Under Armour Reports Second Quarter Fiscal 2027 Results

Under Armour's Q2 revenue and profit fell, but cost cuts and restructuring continue.

What the company is saying

Under Armour, led by President and CEO Kevin Plank, frames this quarter as meeting revenue expectations and exceeding operating income outlook, despite a 7% year-over-year revenue decline to $1.2 billion. The company emphasizes ongoing transformation efforts, citing greater efficiency, sharper product offerings, and increased global marketing. Management highlights a 4% reduction in SG&A expenses to $557 million, attributing this to lower marketing spend and disciplined cost management. The announcement details a $13 million charge under the Fiscal 2025 Restructuring Plan this quarter, with total program costs expected to reach $305 million and completion targeted for December 31, 2026. The updated fiscal 2027 outlook acknowledges external cost pressures, including higher fuel and freight, inventory actions, and geopolitical headwinds, but maintains guidance for mid-single-digit revenue decline and modest operating income improvement. The tone is measured, with explicit references to both challenges and ongoing cost-control initiatives.

What the data suggests

The numbers show a broad-based decline: Q2 revenue fell 7% to $1.2 billion, with North America and international segments each down 7% to $737 million and $509 million, respectively. Wholesale revenue dropped 6% to $725 million, and direct-to-consumer sales fell 8% to $494 million. Apparel, footwear, and accessories revenues all declined, with footwear down the most at 11% to $234 million. Gross margin slipped 30 basis points to 47.0%, primarily due to unfavorable foreign exchange, channel and regional mix, and pricing, partly offset by supply chain and product mix benefits. Operating income was just $15 million, with a net loss of $0.4 million and diluted loss per share of $0.00. Inventory rose 4% to $1.1 billion, and cash at quarter-end was $285 million, with $190 million drawn on a $1.1 billion credit facility. The restructuring program remains capital intensive, with $280 million incurred to date and $305 million anticipated in total. The fiscal 2027 outlook expects operating income of $99–$119 million (adjusted: $140–$160 million), with a $70 million benefit from IEEPA tariff refunds but $45 million in headwinds from Middle East conflict. The company expects gross margin to improve by 170–220 basis points, but this is lower than previously guided due to higher costs and FX. Overall, the data points to ongoing margin and demand pressures, partially mitigated by cost controls and restructuring.

Analysis

The announcement is factual and measured, with no evidence of exaggerated or promotional language. The majority of the content is focused on realised, backward-looking financial results, which are negative: revenue, gross margin, and operating income all declined year-over-year, and the company posted a net loss. Forward-looking statements are present but are limited to updated guidance for fiscal 2027 and the anticipated completion of the restructuring plan by December 2026, both of which are near-term. The restructuring program is capital intensive, with $280 million already incurred and total costs expected to reach $305 million, but these are disclosed transparently and paired with realistic, modest guidance. There is no attempt to inflate the narrative or overstate future benefits; the tone is neutral and the outlook is cautious. The gap between narrative and evidence is minimal, and all claims are supported by disclosed figures.

Risk flags

• ●Revenue and profit declines across all major segments indicate persistent demand and margin pressures, raising concerns about the company's ability to stabilize growth in the near term.
• ●Inventory increased 4% to $1.1 billion despite falling sales, suggesting potential overstock or demand forecasting issues that could lead to further discounting or write-downs.
• ●The restructuring program is capital intensive, with $280 million already spent and $305 million expected in total, creating execution risk if anticipated savings or operational improvements do not materialize by the targeted December 2026 completion.
• ●The updated outlook incorporates $45 million in headwinds from the ongoing conflict in the Middle East and higher fuel and freight costs, which could worsen if geopolitical or macroeconomic conditions deteriorate further.
• ●Gross margin improvement guidance was reduced due to external cost pressures and FX headwinds, highlighting limited control over key profitability drivers and vulnerability to external shocks.

Bottom line

Under Armour's Q2 results confirm a challenging environment, with revenue, gross margin, and operating income all down year-over-year. The company is aggressively cutting costs and pushing through a major restructuring, but inventory build and persistent demand weakness signal ongoing risk. Fiscal 2027 guidance is cautious, with modest operating income improvement and reduced margin expansion targets due to external cost pressures and geopolitical headwinds. The restructuring plan is expensive and not yet complete, so execution over the next 12–14 months is critical. Investors should focus on whether cost controls and inventory management can offset weak demand and margin pressures. The most important takeaway: Under Armour remains in turnaround mode, and sustained improvement is not yet visible in the numbers.

Announcement summary

(NYSE:UAA) Under Armour, Inc. reported unaudited financial results for the second quarter of fiscal 2027, which ended September 30, 2026. Revenue decreased 7 percent to $1.2 billion. North America revenue declined 7 percent to $737 million, and international revenue decreased 7 percent to $509 million. Within international markets, EMEA revenue decreased 9 percent, Asia-Pacific decreased 9 percent, and Latin America increased 3 percent. Wholesale revenue decreased 6 percent to $725 million, and direct-to-consumer (DTC) revenue decreased 8 percent to $494 million. Owned-and-operated store revenue within DTC declined 7 percent, and eCommerce revenue decreased 12 percent, representing 27 percent of total DTC revenue for the quarter. Apparel revenue decreased 6 percent to $880 million, footwear revenue declined 11 percent to $234 million, and accessories revenue decreased 7 percent to $105 million. Gross margin decreased 30 basis points to 47.0 percent, primarily due to unfavorable foreign currency, channel and regional mix, and pricing, partially offset by supply chain benefits and favorable product mix. Selling, general and administrative (SG&A) expenses decreased 4 percent to $557 million, primarily due to lower marketing expenses and disciplined cost management. Adjusted SG&A decreased 3 percent to $559 million. Restructuring charges totaled $11 million. Operating income was $15 million, and adjusted operating income was $25 million. Net loss was $0.4 million, and adjusted net loss was $2 million. Diluted loss per share and adjusted diluted loss per share were $0.00. Inventory increased 4 percent to $1.1 billion. Cash and cash equivalents totaled $285 million at quarter-end, and $190 million of borrowings were outstanding under the company's $1.1 billion revolving credit facility. In the second quarter, the company recorded $11 million in restructuring charges and $2 million in transformation-related SG&A expenses, for a total of $13 million under its Fiscal 2025 Restructuring Plan. To date, the company has incurred $280 million in total restructuring and transformation costs, including $121 million in cash and $159 million in non-cash charges. Total program costs under the plan are anticipated to be approximately $305 million, and the company expects the plan to be substantially complete by December 31, 2026. The company updated its fiscal 2027 outlook to reflect additional external cost pressures and planned inventory actions. Operating income is now expected to be in the range of $99 million to $119 million versus the prior expectation of $96 million to $116 million. Adjusted operating income is still expected to be in the $140 million to $160 million range. This outlook includes an approximate $70 million benefit from the realization of refunds from prior-year IEEPA tariff expenses, partially offset by larger than anticipated headwinds related to the ongoing conflict in the Middle East of approximately $45 million (prior $35 million). Diluted loss/earnings per share is now expected to range from a loss of $0.02 to earnings of $0.02 versus the prior expectation of a loss of $0.01 to $0.05 per share. Adjusted diluted earnings per share is still expected to be $0.08 to $0.12.

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