Under Armour recently released its fiscal first quarter results, which showed a decline in sales across its business. Despite this, the company managed to beat Wall Street’s expectations both in terms of earnings per share and revenue. This unexpected positive outcome resulted in the company’s stock price surging by 17% in early trading. The earnings per share were reported at 1 cent adjusted, whereas a loss of 8 cents was expected. Revenue came in at $1.18 billion, exceeding the expected $1.15 billion.
However, it is essential to note that Under Armour is currently facing some legal challenges, most notably a securities lawsuit that the company agreed to settle for $434 million just before the trial was supposed to begin. This lawsuit accused Under Armour of defrauding shareholders about its revenue growth in an attempt to meet Wall Street’s forecasts. While the company stated that it was not admitting fault, it decided to settle due to the costs and risks associated with litigation. This legal battle has undoubtedly impacted the company’s financial outlook, with Under Armour now expecting to swing to a loss in fiscal 2025.
In response to these challenges, Under Armour has undertaken a broad restructuring plan to regain relevance, reverse a sales slump, and boost profits. This includes laying off workers, cutting back promotions and discounts, and streamlining its product assortment to be more competitive. The company is also looking to position itself as a premium brand, similar to Nike’s strategy. Former CEO Stephanie Linnartz was ousted earlier this year, and founder Kevin Plank has returned to lead the company. Plank expressed optimism about the progress made thus far in these restructuring endeavors.
While sales continue to decline across Under Armour’s business, there were some positive surprises in the latest financial results. Sales in North America, the company’s largest market, dropped by 14%, which was less than analysts’ expectations. Wholesale revenue fell by 8%, and direct-to-consumer sales declined by 12%. Interestingly, sales at stores owned by Under Armour decreased by 3%, while online sales plummeted by 25%. This drop in online sales was attributed to planned decreases in promotional activities. Apparel revenue fell by 8%, footwear sales dropped by 15%, and accessories revenue slid by 5%.
As Under Armour aims to transition back to growth and establish itself as a premium retailer in the athletic apparel market, it has made strategic acquisitions and expansions. The company recently acquired sustainable fashion brand Unless Collective and brought on former Adidas executive Eric Liedtke to lead brand strategy. Unless Collective focuses on regenerative fashion that does not use plastics in manufacturing apparel and footwear. This sustainable approach aligns with Under Armour’s goal to position itself as a socially responsible and innovative brand.
Despite the better-than-expected first quarter results, analysts caution that it will take time for Under Armour to return to growth. They highlight the challenges of repositioning the brand as more premium and focusing on core fundamentals. Analysts emphasize the importance of new product introductions in driving growth, with significant impacts not expected until the second half of fiscal 2026. Risks include maintaining a strong brand image, navigating intense competition, and addressing turnover rates in senior management.
Under Armour faces a complex set of challenges as it seeks to rebound from legal troubles, sales declines, and an evolving market landscape. The company’s restructuring efforts and strategic acquisitions signal a commitment to long-term growth and innovation. However, the road ahead will require careful navigation of changing consumer preferences, competitive pressures, and operational hurdles. Only time will tell if Under Armour can successfully transform itself and emerge as a stronger player in the athletic apparel industry.