30, 2024 (in thousands) | | :----- | :---------------------------------------------- | :---------------------------------------------- | | Net Income (Loss) | $(2,612) | $(305,426) | | Foreign Currency Translation Adjustment | $29,536 | $(16,563) | | Unrealized Gain (Loss) on Cash Flow Hedges, net of tax | $(48,911) | $17,616 | | Total Other Comprehensive Income (Loss) | $(18,523) | $289 | | Comprehensive Income (Loss) | $(21,135) | $(305,137) | [Condensed Consolidated Statements of Stockholders' Equity](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders'%20Equity) | Metric | Balance as of March 31, 2025 (in thousands) | Balance as of June 30, 2025 (in thousands) | | :----- | :------------------------------------------ | :----------------------------------------- | | Total Stockholders' Equity | $1,890,278 | $1,874,429 | | Retained Earnings | $746,277 | $736,180 | | Accumulated Other Comprehensive Income (Loss) | $(93,938) | $(112,461) | [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) | Metric | Three Months Ended June 30, 2025 (in thousands) | Three Months Ended June 30, 2024 (in thousands) | Change ($) | | :----- | :---------------------------------------------- | :---------------------------------------------- | :--------- | | Net Cash Provided by (Used in) Operating Activities | $48,852 | $152,975 | $(104,123) | | Net Cash Provided by (Used in) Investing Activities | $(35,362) | $4,319 | $(39,681) | | Net Cash Provided by (Used in) Financing Activities | $387,303 | $(128,220) | $515,523 | | Net Increase (Decrease) in Cash, Cash Equivalents and Restricted Cash | $410,107 | $26,244 | $383,863 | | Cash, Cash Equivalents and Restricted Cash, End of Period | $925,158 | $903,161 | $21,997 | [Notes to the Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20the%20Condensed%20Consolidated%20Financial%20Statements) Detailed disclosures for condensed consolidated financial statements, covering business operations, accounting policies, and key financial components [Note 1. Description of Business and Basis of Presentation](index=10&type=section&id=Note%201.%20Description%20of%20Business%20and%20Basis%20of%20Presentation) - Under Armour, Inc. develops, markets, and distributes branded athletic performance apparel, footwear, and accessories globally, aiming to inspire athletes with innovative performance and design solutions[26](index=26&type=chunk) [Note 2. Recent Accounting Pronouncements](index=10&type=section&id=Note%202.%20Recent%20Accounting%20Pronouncements) - The company is evaluating ASU 2024-03 (Disaggregation of Income Statement Expenses), effective for annual periods after December 15, 2026, and ASU 2023-09 (Improvements to Income Tax Disclosures), effective for fiscal years after December 15, 2024, which is expected to expand disclosures but not materially impact financial statements[34](index=34&type=chunk)[35](index=35&type=chunk) [Note 3. Property and Equipment](index=11&type=section&id=Note%203.%20Property%20and%20Equipment) | Metric | June 30, 2025 (in thousands) | March 31, 2025 (in thousands) | | :----- | :--------------------------- | :---------------------------- | | Property and Equipment, net | $613,174 | $645,147 | | Accumulated Depreciation | $(1,071,207) | $(1,123,776) | - Depreciation expense for property and equipment was **$28.6 million** for the three months ended June 30, 2025, a decrease from **$32.5 million** in the prior year period[36](index=36&type=chunk) [Note 4. Leases](index=11&type=section&id=Note%204.%20Leases) | Metric | Three Months Ended June 30, 2025 (in thousands) | Three Months Ended June 30, 2024 (in thousands) | | :----- | :---------------------------------------------- | :---------------------------------------------- | | Operating Lease Costs | $41,035 | $37,793 | | Variable Lease Costs | $18,289 | $21,501 | | Sublease Income | $3,400 | $1,000 | - As of June 30, 2025, the weighted average remaining lease term was **7.04 years** with a weighted average discount rate of **4.81%**[40](index=40&type=chunk) [Note 5. Goodwill](index=13&type=section&id=Note%205.%20Goodwill) | Segment | Balance as of March 31, 2025 (in thousands) | Effect of Currency Translation Adjustment (in thousands) | Balance as of June 30, 2025 (in thousands) | | :------ | :------------------------------------------ | :------------------------------------------------------- | :----------------------------------------- | | North America | $309,487 | $0 | $309,487 | | EMEA | $103,055 | $7,400 | $110,455 | | Asia-Pacific | $75,090 | $1,163 | $76,253 | | Total | $487,632 | $8,563 | $496,195 | [Note 6. Supply Chain Finance Program](index=15&type=section&id=Note%206.%20Supply%20Chain%20Finance%20Program) - Outstanding payment obligations under the supply chain finance program increased to **$245.7 million** as of June 30, 2025, from **$143.8 million** as of March 31, 2025[47](index=47&type=chunk) [Note 7. Credit Facility and Other Long Term Debt](index=15&type=section&id=Note%207.%20Credit%20Facility%20and%20Other%20Long%20Term%20Debt) | Debt Instrument | As of June 30, 2025 (in thousands) | As of March 31, 2025 (in thousands) | | :-------------- | :--------------------------------- | :---------------------------------- | | 3.25% Senior Notes due 2026 | $600,000 | $600,000 | | 7.25% Senior Notes due 2030 | $400,000 | $0 | | Total Principal Payments Due | $1,000,000 | $600,000 | | Non-current Portion of Long-Term Debt | $389,457 | $595,125 | | Current Portion of Long-Term Debt | $599,757 | $0 | - The company issued **$400.0 million** of 7.25% Senior Notes due July 15, 2030, and intends to use the proceeds, along with other funds, to redeem or retire the **$600.0 million** 3.25% Senior Notes due 2026 during the second quarter of Fiscal 2026[57](index=57&type=chunk)[58](index=58&type=chunk)[59](index=59&type=chunk) - The revolving credit facility was amended in June 2025, providing **$1.1 billion** in commitments that has a term ending on June 16, 2030, with no amounts outstanding as of June 30, 2025[49](index=49&type=chunk) [Note 8. Commitments and Contingencies](index=18&type=section&id=Note%208.%20Commitments%20and%20Contingencies) - A proposed settlement for the Consolidated Kenney Derivative Action and Consolidated Paul Derivative Action was reached, including corporate governance measures for three years and an **$8.9 million** payment to the company, funded by insurance proceeds[73](index=73&type=chunk) - The company is in litigation with certain insurance carriers regarding coverage for a previously settled Consolidated Securities Action, with **$90 million** of insurance proceeds recognized as of June 30, 2025, remaining subject to the appeal[85](index=85&type=chunk) [Note 9. Stockholders' Equity](index=22&type=section&id=Note%209.%20Stockholders'%20Equity) - Kevin Plank, the founder, President, and CEO, maintains majority voting control through Class B Convertible Common Stock (10 votes per share), while Class A has one vote per share and Class C has no voting rights (except in limited circumstances)[87](index=87&type=chunk)[88](index=88&type=chunk) - The Board authorized a **$500 million** share repurchase program for Class C Common Stock through May 31, 2027. As of the reporting date, **$90 million** (12.8 million shares) has been repurchased, with **$410 million** remaining. No repurchases occurred in Q1 Fiscal 2026[90](index=90&type=chunk)[91](index=91&type=chunk)[92](index=92&type=chunk) [Note 10. Revenues](index=23&type=section&id=Note%2010.%20Revenues) | Revenue Category | Three Months Ended June 30, 2025 (in thousands) | Three Months Ended June 30, 2024 (in thousands) | Change (%) | | :--------------- | :---------------------------------------------- | :---------------------------------------------- | :--------- | | Apparel | $746,592 | $757,792 | -1.5% | | Footwear | $265,855 | $310,389 | -14.3% | | Accessories | $100,078 | $92,545 | +8.1% | | Net Sales | $1,112,525 | $1,160,726 | -4.2% | | License Revenues | $24,362 | $21,671 | +12.4% | | Total Net Revenues | $1,134,068 | $1,183,665 | -4.2% | | Distribution Channel | Three Months Ended June 30, 2025 (in thousands) | Three Months Ended June 30, 2024 (in thousands) | Change (%) | | :------------------- | :---------------------------------------------- | :---------------------------------------------- | :--------- | | Wholesale | $649,050 | $680,513 | -4.6% | | Direct-to-Consumer | $463,475 | $480,213 | -3.5% | [Note 11. Restructuring and Related Charges](index=24&type=section&id=Note%2011.%20Restructuring%20and%20Related%20Charges) - The 2025 restructuring plan is expected to incur **$140 million to $160 million** in pre-tax charges, with **$90 million** cash-related and **$70 million** non-cash, substantially complete by end of Fiscal 2026[98](index=98&type=chunk) | Restructuring Costs | Three Months Ended June 30, 2025 (in thousands) | Three Months Ended June 30, 2024 (in thousands) | Estimated Charges Remaining (in thousands) | | :------------------ | :---------------------------------------------- | :---------------------------------------------- | :----------------------------------------- | | Total costs recorded in restructuring charges | $12,828 | $25,086 | $30,203 | | Total costs recorded in SG&A | $8,259 | $8,657 | $19,548 | | Total restructuring and related charges | $21,087 | $33,743 | $49,751 | [Note 12. Stock-Based Compensation](index=26&type=section&id=Note%2012.%20Stock-Based%20Compensation) - Total stock-based compensation expense for employees and non-employee directors was **$10.7 million** for Q1 Fiscal 2026, down from **$14.4 million** in Q1 Fiscal 2025. Unrecognized expense is **$89.1 million** over **2.45 years**[103](index=103&type=chunk) - Awards to marketing and other partners resulted in **$1.8 million** in stock-based compensation expense for Q1 Fiscal 2026, with **$63.0 million** unrecognized expense over **9.14 years**[109](index=109&type=chunk) | Stock Options Activity | Number of Stock Options | Weighted Average Exercise Price | | :--------------------- | :---------------------- | :------------------------------ | | Outstanding at March 31, 2025 | 1,356 | $16.68 | | Granted | 150 | $6.20 | | Outstanding at June 30, 2025 | 1,506 | $15.63 | [Note 13. Fair Value Measurements](index=28&type=section&id=Note%2013.%20Fair%20Value%20Measurements) | Financial Instrument | June 30, 2025 (Level 2, in thousands) | March 31, 2025 (Level 2, in thousands) | | :------------------- | :------------------------------------ | :------------------------------------- | | Derivative foreign currency contracts | $(63,482) | $192 | | Deferred Compensation Plan obligations | $(17,775) | $(16,830) | | TOLI policies held by Rabbi Trust | $9,610 | $8,726 | - The estimated fair value of long-term debt as of June 30, 2025, was **$998.1 million**, compared to **$583.9 million** as of March 31, 2025, classified as Level 2[120](index=120&type=chunk) [Note 14. Risk Management and Derivatives](index=30&type=section&id=Note%2014.%20Risk%20Management%20and%20Derivatives) - The aggregate notional value of outstanding cash flow hedges was **$1,365.5 million** as of June 30, 2025, up from **$1,113.6 million** as of March 31, 2025, with maturities ranging from one to twenty-four months[129](index=129&type=chunk) - The total notional value of outstanding undesignated derivative instruments was **$514.5 million** as of June 30, 2025, compared to **$450.7 million** as of March 31, 2025[133](index=133&type=chunk) [Note 15. Provision for Income Taxes](index=33&type=section&id=Note%2015.%20Provision%20for%20Income%20Taxes) - The effective income tax rate increased significantly to **49.0%** for the three months ended June 30, 2025, from **(1.7)%** for the same period in 2024, primarily due to changes in actual and forecasted annual pre-tax earnings[136](index=136&type=chunk) - The company is assessing the impact of the recently enacted OBBBA (One Big Beautiful Bill Act) on U.S. taxation of foreign earnings, bonus depreciation, and research expensing[137](index=137&type=chunk) [Note 16. Earnings Per Share](index=34&type=section&id=Note%2016.%20Earnings%20Per%20Share) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :----- | :------------------------------- | :------------------------------- | | Basic Net Income (Loss) per Share | $(0.01) | $(0.70) | | Diluted Net Income (Loss) per Share | $(0.01) | $(0.70) | | Weighted Average Common Shares Outstanding (Basic) | 427,116 | 435,693 | [Note 17. Segment Data](index=34&type=section&id=Note%2017.%20Segment%20Data) - The company's operating segments are North America, EMEA, Asia-Pacific, and Latin America, with operating income (loss) used by the CODM for resource allocation[142](index=142&type=chunk)[143](index=143&type=chunk)[144](index=144&type=chunk) | Segment | Net Revenues (Q2 2025, in thousands) | Net Revenues (Q2 2024, in thousands) | Operating Income (Loss) (Q2 2025, in thousands) | Operating Income (Loss) (Q2 2024, in thousands) | | :------ | :----------------------------------- | :----------------------------------- | :---------------------------------------------- | :---------------------------------------------- | | North America | $670,319 | $709,260 | $121,437 | $147,889 | | EMEA | $248,607 | $226,892 | $39,643 | $20,456 | | Asia-Pacific | $163,386 | $181,836 | $14,703 | $9,935 | | Latin America | $54,575 | $64,409 | $6,606 | $15,171 | | Corporate Other | $(2,819) | $1,268 | $(179,066) | $(493,179) | | Total | $1,134,068 | $1,183,665 | $3,323 | $(299,728) | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=35&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management's analysis of financial condition, operations, and liquidity for Q1 Fiscal 2026, discussing key metrics, strategies, and macroeconomic factors [FORWARD LOOKING STATEMENTS](index=37&type=section&id=FORWARD%20LOOKING%20STATEMENTS) - Forward-looking statements cover topics such as share repurchase programs, future financial condition, growth strategies, restructuring efforts, promotional activities, freight, product cost pressures, foreign currency impacts, global economic conditions, and litigation[150](index=150&type=chunk) - Key risk factors include changes in economic/market conditions, global events (e.g., military conflicts, trade policy), increased competition, raw material costs, execution of long-term strategies, customer financial health, product development, inventory management, loss of key partners, global expansion, brand image, significant transactions, talent retention, regulatory compliance, data security, public health emergencies, and litigation[151](index=151&type=chunk)[155](index=155&type=chunk) [OVERVIEW](index=38&type=section&id=OVERVIEW) - Under Armour is focused on driving premium brand-right growth and improved profitability through increased sales in apparel, footwear, and accessories, growth in direct-to-consumer, and expansion of wholesale distribution[154](index=154&type=chunk) - Challenging market conditions persisted in Q1 Fiscal 2026, particularly in North America and Asia-Pacific, due to lower consumer demand across both wholesale and direct-to-consumer channels[155](index=155&type=chunk) - The 2025 restructuring plan, expected to be substantially complete by end of Fiscal 2026, aims to strengthen financial and operational efficiencies with estimated pre-tax charges of **$140 million to $160 million**[157](index=157&type=chunk) - Macroeconomic factors, including global trade policy changes, inflationary pressures, and foreign currency fluctuations, are expected to negatively impact Fiscal 2026 results, with an anticipated **$100 million** impact on cost of goods sold from incremental tariffs[159](index=159&type=chunk)[160](index=160&type=chunk) [RESULTS OF OPERATIONS](index=40&type=section&id=RESULTS%20OF%20OPERATIONS) Analysis of Q1 Fiscal 2026 financial performance, detailing changes in net revenues, gross profit, operating expenses, and net income (loss) [Revenues](index=40&type=section&id=Revenues) | Revenue Category | Three Months Ended June 30, 2025 (in thousands) | Three Months Ended June 30, 2024 (in thousands) | Change ($) | Change (%) | | :--------------- | :---------------------------------------------- | :---------------------------------------------- | :--------- | :--------- | | Total Net Revenues | $1,134,068 | $1,183,665 | $(49,597) | -4.2% | | Net Sales | $1,112,525 | $1,160,726 | $(48,201) | -4.2% | | License Revenues | $24,362 | $21,671 | $2,691 | +12.4% | - Apparel net sales decreased **1.5%** due to lower average selling prices and unfavorable channel mix, while footwear decreased **14.3%** due to lower unit sales and prices. Accessories increased **8.1%** due to higher unit sales[165](index=165&type=chunk) [Gross Profit](index=42&type=section&id=Gross%20Profit) | Metric | Three Months Ended June 30, 2025 (in thousands) | Three Months Ended June 30, 2024 (in thousands) | Change ($) | Gross Margin (%) 2025 | Gross Margin (%) 2024 | | :----- | :---------------------------------------------- | :---------------------------------------------- | :--------- | :-------------------- | :-------------------- | | Gross Profit | $546,496 | $562,675 | $(16,179) | 48.2% | 47.5% | - Gross margin increased by **70 basis points** to **48.2%**, primarily driven by favorable foreign exchange (**55 bps**), product mix (**30 bps**), and pricing benefits (**30 bps**), partially offset by unfavorable channel mix (**30 bps**) and supply chain (**15 bps**)[169](index=169&type=chunk) [Selling, General and Administrative Expenses](index=42&type=section&id=Selling,%20General%20and%20Administrative%20Expenses) | Metric | Three Months Ended June 30, 2025 (in thousands) | Three Months Ended June 30, 2024 (in thousands) | Change ($) | Change (%) | SG&A as % of Net Revenues 2025 | SG&A as % of Net Revenues 2024 | | :----- | :---------------------------------------------- | :---------------------------------------------- | :--------- | :--------- | :----------------------------- | :----------------------------- | | Selling, General and Administrative Expenses | $530,345 | $837,317 | $(306,972) | -36.7% | 46.8% | 70.7% | - The decrease in SG&A was primarily due to a **$296.4 million (41.4%)** reduction in "other costs" (mainly lower litigation reserve expense in the prior year) and a **$10.6 million (8.7%)** decrease in marketing and advertising costs[171](index=171&type=chunk) [Restructuring Charges](index=43&type=section&id=Restructuring%20Charges) | Metric | Three Months Ended June 30, 2025 (in thousands) | Three Months Ended June 30, 2024 (in thousands) | Change ($) | Change (%) | | :----- | :---------------------------------------------- | :---------------------------------------------- | :--------- | :--------- | | Restructuring Charges | $12,828 | $25,086 | $(12,258) | -48.9% | [Interest Income (Expense), net](index=43&type=section&id=Interest%20Income%20(Expense),%20net) | Metric | Three Months Ended June 30, 2025 (in thousands) | Three Months Ended June 30, 2024 (in thousands) | Change ($) | Change (%) | | :----- | :---------------------------------------------- | :---------------------------------------------- | :--------- | :--------- | | Interest Income (Expense), net | $(4,051) | $2,344 | $(6,395) | -272.8% | [Other Income (Expense), net](index=43&type=section&id=Other%20Income%20(Expense),%20net) | Metric | Three Months Ended June 30, 2025 (in thousands) | Three Months Ended June 30, 2024 (in thousands) | Change ($) | Change (%) | | :----- | :---------------------------------------------- | :---------------------------------------------- | :--------- | :--------- | | Other Income (Expense), net | $(4,695) | $(2,730) | $(1,965) | -72.0% | [Income Tax Expense (Benefit)](index=43&type=section&id=Income%20Tax%20Expense%20(Benefit)) | Metric | Three Months Ended June 30, 2025 (in thousands) | Three Months Ended June 30, 2024 (in thousands) | Change ($) | Change (%) | Effective Tax Rate 2025 | Effective Tax Rate 2024 | | :----- | :---------------------------------------------- | :---------------------------------------------- | :--------- | :--------- | :---------------------- | :---------------------- | | Income Tax Expense (Benefit) | $(2,658) | $5,149 | $(7,807) | -151.6% | 49.0% | -1.7% | [SEGMENT RESULTS OF OPERATIONS](index=44&type=section&id=SEGMENT%20RESULTS%20OF%20OPERATIONS) Analysis of net revenues and operating income (loss) across geographic segments and Corporate Other, highlighting regional performance drivers [Net Revenues](index=44&type=section&id=Net%20Revenues) | Segment | Three Months Ended June 30, 2025 (in thousands) | Three Months Ended June 30, 2024 (in thousands) | Change ($) | Change (%) | | :------ | :---------------------------------------------- | :---------------------------------------------- | :--------- | :--------- | | North America | $670,319 | $709,260 | $(38,941) | -5.5% | | EMEA | $248,607 | $226,892 | $21,715 | +9.6% | | Asia-Pacific | $163,386 | $181,836 | $(18,450) | -10.1% | | Latin America | $54,575 | $64,409 | $(9,834) | -15.3% | | Corporate Other | $(2,819) | $1,268 | $(4,087) | -322.3% | | Total Net Revenues | $1,134,068 | $1,183,665 | $(49,597) | -4.2% | - North America revenues decreased **5.5%** due to declines in wholesale and direct-to-consumer. EMEA revenues increased **9.6%** driven by wholesale and owned/operated retail stores, positively impacted by foreign exchange. Asia-Pacific revenues decreased **10.1%** due to wholesale and e-commerce declines. Latin America revenues decreased **15.3%** primarily due to negative foreign exchange impacts[184](index=184&type=chunk) [Operating Income (Loss)](index=46&type=section&id=Operating%20Income%20(Loss)) | Segment | Three Months Ended June 30, 2025 (in thousands) | Three Months Ended June 30, 2024 (in thousands) | Change ($) | Change (%) | | :------ | :---------------------------------------------- | :---------------------------------------------- | :--------- | :--------- | | North America | $121,437 | $147,889 | $(26,452) | -17.9% | | EMEA | $39,643 | $20,456 | $19,187 | +93.8% | | Asia-Pacific | $14,703 | $9,935 | $4,768 | +48.0% | | Latin America | $6,606 | $15,171 | $(8,565) | -56.5% | | Corporate Other | $(179,066) | $(493,179) | $314,113 | +63.7% | | Total Operating Income (Loss) | $3,323 | $(299,728) | $303,051 | +101.1% | - Corporate Other operating loss decreased by **$314.1 million (63.7%)** primarily due to lower net litigation expense in the prior year. EMEA operating income increased **93.8%** due to lower marketing and facility expenses and higher gross profit. North America operating income decreased **17.9%** due to lower gross profit and higher marketing/distribution costs[187](index=187&type=chunk) [LIQUIDITY AND CAPITAL RESOURCES](index=46&type=section&id=LIQUIDITY%20AND%20CAPITAL%20RESOURCES) Discussion of cash requirements, funding sources, and capital structure, including cash, share repurchases, cash flow, credit facility, and senior notes - As of June 30, 2025, the company had **$911 million** in cash and cash equivalents and believes its current liquidity sources are adequate for at least the next twelve months[188](index=188&type=chunk) - The company plans to use proceeds from the **$400 million** Senior Notes due 2030, credit facility borrowings, and cash on hand to retire the **$600 million** Senior Notes due 2026 in Q2 Fiscal 2026[188](index=188&type=chunk) [Share Repurchase Program](index=47&type=section&id=Share%20Repurchase%20Program) - The Board authorized a **$500 million** share repurchase program for Class C Common Stock through May 31, 2027. No shares were repurchased in Q1 Fiscal 2026, leaving **$410 million** remaining[191](index=191&type=chunk)[192](index=192&type=chunk) [Cash Flows](index=48&type=section&id=Cash%20Flows) | Cash Flow Activity | Three Months Ended June 30, 2025 (in thousands) | Three Months Ended June 30, 2024 (in thousands) | Change ($) | | :----------------- | :---------------------------------------------- | :---------------------------------------------- | :--------- | | Operating Activities | $48,852 | $152,975 | $(104,123) | | Investing Activities | $(35,362) | $4,319 | $(39,681) | | Financing Activities | $387,303 | $(128,220) | $515,523 | - Operating cash flows decreased by **$104.1 million**, primarily due to a **$366.4 million** decrease from changes in working capital, partially offset by a **$262.2 million** increase in net income before non-cash items[194](index=194&type=chunk) - Financing cash flows increased by **$515.5 million**, primarily due to the issuance of **$400 million** Senior Notes due 2030[196](index=196&type=chunk) [Capital Resources](index=48&type=section&id=Capital%20Resources) - The amended credit agreement provides **$1.1 billion** in revolving credit commitments until June 16, 2030, with no amounts outstanding as of June 30, 2025. The company was in compliance with all covenants[199](index=199&type=chunk)[204](index=204&type=chunk) - The company issued **$400.0 million** of 7.25% Senior Notes due 2030, intending to use the proceeds to redeem or retire the **$600.0 million** 3.25% Senior Notes due 2026 in Q2 Fiscal 2026[207](index=207&type=chunk)[208](index=208&type=chunk)[209](index=209&type=chunk) [CRITICAL ACCOUNTING ESTIMATES AND ASSUMPTIONS](index=51&type=section&id=CRITICAL%20ACCOUNTING%20ESTIMATES%20AND%20ASSUMPTIONS) - Financial statements rely on complex judgments, probabilities, and assumptions that are inherently uncertain, and actual results could differ significantly from these estimates[212](index=212&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=51&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) No significant changes to market risk since March 31, 2025, with further discussion available in the Annual Report on Form 10-K - No significant changes to market risk have occurred since March 31, 2025[214](index=214&type=chunk) [Item 4. Controls and Procedures](index=51&type=section&id=Item%204.%20Controls%20and%20Procedures) Disclosure controls and procedures were ineffective due to a material weakness in internal control over financial reporting, with remediation efforts ongoing [Evaluation of Disclosure Controls and Procedures](index=51&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) - The CEO and CFO concluded that disclosure controls and procedures were not effective as of June 30, 2025, due to a material weakness in internal control over financial reporting[215](index=215&type=chunk) [Material Weakness in Internal Control Over Financial Reporting](index=52&type=section&id=Material%20Weakness%20in%20Internal%20Control%20Over%20Financial%20Reporting) - A material weakness exists in internal control over financial reporting due to ineffective controls over the review and execution of certain balance sheet account reconciliations, which resulted in immaterial errors in prior financial statements[216](index=216&type=chunk) [Remediation Efforts and Status of Remaining Material Weakness](index=52&type=section&id=Remediation%20Efforts%20and%20Status%20of%20Remaining%20Material%20Weakness) - Remediation efforts include developing a new account reconciliation policy, designing and enhancing controls, and engaging third-party consultants, with completion expected throughout Fiscal 2026[217](index=217&type=chunk)[219](index=219&type=chunk) [Changes in Internal Control Over Financial Reporting](index=52&type=section&id=Changes%20in%20Internal%20Control%20Over%20Financial%20Reporting) - No material changes in internal control over financial reporting occurred during the quarter ended June 30, 2025, other than ongoing remediation efforts for the identified material weakness[218](index=218&type=chunk) [PART II - OTHER INFORMATION](index=53&type=section&id=PART%20II%20-%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=53&type=section&id=Item%201.%20Legal%20Proceedings) Information on legal proceedings is incorporated by reference from Note 8 to the Condensed Consolidated Financial Statements - Information on legal proceedings is incorporated by reference from Note 8 to the Condensed Consolidated Financial Statements[221](index=221&type=chunk) [Item 1A. Risk Factors](index=53&type=section&id=Item%201A.%20Risk%20Factors) Refers to risk factors in the Annual Report on Form 10-K for Fiscal 2025, noting potential impact from additional unknown or immaterial risks - Readers should consider risk factors from the Annual Report on Form 10-K for Fiscal 2025, as additional unknown or currently immaterial risks could negatively impact the business[222](index=222&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=53&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) No repurchases of Class C Common Stock occurred under the authorized share repurchase program during the three months ended June 30, 2025 | Period | Total Number of Shares Purchased | Average Price Paid per Share | Total Number of Shares Purchased as Part of a Publicly Announced Program | Approximately Dollar Value of Shares that May Yet be Purchased Under the Program (in millions) | | :----- | :------------------------------- | :--------------------------- | :----------------------------------------------------------------------- | :------------------------------------------------------------------------------------------- | | 04/01/2025 to 04/30/2025 | — | $— | — | $410.0 | | 05/01/2025 to 05/31/2025 | — | $— | — | $410.0 | | 06/01/2025 to 06/30/2025 | — | $— | — | $410.0 | [Item 5. Other Information](index=53&type=section&id=Item%205.%20Other%20Information) No director or officer adopted or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement during Q1 Fiscal 2026 - No director or officer adopted or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement during the three months ended June 30, 2025[225](index=225&type=chunk) [Item 6. Exhibits](index=54&type=section&id=Item%206.%20Exhibits) Lists exhibits filed as part of the Form 10-Q, including indentures, credit agreement amendments, and certifications - Exhibits include Indentures for Senior Notes, Amendment No. 7 and 8 to the Amended and Restated Credit Agreement, and Section 302 and 906 certifications[226](index=226&type=chunk) [SIGNATURES](index=55&type=section&id=SIGNATURES) - The report was duly signed on behalf of Under Armour, Inc. by David E. Bergman, Chief Financial Officer, on August 8, 2025[229](index=229&type=chunk)