Under Armour plans reset as North American sales drag

Under Armour has reported a 1% decline in fourth-quarter revenue to $1.2 billion, as the sportswear group grapples with a sustained downturn in its home market. While international sales grew 10% to $539 million, a 7% drop in North American revenue to $641 million underscored the ongoing structural challenges facing the brand.

For the full fiscal year 2026, total revenue fell 4% to $5 billion. The company posted a significant net loss of $495.6 million, largely impacted by a $247 million tax-related valuation allowance. Gross margins for the year contracted 240 basis points to 45.5%, pressured by higher U.S. tariffs and elevated product costs.

In response, management is extending its restructuring program through the end of 2026. Total projected transformation costs have been raised to $305 million, up from a previous estimate of $255 million. Chief Executive Kevin Plank characterized the period as an intentional "reset" designed to restore the discipline required to operate as a best-in-class brand.

The company’s innovation strategy is now focused on a "less is more" philosophy. Under Armour has reduced its product assortment by 25% over the past two years, prioritizing high-volume items like performance footwear and the new "Bouncy Cotton" apparel line. This simplification aims to improve price-to-value perceptions and drive healthier long-term profitability.

Looking toward fiscal 2027, the outlook remains cautious. Under Armour expects revenue to decline slightly, driven by continued low-single-digit contraction in North America. However, gross margins are forecast to improve by up to 270 basis points, bolstered by anticipated tariff refunds and a shift toward premium, full-price sales.

Adjusted earnings for the coming year are projected between 8 and 12 cents per share. While the brand faces ongoing geopolitical pressure and conflict-related headwinds in the Middle East, the leadership maintains that the current "rebase" provides a stronger, more predictable foundation for future growth.