Under Armour Q2 FY2027 Earnings: Revenue Falls 7% as Margin Outlook Narrows

Under Armour (NYSE: UAA, UA) reported fiscal Q2 2027 revenue of $1.242 billion, down 6.9% from $1.333 billion a year earlier, while diluted EPS was $0.00 compared with a $0.04 loss. Sales declined across every major product category and both principal distribution channels, while gross margin slipped 30 basis points. The company maintained its full-year revenue outlook but reduced expected gross margin expansion.

Core Financial Results

Gross profit fell slightly faster than revenue as unfavorable foreign exchange, channel and regional mix, and pricing outweighed supply-chain benefits and favorable product mix. SG&A declined 4%, but that was slower than the revenue contraction, lifting SG&A to 44.9% of revenue from 43.6%.

Lower restructuring charges helped limit the decline in GAAP operating income. On an adjusted basis, however, operating income fell by more than half and adjusted EPS declined to $0.00 from $0.04.

Business and Segment Performance

The revenue decline was broad rather than concentrated in one market or category. Footwear was the weakest major product category, while direct-to-consumer revenue fell faster than wholesale revenue. Within DTC, e-commerce revenue declined 12% and accounted for 27% of quarterly DTC revenue, while owned-and-operated store revenue fell 7%.

International revenue benefited from currency translation: the reported decline was 7.5%, compared with an 8.8% decrease in constant currency. Latin America was the only geographic segment to report revenue growth, but its 3.0% increase became a 3.5% decline on a constant-currency basis.

Segment profitability also diverged. North America’s operating margin increased to 17.9% from 17.4% despite lower revenue, while EMEA’s margin fell to 13.6% from 16.6% and Asia-Pacific’s declined to 10.4% from 15.7%. Latin America’s operating margin rose to 18.2% from 8.5%, accompanying higher reported revenue.

Profitability, Cash Flow, and the Balance Sheet

Under Armour generated $20.1 million of operating cash flow during the first six months of fiscal 2027, compared with a $21.0 million use of cash in the prior-year period. Inventory was a $168.0 million use of cash, but accounts payable contributed $108.9 million, and capital spending fell by more than half.

Inventory reached $1.076 billion at quarter-end, up 4% year over year and above its March 2026 level. The company ended the quarter with $284.6 million in cash and $190 million borrowed under its $1.1 billion revolving credit facility.

The fiscal 2025 restructuring plan produced $11 million of restructuring charges and $2 million of transformation-related SG&A expense during the quarter. Cumulative restructuring and transformation costs reached $280 million, including $121 million of cash charges, against an anticipated total of approximately $305 million. Under Armour expects the plan to be substantially complete by December 31, 2026.

Lower Restructuring Charges Supported GAAP Results While Adjusted Earnings Weakened

The gap between GAAP and adjusted performance is important this quarter. Restructuring charges declined to $11.4 million from $31.9 million, helping GAAP operating income remain relatively close to the prior-year level even though adjusted operating income fell from $53.4 million to $24.9 million.

The tax line also drove the apparent improvement in GAAP net income. Under Armour recorded a $2.4 million pre-tax loss this quarter, compared with $7.5 million of pre-tax income a year earlier. However, the current quarter included a $2.4 million income tax benefit, while the prior-year quarter had $25.9 million of income tax expense. As a result, the GAAP net loss narrowed sharply even as adjusted net income swung from a $15.3 million profit to a $2.1 million loss.

Fiscal 2027 Guidance

Under Armour continues to expect a mid-single-digit revenue decline for fiscal 2027. It reduced its gross margin expansion forecast by 50 basis points at both ends because of higher fuel and freight expenses, planned inventory actions, and foreign exchange pressure. At the same time, the company raised its GAAP operating income range by $3 million at both ends while maintaining its adjusted operating income outlook.

The full-year operating outlook includes an approximately $70 million benefit from refunds of prior-year IEEPA tariff expenses. It also includes an estimated $45 million headwind related to the conflict in the Middle East, up from the previous estimate of $35 million. About 150 basis points of the expected full-year gross margin improvement comes from tariff-cost recovery realized in the first quarter.

For fiscal Q3, Under Armour expects a GAAP operating loss of $20 million to $30 million and adjusted operating results ranging from a $5 million loss to $5 million of income. GAAP and adjusted diluted loss per share are both expected to range from $0.01 to $0.03.

Investor Risks to Watch

• Broad-based demand pressure: Revenue declined across North America, international markets, wholesale, DTC, apparel, footwear, and accessories. The unchanged full-year outlook still calls for a mid-single-digit revenue contraction.
• Reduced margin recovery: Higher fuel and freight costs, inventory actions, foreign exchange, and the Middle East conflict led management to lower its gross margin expansion outlook.
• Dependence on tariff-cost recovery: Approximately $70 million of the full-year operating outlook and about 150 basis points of expected gross margin improvement are tied to refunds of tariff expenses recorded in the prior year.
• Inventory and liquidity: Inventory increased to $1.1 billion and consumed $168 million of cash during the first half, while the company had $190 million outstanding on its revolving credit facility.
• Restructuring execution: The company has incurred $280 million of an anticipated $305 million program and is targeting substantial completion by the end of December 2026.

Summary

Under Armour’s fiscal Q2 2027 results showed continued revenue pressure across markets, channels, and product categories. Lower expenses and restructuring charges limited the decline in GAAP operating income, but adjusted profitability weakened materially. Positive first-half operating cash flow provided some support, while the reduced gross margin outlook, higher inventory, external cost pressures, and reliance on tariff refunds remain the principal items to monitor.