Dive Brief:
- Tariffs remain a problem at Under Armour, which reported the last quarter of its fiscal 2026 year on Tuesday. Revenue in Q4 fell 1% year on year to $1.2 billion, though net loss narrowed by more than a third to $43 million.
- Wholesale revenue fell 3% to $748 million and direct-to-consumer revenue rose 5% to $406 million. Gross margin contracted by 470 basis points to 42%, mostly due to tariffs.
- For the full year, revenue fell 4% to $5 billion. Gross margin contracted by 240 basis points to 45.5%, again mostly due to higher tariffs. Net loss more than doubled to over $496 million.
Dive Insight:
Tariffs were a problem for Under Armour in fiscal 2026, and that could continue if refunds don’t come through. The brand has based much of its profit expectations for 2027 on the assumption that it will get back $70 million in refunds from last year’s IEEPA tariff expenses.
But there are no refunds on the cool factor, and that remains a problem at Under Armour. Strength overseas wasn’t enough to pull up the results in North America, where Q4 revenue fell 7% to $641 million and full-year revenue fell 8% to $2.9 billion.
Slower sales are due partly to a conscious pullback in distribution and SKUs. But customer affinity for Under Armour shows only “very modest signs of improvement in the US and remains significantly below many other brands,” according to GlobalData research.
“Many consumers remain confused and somewhat nonplussed with the brand,” GlobalData Managing Director Neil Saunders said in emailed comments.
There are signs of emerging strength, according to research from the UBS Evidence Lab. In Q4, visits to Under Armour’s websites rose 3% year on year in the U.S., 3% in Europe and 24% in the Asia-Pacific region. Search interest in the U.S. accelerated quarter on quarter “although this was likely off a low base,” and it looks like the brand pulled back on promotions in Q4, UBS also found.
But, given ongoing losses and squeezed margins, that’s not a “sustainable recovery,” especially since weak distribution points and products have presumably been eliminated, according to Saunders.
The brand’s outlook reflects the weakness. Under Armour expects fiscal 2027 revenue to “decline slightly year over year, with a low single-digit decrease in North America,” and gross margin to expand 220 to 270 basis points, with about 150 of those getting delivered by tariff refunds. Otherwise, gross margin gains reflect pricing and a more favorable channel mix, partially offset by current tariffs and supply chain challenges from the Middle East conflict.
“The deterioration might be gentler, but it is still deterioration,” Saunders said. “And it ties back to the fact that Under Armour has still not found its groove in terms of brand positioning or having truly innovative and interesting products that stand out from rivals.”
