Under Armour has anticipated a revenue decrease of 6% to 7% for the second quarter of fiscal year 2026, citing changing trade policies and an unstable macroeconomic landscape as primary factors affecting both demand and tariff-related costs.
The company expects its operating income to range from a $10 million loss to breaking even during this quarter.
In the earnings call, Chief Financial Officer David Bergman stated, “Last quarter, we noted that, before any global trade policy changes, we expected a modest revenue decline in fiscal 2026 as we focused on strengthening the brand and increasing higher quality sales.”
He further mentioned that “Since then, changing trade policies have created additional headwinds, including on the demand side, making it more difficult to predict the future environment, but also highlighting the importance of our disciplined Brand First strategy.”
Bergman also noted that Under Armour is preparing for an anticipated $100 million rise in the cost of goods sold for fiscal 2026, which would result in a gross margin decline of about 200 basis points. To address these challenges, the company is pursuing various strategies, including collaborating with suppliers to share costs, considering alternative sourcing solutions, and implementing targeted price changes.
Despite these challenges, the company reported that its results “met or exceeded” expectations for the first quarter of fiscal 2026 (Q1 FY26), with revenues reaching $1.13 billion, reflecting a 4% decrease from $1.18 billion in the prior year’s quarter.
In North America, revenue dipped 5% to $670 million, while international sales saw a slight 1% decline, totaling $467 million.
In a positive turn, revenue in the Europe, Middle East, and Africa (EMEA) region grew by 10%, or 6% when adjusted for currency fluctuations.
However, the Asia-Pacific and Latin American markets experienced notable downturns, with declines of 10% and 15%, respectively, with neutral currency figures indicating similar trends.
In owned retail stores, revenue climbed by 1% during the quarter, while e-commerce sales, which make up 31% of the direct-to-consumer segment, declined by 12%.
Under Armour’s president and CEO, Kevin Plank, remarked, “We are pleased our quarterly results met or exceeded our expectations as we drive a bold transformation—sharpening Under Armour into a brand where sports credibility, innovation and style meet operational discipline. Despite ongoing uncertainty, our brand is gaining strength and we’re executing our strategic plan with clarity and confidence.”
Key Metrics from Q1 FY26
Gross margin increased slightly by 70 basis points to reach 48.2%, bolstered by favorable exchange rates, pricing strategies, and a beneficial product mix. This was somewhat countered by an unfavorable channel mix and rising supply chain expenditures compared to the previous year.
Selling, general, and administrative (SG&A) expenses significantly decreased by 37%, totaling $530 million, mainly due to large legal reserves from the prior year. This quarter included $13 million in restructuring expenses and $8 million related to transformation efforts, summing up to approximately $21 million.
The operating income for the quarter was reported at $3.32 million, and when excluding transformation and restructuring costs, the adjusted operating income reached $24 million.
The net loss for Q1 FY26 was $2.61 million, a marked improvement compared to a net loss of $305.42 million during the same period last year, resulting in a diluted loss per share of $0.01.
Conclusion
For the second quarter of fiscal 2026 (Q2), Under Armour expects revenue declines in North America and Asia-Pacific, while growth is anticipated in the EMEA region.
The gross margin is projected to decline by 340 to 360 basis points due to ongoing supply chain difficulties and potential tariff implications.
SG&A expenses are expected to increase at a low double-digit percentage rate; however, when excluding transformation-related costs from restructuring, a high single-digit percentage gain is anticipated, primarily due to increased marketing investments.
The projected diluted loss per share for Q2 FY26 is estimated to be between $0.07 and $0.08, while adjusted diluted earnings per share are forecasted to fall between $0.01 and $0.02.
