Under Armour shares fell after the company cut its profitability guidance, adding fresh uncertainty to a turnaround that has already struggled to regain momentum. The sportswear maker now expects gross margin to expand by roughly 170 to 220 basis points in fiscal 2027, down from its prior forecast of 220 to 270 basis points. The reduced outlook reflects higher fuel and freight costs, the impact of inventory management actions, and foreign exchange headwinds.
Second quarter results show broad pressure
For the three months ended September 30, 2026, Under Armour reported revenue of $1.2 billion, a 7 percent decline from the same period a year earlier. The drop was widespread. North America revenue fell 7 percent to $737 million, while international revenue decreased 7 percent to $509 million, or 9 percent on a constant currency basis.
Within international markets, Europe, Middle East and Africa revenue declined 9 percent, Asia-Pacific revenue fell 9 percent, and Latin America revenue rose 3 percent. On a constant currency basis, the Asia-Pacific region was the weakest, down 12 percent.
Wholesale revenue slipped 6 percent to $725 million, and direct-to-consumer revenue fell 8 percent to $494 million. Within direct-to-consumer, owned and operated store revenue declined 7 percent, and eCommerce revenue dropped 12 percent. eCommerce now accounts for 27 percent of the company’s direct-to-consumer business.
By product category, apparel revenue decreased 6 percent to $880 million, footwear revenue fell 11 percent to $234 million, and accessories revenue declined 7 percent to $105 million.
Profitability inches lower
Gross margin for the quarter was 47.0 percent, down 30 basis points from the prior year. The company attributed the decline to unfavorable foreign exchange, channel and regional mix, and pricing pressure, partly offset by supply chain benefits and a more favorable product mix.
Selling, general and administrative expenses decreased 4 percent to $557 million, driven by lower marketing spend and disciplined cost management. Adjusted SG&A, which excludes transformation expenses and a reversal of previously accrued litigation reserve expense, fell 3 percent to $559 million. Restructuring charges totaled $11 million.
Operating income was $15 million. On an adjusted basis, which excludes transformation expenses, restructuring charges, and the litigation reserve reversal, operating income was $25 million. The company posted a net loss of $0.4 million, or break even per diluted share. Adjusted net loss was $2 million, also break even per share.
Inventory and liquidity
Inventory increased 4 percent to $1.1 billion. Cash and cash equivalents stood at $285 million at quarter-end, while borrowings under the company’s $1.1 billion revolving credit facility totaled $190 million.
The company has now incurred $280 million in total restructuring and transformation costs under its Fiscal 2025 Restructuring Plan, including $121 million in cash and $159 million in non-cash charges. Total program costs are expected to reach approximately $305 million, with the plan substantially complete by December 31, 2026.
Full year outlook trimmed
Under Armour still expects revenue to decline at a mid-single-digit percentage rate for the full fiscal year. Operating income is now projected at $99 million to $119 million, slightly above the prior range of $96 million to $116 million. Adjusted operating income remains unchanged at $140 million to $160 million.
Diluted earnings per share are now expected to range from a loss of $0.02 to earnings of $0.02, compared with the prior forecast of a loss of $0.01 to earnings of $0.05. Adjusted diluted earnings per share are still expected to be $0.08 to $0.12.
Management highlighted that roughly 150 basis points of the expected full-year gross margin improvement come from the recovery of International Emergency Economic Powers Act tariff costs that were expensed in fiscal 2026 and realized in the first quarter of fiscal 2027. Excluding that benefit, gross margin expansion is expected to come from pricing actions, lower discounting, and a more favorable channel and product mix, partially offset by supply chain headwinds tied to the ongoing Middle East conflict and unfavorable foreign exchange.
What management says
Chief executive Kevin Plank said the company delivered against its revenue expectation and exceeded its operating income outlook. "As we progress in this transformation, we are driving greater efficiency across our business, sharpening our product offering, and amplifying global marketing to strengthen our brand and improve financial performance," he said.
Yet the guidance reduction on gross margin was enough to push the stock lower, a sign that investors remain wary of how quickly Under Armour can stabilize its business and restore the profit growth that once made it one of the most closely watched brands in athletic apparel.
