By Sanskriti Shekhar
Aug 7 (Reuters) – Under Armour on Friday forecast a steeper annual revenue decline, underscoring the challenge of reviving growth as cautious consumers rein in spending on athletic apparel amid economic uncertainty in its key North American market.
Shares of the company were down about 9% in early trading.
Persistent inflation and a softer consumer spending environment have pressured demand for apparel, footwear and accessories, particularly in North America, weighing on Under Armour’s turnaround efforts.
Larger rivals Nike and Adidas are also grappling with uneven demand and intensifying competition from fast-growing brands such as On and Hoka.
“It’s a difficult sportswear market right now. The tariff situation and other economic factors are not helping,” Morningstar analyst David Swartz said.
Revenue at Under Armour’s North America business, its largest market, fell 9% to $609.8 million in the quarter ended June 30.
“For the second quarter, we expect a more challenging consumer environment to persist, particularly in North America and parts of Asia Pacific,” Chief Financial Officer Reza Taleghani said on a post-earnings call.
Under Armour said it now expects full-year revenue to decline by a mid-single-digit percentage, compared with its prior target of a “slight decline”.
Kevin Plank, who returned as CEO in 2024, said consumers “don’t need more choices, they need better ones.” The company has been pushing ahead with its turnaround plan that includes reducing its product assortment by about 25% and focusing on higher-priced offerings in categories such as training, running and team sports.
The company has launched new products, including training shoes “Surge 5,” “Radiant TR” and baseball cleats “Leadoff Icon Mid,” priced from about $30 to $275, as well as jackets, hoodies and other sports accessories, to attract younger Gen Z customers.
Under Armour said it has incurred $266 million in restructuring and transformation expenses so far and expects to complete the plan by the end of the year.
“There isn’t much evidence that its turnaround efforts are having a significant impact,” Swartz said.
The profit outlook includes an about $70 million benefit from refunds related to International Emergency Economic Powers Act tariff costs in fiscal 2026 and a roughly $35 million hit related to the Middle East conflict.
The apparel maker’s quarterly revenue fell 3% to $1.10 billion, compared with analysts’ average estimate of $1.11 billion, according to data compiled by LSEG, while adjusted profit per share of 5 cents beat estimates.
(Reporting by Sanskriti Shekhar in Bengaluru; Editing by Leroy Leo)
Comments