Press release·03/01/2025 08:39:53

Overview

Under Armour is a leading developer, marketer, and distributor of branded performance apparel, footwear, and accessories. The company remains focused on driving premium brand-right growth and improved profitability through increased sales of its products, growth in its direct-to-consumer sales channel, and expansion of its wholesale distribution.

Quarterly Results

During the three months ended December 31, 2024, Under Armour faced a challenging environment, particularly in North America, with lower demand in its wholesale channel and the impacts of proactive strategies to reduce discounting and promotional activity in its direct-to-consumer channel. The company also faced a challenging environment in the Asia-Pacific region.

Key financial highlights for the quarter include:

• Total net revenues decreased 5.7%
• Wholesale revenue decreased 1.0% and direct-to-consumer revenue decreased 9.1%
• Apparel revenue decreased 5.0%, footwear revenue decreased 9.0%, and accessories revenue increased 5.7%
• Net revenue decreased 7.8% in North America, increased 4.9% in EMEA, decreased 5.1% in Asia-Pacific, and decreased 15.5% in Latin America
• Gross margin increased 240 basis points to 47.5%
• Selling, general and administrative expenses increased 6.4%

2025 Restructuring Plan

On May 15, 2024, Under Armour’s Board of Directors approved a restructuring plan (the “2025 restructuring plan”) designed to strengthen and support the company’s financial and operational efficiencies. The plan is expected to result in $140 million to $160 million of pre-tax restructuring and related charges to be incurred during Fiscal 2025 and Fiscal 2026.

Effects of Inflation and Other Global Events

Macroeconomic factors, such as inflationary pressures and fluctuations in foreign currency exchange rates, have and may continue to impact Under Armour’s business. The company is monitoring these factors and their potential impacts on product input costs, freight costs, and consumer discretionary spending.

Under Armour is also actively monitoring potential tariffs proposed or signaled by the U.S. government, as well as potential related impacts, including countermeasures and indirect effects on capital markets or consumer discretionary spending.

Results of Operations

Under Armour’s total net revenues decreased 5.7% in the three months ended December 31, 2024 compared to the prior year period, driven by declines in North America, Asia-Pacific, and Latin America, partially offset by growth in EMEA. Gross margin increased 240 basis points to 47.5%, primarily due to pricing benefits and supply chain efficiencies. Selling, general and administrative expenses increased 6.4%, primarily due to higher marketing costs, an impairment charge, and restructuring-related charges.

For the nine months ended December 31, 2024, total net revenues decreased 8.8%, with declines in North America, Asia-Pacific, and Latin America, partially offset by growth in EMEA. Gross margin increased 180 basis points to 48.3%, driven by supply chain efficiencies and pricing benefits. Selling, general and administrative expenses increased 11.0%, primarily due to higher litigation expenses, restructuring charges, and other transformational initiatives.

Segment Results

Under Armour’s operating segments are defined by geographic regions, including North America, EMEA, Asia-Pacific, and Latin America. Key highlights for the three and nine months ended December 31, 2024 include:

• North America: Operating income decreased 1.3% and 1.6% for the three and nine month periods, respectively, due to lower gross profit from decreased revenues, partially offset by lower expenses.
• EMEA: Operating income decreased 14.3% and 3.0% for the three and nine month periods, respectively, due to higher marketing expenses, partially offset by increased gross profit.
• Asia-Pacific: Operating income decreased 12.5% and 32.4% for the three and nine month periods, respectively, due to lower gross profit from decreased revenues and higher inventory returns.
• Latin America: Operating income increased 6.1% and 26.8% for the three and nine month periods, respectively, due to lower expenses.
• Corporate Other: Operating loss increased 27.4% and 58.2% for the three and nine month periods, respectively, due to restructuring charges, an impairment, higher incentive compensation, and increased information technology expenses.

Liquidity and Capital Resources

As of December 31, 2024, Under Armour had $726.9 million in cash and cash equivalents. The company believes its cash, cash flows from operations, ability to reduce expenditures, borrowings available under its credit facility, and other financing alternatives are adequate to meet its liquidity needs for at least the next twelve months.

Under Armour’s Board of Directors authorized a new $500 million share repurchase program in May 2024. During the nine months ended December 31, 2024, the company repurchased $65 million of its Class C Common Stock through accelerated share repurchase transactions.

In summary, Under Armour faced a challenging operating environment in the quarter, but remains focused on driving premium brand growth, improving profitability, and maintaining a strong liquidity position to support its long-term strategic initiatives.