Here’s a bold statement: Under Armour just defied the odds in a big way. Despite facing significant challenges, especially in its North American stronghold, the sportswear giant not only met but exceeded expectations in Q3, even raising its profit forecast for the year. But here’s where it gets controversial: Can this momentum truly signal a turnaround, or is it just a temporary blip in a larger struggle? Let’s dive in.
Before the market opened on Friday, the Baltimore-based brand reported adjusted diluted earnings of 9 cents per share, a stark contrast to the 2-cent loss analysts had predicted. However, the company also posted an operating loss of $150 million. When excluding litigation expenses and restructuring costs, adjusted operating income stood at $26 million. Sales dipped by 5%, landing at $1.33 billion, but still managed to edge past the $1.31 billion analysts had anticipated.
Breaking it down by region, North America—Under Armour’s largest market—continued to be a sore spot, with sales plunging 10% to $757 million. And this is the part most people miss: While North America struggles, international markets are picking up the slack. Latin America and the EMEA (Europe, Middle East, and Africa) regions shone brightly, with revenue climbing 20% and 6%, respectively. However, Asia-Pacific sales slipped by 5%, raising questions about the brand’s global strategy.
Wholesale and direct-to-consumer channels also faced headwinds. Wholesale revenues dropped 6% to $660 million, while direct-to-consumer sales fell 4% to $647 million. Within this, brick-and-mortar store revenue dipped 2%, and e-commerce took a 7% hit—a surprising decline in an era dominated by online shopping.
By product category, apparel revenue slipped 3% to $934 million, footwear took a harder fall with a 12% decline to $265 million, and accessories dropped 3% to $108 million. Despite these setbacks, Under Armour’s founder and CEO, Kevin Plank, remained optimistic. He highlighted that the third quarter’s adjusted operating results surpassed expectations and expressed confidence in reigniting brand momentum globally.
Plank emphasized, “In North America, we believe the December quarter marked the toughest phase of our business reset. We’re now poised for greater stability as we build on this progress worldwide.” He also noted that the company’s transformation is gaining speed, driven by improved products, compelling storytelling, and a more disciplined market approach.
In May 2024, Under Armour unveiled a restructuring plan aimed at boosting financial and operational efficiency. The updated plan is expected to cost up to $255 million, including $107 million in cash charges and $148 million in non-cash charges. By the end of Q3 2026, the company had recorded $178 million in restructuring and impairment charges, plus $47 million in other transformation-related expenses. Of the $224 million incurred so far, $89 million is cash-related, and $135 million is non-cash. The remaining charges are expected to be recognized by the end of fiscal 2026.
Looking ahead, Under Armour has revised its fiscal 2026 projections. Adjusted diluted earnings per share are now forecast at 10 to 11 cents, up from the previous 3 to 5 cents and surpassing analyst expectations of 5 cents. Revenue is expected to decline by about 4%, compared to the earlier projection of a 4 to 5% drop. This includes an 8% decline in North America and a 6% decline in Asia-Pacific, partially offset by a 9% increase in EMEA revenue.
The operating loss is projected at around $154 million, compared to the prior outlook of $56 million to $71 million. Excluding litigation and restructuring costs, adjusted operating income is expected to reach about $110 million, up from the previous $95 million to $110 million range.
In pre-market trading on Friday, Under Armour’s stock surged 4.8% to $6.45, reflecting investor optimism. But here’s the question: Is this enough to convince skeptics that Under Armour is back on track? Or is the company still facing an uphill battle in a fiercely competitive market? Let us know your thoughts in the comments—we’d love to hear your take on whether Under Armour’s strategy will pay off in the long run.
