Under Armour's Latest Financial Quarter Underperforms Expectations
Under Armour, the sporting goods manufacturer, is currently navigating a challenging financial landscape as it strives to turn its business around. The company's Q1 2026 earnings report, released in August 2025, painted a mixed picture of ongoing financial struggles and restructuring efforts.
Financial Performance
In Q1 2026, Under Armour's revenue declined by 4% to $1.1 billion, with North American revenue dropping 5% to $670 million and international revenue decreasing by 1% (2% currency-neutral)[5][3]. Operating income was modest at $3 million, but after excluding restructuring and transformation expenses, adjusted operating income rose to $24 million[3]. Net loss was $3 million, with an adjusted net income of $9 million, resulting in very slight negative earnings per share[3].
The company projects a revenue decline of 6–7% for fiscal 2026, including a low-double-digit decline in North America balanced by growth in Europe (EMEA)[5][2]. Gross margin is expected to worsen due to tariffs and supply chain costs, although some offset is anticipated from pricing and currency effects[5].
Turnaround Strategy and Costs
Under Armour is executing a restructuring plan initiated in May 2024, with total estimated costs of $140–160 million[3][5]. Through Q1 FY26, the company recorded $110 million in restructuring and transformation charges (approx. $65 million cash-related)[3][5]. Remaining related expenses are expected through the end of 2026[3][5].
The turnaround strategy focuses on premium branding, reducing SKUs by 25%, operational streamlining, performance innovation, athlete partnerships, and regional market specialization[1][2]. This includes leveraging technical product innovation and niche focus areas (e.g., football), differentiating from larger peers Nike and Lululemon[1][2].
Debt and Liquidity
Under Armour maintains solid liquidity with $911 million in cash and cash equivalents, partly due to a $400 million senior notes issuance[3]. The company plans to use cash on hand, its revolving credit facility, and raised proceeds to redeem or retire $600 million in senior notes due in June 2026, indicating active debt management[3]. The revolving credit facility of $1.1 billion was undrawn at the end of Q1 FY26, suggesting available liquidity buffer[3].
Market and Investor Sentiment
Market reaction to Under Armour's turnaround efforts has been cautious. The company's stock shows a bearish technical pattern, reflecting skepticism about near-term momentum and profitability recovery[4]. Analysts note the high execution risk associated with the turnaround and external challenges including tariffs and trade disruptions[2].
In summary, Under Armour's turnaround in 2025 is ongoing but struggling with persistent revenue declines, profitability losses, and restructuring costs. While operational efficiencies and branding pivots show some promise, the company must overcome macroeconomic headwinds, competitive pressures, and tariff impacts. Its liquidity and debt management appear prudent, but investors remain cautious given the continued negative profitability metrics and market uncertainties. The company plans to complete restructuring efforts by the end of fiscal 2026 amid a turbulent athletic apparel landscape[1][2][3][5].
Today, the value of Under Armour's stock is over 50% less than its IPO price. On August 8, 2026, Under Armour's stock lost over 20% of its value by noon, due to the company's projections for Q2 2026. Under Armour's market cap is currently $2.8 billion, with two classes of publicly traded stock - Class A shares (UAA) and Class C shares (UA).
Sports apparel manufacturer Under Armour is grappling with financial struggles in a challenging market landscape, as shown by their Q1 2026 earnings report where revenue dropped by 4% and net loss was $3 million.
Their ongoing restructuring plan, detailed in May 2024, aims to turn the company around through premium branding, operational streamlining, and other strategic initiatives, but the recent stock market reaction indicates skepticism about their near-term momentum and profitability recovery.
