Cost Control and Streamlining Drive Under Armour's Fiscal 2026 Reset
Under Armour (NYSE: UAA) finished its fiscal 2026 with revenue down 4% for the year and 1% for the fourth quarter, as the company’s transformation remained in full swing. CEO Kevin Plank emphasized that the year’s performance was a deliberate step in resetting operations and restoring discipline—moves intended to position Under Armour as a more controlled, predictable business going forward.
Margins Squeezed by Tariffs and Costs, But Adjusted Expense Ratios Improve
Margins took a notable hit in 2026. Gross margin fell to 45.5% for the year (down 240 basis points), primarily due to higher tariffs and increased product costs, with unfavorable pricing and regional sales mix adding further headwinds. However, the company’s expense management was evident: Selling, general, and administrative (SG&A) expenses dropped 12% year-over-year, and even after adjusting for transformation and litigation expenses, SG&A was down 5%.
| Key Margin and Expense Metrics | FY 2026 | FY 2025 |
|---|---|---|
| Gross Margin | 45.5% | 47.9% |
| Adjusted Gross Margin | 45.7% | 47.9% |
| SG&A Expense (GAAP, $M) | 2,294.25 | 2,601.99 |
| Adjusted SG&A ($M) | 2,165.16 | 2,276.64 |
Despite these savings, Under Armour reported a net loss of $495.64 million for the year and $43.39 million for Q4, with adjusted net income at $49.56 million for FY 2026 after removing restructuring, transformation, and other charges.
International Markets and Accessories Stand Out Amid Segment Pressures
The North American business faced sharp revenue declines, down 8% for the year, offset by solid international growth of 4%. EMEA (+8.6%) and Latin America (+8.7%) led the gains, while Asia-Pacific saw a 4.8% decline. Accessories managed slight revenue growth (+0.9% year-over-year), while footwear revenue fell 10.8%. Direct-to-consumer revenues dipped 1.7%, but physical stores bucked the trend, increasing sales by 1% as eCommerce continued its slide, accounting for 33% of DTC revenue.
| Segment / Category | FY 2026 Revenue ($M) | % Change |
|---|---|---|
| North America | 2,859.42 | -7.9% |
| EMEA | 1,180.51 | +8.6% |
| Asia-Pacific | 719.13 | -4.8% |
| Latin America | 234.19 | +8.7% |
| Apparel | 3,395.05 | -1.6% |
| Footwear | 1,076.38 | -10.8% |
| Accessories | 414.47 | +0.9% |
Restructuring Plan Extended, Transformation Costs to Peak in 2027
Under Armour’s Fiscal 2025 Restructuring Plan will now extend through 2026, with total expected program costs rising to roughly $305 million. In 2026 alone, $128 million in restructuring charges were taken. The company aims to complete the plan by year-end 2026, implying most major transformation expenses will soon be behind it.
2027 Outlook Highlights: Margin Recovery, Targeted Growth, and Increased Marketing Investment
In contrast with the reset narrative of 2026, Under Armour’s outlook for fiscal 2027 is marked by cautious optimism:
- Revenue: Projected low single-digit decline, with North America expected to decrease but EMEA and Asia-Pacific forecasted to grow.
- Gross Margin: Forecasted to improve by 220-270 basis points, a substantial lift driven by anticipated relief on tariffs (IEEPA refund), better pricing, and more favorable sales mix.
- Operating Income: Anticipated to reach $96-$116 million GAAP, or $140-$160 million on an adjusted basis—bolstered by a projected $70 million benefit from tariff refunds, partly offset by $35 million in Middle East conflict headwinds and a $30 million bump in marketing investments.
- Adjusted EPS: Expected in the $0.08–$0.12 range, even as tax rates rise and transformation spending persists.
| 2027 Outlook (Select Metrics) | Low End | High End |
|---|---|---|
| Adjusted Gross Margin (bps improvement vs. 2026) | +220 | +270 |
| Adjusted Operating Income ($M) | 140 | 160 |
| Adjusted Diluted EPS | 0.08 | 0.12 |
| GAAP Revenue Growth | Slight Decline | Slight Decline |
Management is directing fresh resources into brand storytelling and global marketing, aiming to accelerate demand and modernize Under Armour’s positioning as it transitions out of its “reset” phase.
Key Takeaway: Discipline Sets Stage for a Focused, Margin-Driven Rebound
Under Armour’s 2026 financials spotlight ongoing growing pains—particularly in North America and footwear—but also a company that is methodically building a foundation for recovery. With restructuring largely behind it, margin improvements and renewed marketing may give Under Armour the springboard it needs in 2027 to deliver more predictable, profitable growth. Investors and observers will be watching closely to see if execution matches management’s optimism in the coming quarters.
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