Under Armour's Q2 Earnings Beat Mark, E-Commerce Revenues Dip 8% Y/Y

Under Armour, Inc. UAA reported second-quarter fiscal 2026 results, wherein the top and bottom lines exceeded the Zacks Consensus Estimate. Both metrics decreased year over year. Also, e-commerce revenues fell year over year.

Management is encouraged to see signs in brand momentum across North America, which is a key milestone in the company’s turnaround.  Its strategic actions, operating model and go-to-market approach progress well.

However, UAA’s shares have fallen nearly 5% in pre-trading hours on soft outlook for fiscal 2026. Declines in revenues and earnings on a year-over-year basis further hurt investors’ sentiments. This Zacks Rank #3 (Hold) stock has lost 30.5% in the past three months compared with the industry’s decline of 11.9%.

Under Armour’s Quarterly Performance: Key Insights

The Baltimore, MD-based company reported adjusted earnings of four cents per share, which outpaced the Zacks Consensus Estimate of three cents. The reported figure decreased from adjusted earnings of 30 cents per share in the year-ago period. 

Meanwhile, net revenues of $1,333.4 million beat the Zacks Consensus Estimate of $1,308 million but dipped 5% from the prior-year quarter. The metric declined 6% on a currency-neutral basis.

Under Armour, Inc. Price, Consensus and EPS Surprise

Under Armour, Inc. price-consensus-eps-surprise-chart | Under Armour, Inc. Quote

Wholesale revenues fell 6.2% year over year to $775.1 million, while direct-to-consumer revenues dipped 2.2% to $538.1 million. Revenues from company-owned and operated stores were steady at 1%, whereas e-commerce revenues dropped 8% and accounted for 28% of the total direct-to-consumer business for the quarter.

Breaking Down Under Armour’s Top Line

By product category, Apparel revenues slipped 1.1% year over year to $936.5 million, beating the Zacks Consensus Estimate of $907 million. Footwear revenues decreased 15.7% to $263.6 million, missing the consensus estimate of $267 million. Revenues from the Accessories category fell 2.8% to $113.1 million, beating the consensus estimate of $109 million. Meanwhile, Licensing revenues improved 16.9% to $29 million, surpassing the consensus estimate of $25.3 million.

Revenues from North America declined 8.3% to $791.5 million, beating the Zacks Consensus Estimate of $775 million. Meanwhile, revenues from the international business rose 2% (down 1% on a currency-neutral basis) to $551 million. 

Within the international segment, revenues from Europe, the Middle East and Africa (EMEA) increased 12.2% year over year to $317.7 million, beating the consensus estimate of $304 million. Revenues from the Asia-Pacific dropped 13.7% to $179.2 million, surpassing the consensus estimate of $153.6 million. Latin America saw a 14.6% rise to $53.8 million, surpassing the consensus estimate of $46.1 million.

Focus on UAA’s Margins

Under Armour reported gross profit of $630.6 million, down 9.4% year over year. The company’s gross margin contracted 250 basis points to 47.3% from the prior-year period. This was driven mainly by supply-chain woes stemming from higher tariffs and a less favorable channel and regional mix. These were somewhat offset by gains from foreign exchange and pricing.

Adjusted selling, general and administrative expenses grew 9% year over year to $577.2 million, excluding roughly $4 million in transformation costs associated with the fiscal 2025 restructuring plan. 

Adjusted operating income was $53.4 million, down from $166.1 million reported in the year-ago period.

Under Armour Financial Snapshot

UAA ended the quarter with cash and cash equivalents of $396 million. In the reported quarter, using the net proceeds from issuing the Senior Notes due 2030, coupled with borrowings from its revolving credit facility and cash, Under Armour satisfied and discharged its $600 million Senior Notes due 2026. As of Sept. 30, 2025, UAA had $200 million in borrowings outstanding under a $1.1-billion revolving credit facility.

The company ended the quarter with long-term debt (net of current maturities) of $589.8 million and total stockholders' equity of $1.86 billion.

Under Armour repurchased $25 million of its Class C common stock in the reported quarter, retiring 5.2 million shares. As of quarter-end, it repurchased 18 million shares worth $115 million as part of a three-year, $500 million program approved by its board last May.

In May 2024, UAA unveiled a restructuring plan focused on improving its financial and operational efficiencies. The plan is estimated to cost up to $160 million, including up to $90 million likely to be cash-related and roughly $70 million anticipated as non-cash charges. By the end of the second quarter of fiscal 2026, the plan had resulted in the company generating $103 million in restructuring and impairment charges and $44 million in other associated transformational expenses. Of the total $147 million spent to date, $82 million is cash-related and $65 million is non-cash-related. Management expects the remaining charges outlined in the revised restructuring plan will be recognized by fiscal 2026-end.

Sneak Peek Into UAA’s 2026 Outlook

For fiscal 2026, revenues are projected to decline 4-5% year over year. This includes planned high-single-digit percentage decreases in North America and Asia-Pacific, and a high-single-digit percentage rise in EMEA.

Gross margin is likely to contract 190-210 bps, primarily owing to elevated U.S. tariffs, coupled with negative channel and regional mix. Favorable foreign currency exchange impacts, product mix and pricing are anticipated to partly offset these decreases.

SG&A expenses are likely to decline by a mid-teens percentage rate. Excluding transformation expenses associated with the company's fiscal 2025 Restructuring Plan as well as the prior year's litigation settlement expenses and impairment charges, adjusted SG&A is forecast to decline at a mid-single-digit rate, thanks to reduced marketing costs, restructuring savings and other cost-management efforts.

Operating income is forecasted to range from $19-$34 million, with adjusted operating income, excluding restructuring and transformation charges, estimated between $90 million and $105 million for fiscal 2026. Loss per share is envisioned to be between 15 cents and 17 cents, while adjusted earnings per share are anticipated to be in the range of 3-5 cents. UAA reported earnings per share of 31 cents in the prior fiscal year.

Key Picks in the Consumer Discretionary Space

Crocs CROX, which is a leading footwear company, currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here. 

CROX delivered a trailing four-quarter earnings surprise of 14.3%, on average. The Zacks Consensus Estimate for Crocs' current financial-year EPS indicates decline of 7.9% from the year-ago number. 

Guess?, Inc. GES, which is a designer and marketer of casual apparel and accessories, currently carries a Zacks Rank #2 (Buy). 

GES delivered a trailing four-quarter earnings surprise of 26.7%, on average. The Zacks Consensus Estimate for GES’ current financial-year sales indicates growth of 8.5% from the year-ago number. 

Ralph Lauren RL, which is a designer and manufacturer of apparel and accessories, currently carries a Zacks Rank of 2.

The Zacks Consensus Estimate for RL’s current financial-year EPS is expected to rise 21.7% from the corresponding year-ago reported figure. RL delivered a trailing four-quarter earnings surprise of 8.5%, on average.

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This article originally published on Zacks Investment Research (zacks.com).

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