Under Armour lifts annual forecasts as turnaround slows N America sales slide

By Savyata Mishra

Feb 6 (Reuters) - Under Armour UAA.N raised its annual forecasts after posting better-than-expected third-quarter results on Friday and its CEO signaled stability ahead, sending the sportswear retailer's shares up more than 13% in early trading.

CEO Kevin Plank has ramped up cost cuts, simplified its product mix, rolled out new apparel and footwear styles since returning to the helm in April 2024 amid declining sales and intensifying competition.

"North America is beginning to turn the corner. We believe the December quarter marks the bottom of the reset," he said on a post-earnings call.

Under Armour expects fiscal 2026 adjusted profit per share of 10 cents to 11 cents, compared with its prior target of 3 to 5 cents.

The fall order book was "encouraging" in North America, executives said on the earnings call, adding that while traffic remains soft, "underlying indicators are improving."

Under Armour has pulled back on discounts and has cut about 25% of its product lines to focus on higher-priced items in categories such as training, running and team sports.

"Elevating product and pricing takes time, and the company faces a delicate balance between growing higher-end offerings and protecting near-term sales from its core, lower-priced basics," said Patrick Ricciardi, analyst at Third Bridge.

Under Armour forecast annual revenue to drop 4%, compared with its prior view of a 4% to 5% decline. Analysts expected a 4.2% drop to $4.95 billion, according to data compiled by LSEG.

TARIFF COSTS MAINTAINED

Higher U.S. tariffs on goods from manufacturing hubs such as Vietnam and Indonesia are expected to add about $100 million to Under Armour's costs this fiscal year.

Gross margin is expected to contract 190 basis points, largely tied to the tariff costs. For the quarter, it fell 310 basis points to 44.4%.

The company logged a 5% decline in revenue to $1.33 billion in the third quarter, compared to expectations of a 6.3% drop to $1.31 billion.

Excluding items, it earned 9 cents per share, compared to expectations of a loss of 2 cents.