UAA Stock Jumps 20% on Q3 Earnings Beat & Raised FY26 Guidance

Under Armour, Inc. UAA reported third-quarter fiscal 2026 results, wherein the top and bottom lines beat the Zacks Consensus Estimate. Revenues decreased and earnings increased year over year. 

UAA’s shares have risen 20.4% since the earnings release on Feb. 6. Management highlighted that results met or exceeded expectations across most major line items and raised its fiscal 2026 outlook.

Despite ongoing year-over-year revenue declines, particularly in North America and footwear, management expressed confidence in brand momentum, improving wholesale engagement and signs of stabilization heading into fiscal 2027, which appears to have supported investor sentiment following the earnings release. This Zacks Rank #3 (Hold) stock has increased 68.8% in the past three months compared with the industry’s growth of 8.7%.

Under Armour’s Quarterly Performance: Key Insights

The Baltimore, MD-based company reported adjusted earnings of 9 cents per share, in contrast to the Zacks Consensus Estimate of adjusted loss of 2 cents. The reported figure also increased from adjusted earnings of 8 cents per share in the year-ago period. 

Meanwhile, net revenues of $1,327.8 million beat the Zacks Consensus Estimate of $1,309 million but dipped 5.2% from the prior-year quarter. The metric declined 6% on a currency-neutral basis.

Wholesale revenues fell 6.4% year over year to $660 million, while direct-to-consumer revenues dipped 3.9% to $646.8 million. Revenues from company-owned and operated stores declined 2%, whereas e-commerce revenues dropped 7% and accounted for 38% of the total direct-to-consumer business for the quarter.

Breaking Down Under Armour’s Top Line

By product category, Apparel revenues slipped 3.3% year over year to $934 million, beating the Zacks Consensus Estimate of $932.3 million. Footwear revenues decreased 12% to $265.1 million, surpassing the consensus estimate of $255.8 million. Revenues from the Accessories category fell 2.5% to $107.7 million, beating the consensus estimate of $98 million. Meanwhile, Licensing revenues improved 13.6% to $27.2 million, surpassing the consensus estimate of $24.1 million.

Revenues from North America declined 10.3% to $756.7 million, beating the Zacks Consensus Estimate of $746.1 million. Meanwhile, revenues from the international business rose 3% (up 1% on a currency-neutral basis) to $577 million. 

Within the international segment, revenues from Europe, the Middle East and Africa (“EMEA”) increased 6% year over year to $315.8 million, missing the consensus estimate of $317.6 million. Revenues from the Asia-Pacific dropped 5.1% to $190.9 million, surpassing the consensus estimate of $180.5 million. Latin America saw a 19.7% rise to $70.6 million, surpassing the consensus estimate of $60.5 million.

Focus on UAA’s Margins

Under Armour reported gross profit of $589.7 million, down 11.3% year over year. The company’s gross margin contracted 310 basis points to 44.4% from the prior-year period. 

The decline was primarily caused by 180 basis points of supply-chain headwinds, including 200 basis points of pressure from higher U.S. tariffs, 140 basis points related to pricing in a more promotional environment in North America and a combined 40 basis points from unfavorable channel and regional mix. These pressures were partially offset by a 30-basis-point benefit from foreign exchange and a 20-basis-point tailwind from a more favorable product mix.

Adjusted SG&A decreased 7% to $563.3 million, primarily due to lower marketing spend caused by timing shifts, as the majority of the prior year’s spending occurred in the second half.

Adjusted operating income was $26.4 million, down from $59.6 million reported in the year-ago period.

Under Armour’s Financial Snapshot

At the end of the third quarter, cash and cash equivalents were $465 million. The company also held $600 million in restricted investments earmarked for repayment of its senior notes due in June 2026. There were no borrowings outstanding under the $1.1 billion revolving credit facility at the end of the third quarter. Inventory was down 2% to $1.1 billion.

In May 2024, Under Armour announced a restructuring plan to enhance financial and operational efficiency, which has been updated as implementation has progressed. The plan is now expected to cost up to $255 million, including up to $107 million in cash charges and up to $148 million in non-cash charges. 

Through the end of the third quarter of fiscal 2026, the company recorded $178 million in restructuring and impairment charges and $47 million in other transformation-related expenses. Of the $224 million recorded to date, $89 million represents cash expenditures and $135 million is non-cash. The remaining charges under the revised plan are expected to be recognized by the end of fiscal 2026.

UAA Stock Past Three-Month Performance

Sneak Peek Into UAA’s 2026 Outlook

For fiscal 2026, revenues are projected to decline about 4% compared with the prior expectation of a 4% to 5% decrease. This outlook assumes an approximately 8% drop in North America and a 6% decline in Asia-Pacific, both of which improved from the previously anticipated high-single-digit decreases. These reductions are expected to be partly offset by roughly 9% growth in EMEA, compared with the earlier view for a high-single-digit increase.

Gross margin is now anticipated to contract about 190 basis points, compared with the prior outlook for a 190-210-basis-point decline. The decrease is mainly caused by higher U.S. tariffs, an unfavorable channel and regional mix, and pricing headwinds, with some relief from favorable foreign exchange and product mix.

SG&A expenses are expected to fall at a low-double-digit rate compared with the earlier forecast for a mid-teens percentage decline. Adjusted SG&A, which excludes litigation reserve costs, transformation expenses tied to the fiscal 2025 Restructuring Plan and impairment charges, is still projected to decline at a mid-single-digit rate. The reduction reflects lower marketing spending, restructuring benefits and broader cost control efforts.

The company now expects an operating loss of approximately $154 million compared with the previous outlook for a loss of $56 million to $71 million. Excluding litigation reserves and anticipated transformation and restructuring charges, adjusted operating income is forecasted to be around $110 million compared with the earlier range of $95 million to $110 million.

Loss per share is expected to be between $1.24 and $1.25. Adjusted earnings per share are projected in the range of 10 cents to 11 cents, up from the prior outlook of 3 cents to 5 cents.

Key Picks

We have highlighted three better-ranked stocks, namely FIGS Inc. FIGS, American Eagle Outfitters Inc. AEO and Boot Barn Holdings, Inc. BOOT.

FIGS is a direct-to-consumer healthcare apparel and lifestyle brand. It flaunts a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for FIGS’ current financial-year earnings and sales indicates growth of 450% and 7.1%, respectively, from the year-ago actuals. FIGS delivered a trailing four-quarter average earnings surprise of 87.5%.

American Eagle is a specialty retailer of casual apparel, accessories and footwear. It sports a Zacks Rank of 1 at present.

The Zacks Consensus Estimate for American Eagle's current fiscal-year earnings indicates a decline of 20.7%, while the same for sales implies growth of 2.5% from the year-ago actuals. AEO delivered a trailing four-quarter average earnings surprise of 35.1%.

Boot Barn operates as a lifestyle retail chain devoted to western and work-related footwear, apparel and accessories. It currently sports a Zacks Rank of 1.

The Zacks Consensus Estimate for Boot Barn’s fiscal 2026 earnings and sales implies growth of 26.5% and 17.6%, respectively, from the year-ago actuals. BOOT delivered a trailing four-quarter average earnings surprise of 4.9%.

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

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