What's Next For Under Armour Stock?

Core Viewpoint - Under Armour is undergoing a strategic repositioning to restore its premium brand status, which has led to a decline in sales volume and expected losses in the short term, but improvements in gross margins are noted [1][3][4]. Financial Performance - Under Armour's stock has decreased by 6% year-to-date, currently trading at around $8, while peer Nike has seen a 24% decline [1]. - The company's revenue for Q1 was down 10% year-over-year to $1.2 billion, with North American sales dropping 14% and Asia Pacific sales down 10% [1]. - Gross margins have decreased from approximately 50% post-COVID to 47.5% in Q1 2025, although this represents a year-over-year increase of 110 basis points [1]. - For fiscal year 2025, revenue is forecasted to decline by 10% year-over-year, with a projected revenue of $5.1 billion [2][3]. Market Comparison - Under Armour's stock has underperformed the S&P 500 over the past three years, with returns of 21% in 2021, -51% in 2022, and -6% in 2023, compared to the S&P's respective returns of 27%, -19%, and 24% [2]. - The company's stock price is currently valued at $8 per share based on a revenue per share forecast of $11.33 and a 0.7x price-to-sales multiple for fiscal year 2025 [2]. Strategic Initiatives - The company is focusing on reducing inventory, which has decreased by 15% to $1.1 billion, and cutting back on online discounts to improve profitability [1]. - Under Armour expects to incur an operating loss of $194 million to $214 million for the full year due to higher expenses and restructuring charges related to its repositioning plan [3]. Consumer Behavior - There is a challenge in regaining premium brand status as consumers have become accustomed to lower prices, which may hinder the company's long-term profitability goals [4].