Under Armour Cuts Revenue Outlook as North America Weakness Deepens
The athletic-apparel maker lowered its full-year revenue forecast to a mid-single-digit decline after first-quarter sales fell 3% to $1.1 billion.
Under Armour (UAA) posted a 3% decline in first-quarter revenue to $1.1 billion, marking a fourth consecutive quarter of contraction even as the rate of decline narrowed from 5% in each of the prior two periods. The athletic-apparel maker simultaneously cut its full-year fiscal 2027 revenue outlook to a mid-single-digit decline from a slight decline, citing softer demand across its key markets.
The revenue revision underscores a persistent struggle in North America, where sales fell 9% to $610 million — a steeper drop than the 7% decline logged in the fourth quarter of fiscal 2026. The company now expects North America revenue to decline in the mid-single digits for the full year, worse than the low-single-digit decline it previously projected. The region, which still accounts for more than half of total revenue, has contracted in every quarter for more than a year.
International markets offered a partial offset, with revenue rising 5% on a reported basis, though that pace slowed from 10% growth in the prior quarter. EMEA remained a bright spot, with sales up 12%, accelerating from 7% growth in the fourth quarter. Asia-Pacific, however, reversed sharply, declining 7% after growing 13% in the prior quarter. Latin America growth also decelerated to 8% from 22%. For the full year, Under Armour now expects both EMEA and Asia-Pacific to decline in the low-single digits, reversing prior expectations for low-single-digit growth in each region.
Gross margin was the quarter's standout metric, surging 590 basis points to 54.1%. The bulk of the expansion was due to IEEPA tariff cost recoveries, a benefit expected to contribute roughly 150 basis points to the full-year margin improvement of 220 to 270 basis points. The tariff recovery helped swing GAAP operating income to $47 million, compared with an operating loss of $34 million in the fourth quarter. Adjusted operating income reached $52 million, up from $3 million in the prior quarter.
Direct-to-consumer sales, a channel Under Armour has invested in heavily, declined 6%, reversing 5% growth in the fourth quarter. E-commerce revenue fell 12%, worsening from flat in the prior period. Wholesale revenue declined 2%, an improvement from a 3% drop in the fourth quarter. Footwear, the weakest major category, saw revenue fall 8% to $245 million, though that represented an improvement from a 16% decline two quarters earlier.
Despite the revenue cut, Under Armour maintained its full-year operating income outlook at $96 million to $116 million on a GAAP basis and $140 million to $160 million adjusted, with roughly $70 million in IEEPA benefits offsetting approximately $35 million in headwinds tied to Middle East conflict. The company improved its SG&A guidance, now expecting GAAP SG&A to decline in the high-single digits, up from a prior forecast of a low-single-digit decline, reflecting expense reductions to align with weaker demand. Adjusted diluted EPS guidance was held at $0.08 to $0.12, while the GAAP diluted loss per share outlook widened to $0.01 to $0.05 from a prior range of breakeven to $0.04.
Restructuring charges fell to $4 million in the quarter, down from $75 million in the third quarter, as the company's multiyear cost-restructuring program nears completion. Total program costs are now anticipated at roughly $305 million, up from a prior estimate of about $255 million, with $266 million incurred to date. Inventory decreased 3% to $1.1 billion, while cash and equivalents rose to $396 million from $309 million at the end of the prior quarter after the company retired all Senior Notes due 2026 upon maturity.