Under Armour(UA) - 2026 Q1 - Quarterly Results

Executive Summary & Business Overview This section outlines Under Armour's Q1 FY2026 performance, emphasizing management's strategic focus on brand strengthening and product innovation Management Commentary Under Armour's CEO reported Q1 results met expectations amid transformation, focusing on premium products and brand strengthening despite market uncertainty - Quarterly results met or exceeded expectations while the company undergoes a significant transformation[2] - Strategic focus is on enhancing brand positioning with premium products, increasing average selling prices through innovation, and optimizing top-volume programs[2] First Quarter Fiscal 2026 Financial Performance Under Armour's Q1 FY2026 saw a 4% revenue decline to $1.1 billion, with mixed financial results and an increase in cash and inventories Key Financial Highlights Q1 FY2026 saw a 4% revenue decline to $1.1 billion, with GAAP operating income of $3 million and net loss of $3 million, while gross margin improved to 48.2% Q1 FY2026 Key Financial Metrics | Metric | Q1 FY2026 | Change (YoY) | | :--- | :--- | :--- | | Revenue | $1.1 billion | -4% | | Gross Margin | 48.2% | +70 bps | | Operating Income | $3 million | N/A (vs. loss) | | Adjusted Operating Income | $24 million | +204.5% | | Net Loss | $3 million | N/A (vs. larger loss) | | Adjusted Net Income | $9 million | +148.0% | | Diluted EPS | -$0.01 | N/A (vs. -$0.70) | | Adjusted Diluted EPS | $0.02 | +100% | - Gross margin increased to 48.2% primarily due to favorable foreign exchange, pricing, and product mix, which was partially offset by unfavorable channel mix and higher supply chain costs[3] - SG&A expenses decreased significantly by 37% to $530 million, mainly because the prior year included a large legal reserve expense, with adjusted SG&A decreasing by 6%[3] Revenue Analysis Total revenue declined 4% to $1.1 billion, with North America down 5% and international down 1%, driven by decreases in wholesale, DTC eCommerce, and footwear Q1 FY2026 Revenue Breakdown by Geography | Region | Revenue (USD) | Change (YoY) | Currency Neutral Change | | :--- | :--- | :--- | :--- | | North America | $670 million | -5% | -5% | | International | $467 million | -1% | -2% | | EMEA | $249 million | +10% | +6% | | Asia-Pacific | $163 million | -10% | -10% | | Latin America | $55 million | -15% | -8% | Q1 FY2026 Revenue Breakdown by Channel & Product | Category | Revenue (USD) | Change (YoY) | | :--- | :--- | :--- | | Wholesale | $649 million | -5% | | Direct-to-Consumer | $463 million | -3% | | Apparel | $747 million | -1% | | Footwear | $266 million | -14% | | Accessories | $100 million | +8% | - Within the Direct-to-Consumer segment, revenue from owned and operated stores increased by 1%, but this was offset by a 12% decline in eCommerce revenue[3] Balance Sheet and Cash Flow As of June 30, 2025, cash and equivalents reached $911 million, inventories rose to $1.1 billion, and operating cash flow was $49 million, with no credit facility borrowings Key Balance Sheet Items (as of June 30, 2025) | Item | Amount (USD) | Change from Mar 31, 2025 | | :--- | :--- | :--- | | Cash and cash equivalents | $911.0 million | +$409.6 million | | Inventories | $1,141.8 million | +$196.0 million | | Total Assets | $4,865.2 million | +$564.3 million | | Total Liabilities | $2,990.8 million | +$580.2 million | - The company raised $400 million in senior notes during the quarter, intending to use the proceeds to retire $600 million in senior notes due June 2026[5] - Net cash provided by operating activities was $48.9 million, a decrease from $153.0 million in the prior year's quarter, primarily due to changes in operating assets and liabilities[26] Fiscal 2025 Restructuring Plan This section details the Fiscal 2025 Restructuring Plan, outlining its estimated costs and the charges incurred to date by Q1 FY2026 Restructuring Plan Update The Fiscal 2025 Restructuring Plan, estimated at $140-$160 million, has incurred $110 million in charges by Q1 FY2026, with remaining charges expected by end of FY2026 Restructuring Plan Costs (as of Q1 FY2026) | Metric | Amount (USD) | | :--- | :--- | | Total Estimated Cost | $140M - $160M | | Total Charges Incurred to Date | $110 million | | Restructuring & Impairment Charges | $71 million | | Other Transformational Expenses | $39 million | | Cash-Related Charges Incurred | $65 million | | Non-Cash-Related Charges Incurred | $45 million | - The company anticipates recognizing the remaining charges associated with the restructuring plan by the end of fiscal 2026[4] Second Quarter Fiscal 2026 Outlook This section provides Under Armour's Q2 FY2026 guidance, projecting revenue decline, gross margin compression, and an operating loss due to market headwinds Q2 FY2026 Guidance Q2 FY2026 outlook projects a 6-7% revenue decline, a 340-360 bps gross margin drop due to tariffs, and a GAAP operating loss of $10 million to breakeven Q2 FY2026 Outlook | Metric | Guidance | | :--- | :--- | | Revenue | Decline 6% to 7% | | Gross Margin | Decline 340 to 360 bps | | Operating Income (Loss) | ($10) million to $0 million | | Adjusted Operating Income | $30 million to $40 million | | Diluted Loss Per Share | ($0.07) to ($0.08) | | Adjusted Diluted EPS | $0.01 to $0.02 | - The expected gross margin decline is primarily attributed to supply chain headwinds from tariffs and an unfavorable channel mix[6] - Adjusted SG&A is expected to grow at a high-single-digit rate, driven by higher marketing investments compared to the prior year when spending was shifted to the second half[6] Financial Statements and Reconciliations This section presents Under Armour's Q1 FY2026 consolidated financial statements, including income, balance sheet, cash flow, non-GAAP reconciliations, and store count Condensed Consolidated Statements of Operations Q1 FY2026 net revenues were $1.134 billion, with gross profit at $546.5 million, resulting in an operating income of $3.3 million and a net loss of $2.6 million Q1 FY2026 Income Statement (in thousands) | Line Item | Q1 2025 (ended Jun 30) | Q1 2024 (ended Jun 30) | | :--- | :--- | :--- | | Net revenues | $1,134,068 | $1,183,665 | | Gross profit | $546,496 | $562,675 | | Income (loss) from operations | $3,323 | $(299,728) | | Net income (loss) | $(2,612) | $(305,426) | | Diluted net income (loss) per share | $(0.01) | $(0.70) | Condensed Consolidated Balance Sheets As of June 30, 2025, total assets reached $4.87 billion, with cash at $911 million and inventories at $1.14 billion, while total liabilities increased to $2.99 billion Balance Sheet Highlights (in thousands) | Account | June 30, 2025 | March 31, 2025 | | :--- | :--- | :--- | | Cash and cash equivalents | $910,985 | $501,361 | | Inventories | $1,141,829 | $945,836 | | Total current assets | $2,902,858 | $2,329,097 | | Total assets | $4,865,191 | $4,300,871 | | Total current liabilities | $1,895,375 | $1,109,143 | | Total liabilities | $2,990,762 | $2,410,593 | | Total stockholders' equity | $1,874,429 | $1,890,278 | Condensed Consolidated Statements of Cash Flows Q1 FY2026 saw $48.9 million in operating cash, $35.4 million used in investing, and $387.3 million provided by financing, leading to a $410.1 million net cash increase Cash Flow Summary (in thousands) | Cash Flow Activity | Three Months Ended June 30, 2025 | | :--- | :--- | | Net cash provided by operating activities | $48,852 | | Net cash used in investing activities | $(35,362) | | Net cash provided by financing activities | $387,303 | | Net increase in cash | $410,107 | | Cash at end of period | $925,158 | Non-GAAP Reconciliations Q1 FY2026 non-GAAP reconciliations show adjusted operating income of $24.4 million, adjusted net income of $8.6 million, and adjusted diluted EPS of $0.02, primarily excluding restructuring charges - Currency-neutral net revenue declined 4.4% in Q1, slightly worse than the GAAP decline of 4.2%, indicating a small positive impact from foreign exchange[28] Q1 FY2026 GAAP to Non-GAAP Reconciliation | Metric | GAAP | Adjustments | Non-GAAP (Adjusted) | | :--- | :--- | :--- | :--- | | Operating Income | $3.3M | +$21.1M | $24.4M | | Net Income (Loss) | ($2.6M) | +$11.2M | $8.6M | | Diluted EPS | ($0.01) | +$0.03 | $0.02 | Q2 FY2026 Outlook GAAP to Non-GAAP Reconciliation | Metric | GAAP Outlook | Adjustments | Non-GAAP Outlook | | :--- | :--- | :--- | :--- | | Operating Income | ($10M) - $0M | +$40M | $30M - $40M | | Diluted EPS | ($0.08) - ($0.07) | +$0.09 | $0.01 - $0.02 | Company-Owned & Operated Door Count As of June 30, 2025, Under Armour operated 442 stores globally, a net increase of one, with North American stores decreasing and international stores increasing Store Count as of June 30 | Region | 2025 | 2024 | Change | | :--- | :--- | :--- | :--- | | North America | 195 | 200 | -5 | | International | 247 | 241 | +6 | | Total Doors | 442 | 441 | +1 |