Under Armour, Inc. 10-Q Summary: Q1 2026
Business Context and Reporting Period
This report covers the quarterly period ended June 30, 2026 (Fiscal Q1 2027). Under Armour, Inc. operates as a developer, marketer, and distributor of branded athletic performance apparel, footwear, and accessories across four geographic segments: North America, EMEA, Asia-Pacific, and Latin America. The company is a large accelerated filer with Class A, B, and C common stock outstanding.
Key Financial Metrics
| Metric | Q1 2026 | Q1 2025 |
|---|---|---|
| Net Revenues | $1,097.9 million | $1,134.1 million |
| Gross Profit | $593.8 million | $546.5 million |
| Gross Margin | 54.1% | 48.2% |
| Operating Income | $46.7 million | $3.3 million |
| Net Income | $0.5 million | ($2.6 million) loss |
| Operating Cash Flow | $109.1 million | $48.9 million |
| Cash and Equivalents | $396.0 million | $911.0 million |
| Total Debt (Principal) | $600.0 million | $1,200.0 million |
Material Changes vs. Prior Period
- Revenue Decline: Net revenues decreased 3.2% year-over-year, driven by declines in North America (-9.0%), Asia-Pacific (-6.6%), and Direct-to-Consumer channels (-5.8%). Footwear sales dropped 7.7%.
- Margin Expansion: Gross margin improved by 590 basis points to 54.1%. This was primarily driven by a $70 million net benefit from the recovery of previously paid IEEPA tariffs and favorable supply chain impacts, offsetting unfavorable pricing and mix.
- Profitability Turnaround: Operating income surged to $46.7 million from $3.3 million, aided by reduced restructuring charges ($4.0 million vs. $12.8 million) and the tariff recovery benefit.
- Debt Reduction: The company settled $600 million in Senior Notes due 2026 using proceeds from restricted investments, reducing total principal debt by 50% compared to the prior year.
- Effective Tax Rate: The effective tax rate spiked to 97.4% (from 49.0%) due to valuation allowances on forecasted losses in the U.S. and Cyprus and discrete items.
Guidance, Outlook, and Risks
- Restructuring Plan: The 2025 restructuring plan is now expected to total up to $305 million in pre-tax charges. As of June 30, 2026, $266.3 million has been recorded. The plan is expected to be substantially complete by December 31, 2026.
- Tariff Environment: While the company received $101 million in cash refunds for prior IEEPA tariffs, new Section 301 tariffs imposed in July 2026 are increasing product costs and negatively impacting gross margins. Future tariff rates and coverage remain uncertain.
- Liquidity: The company maintains $396 million in cash and a $1.1 billion revolving credit facility (with $200 million outstanding). Management believes liquidity is adequate for the next 12 months.
- Share Repurchases: No shares were repurchased in Q1 2026. Approximately $385 million remains available under the $500 million program authorized in May 2024.
- Legal Contingencies: The company has accrued $8.5 million regarding a dispute with insurance carriers over coverage for a previously settled securities class action.
Investor Verification Checklist
- Tariff Impact: Verify the magnitude of new Section 301 tariffs on future gross margins and the timeline for any additional refunds.
- Restructuring Execution: Monitor the remaining $38.7 million of expected restructuring charges and the realization of operational efficiencies by year-end 2026.
- North America Demand: Assess the sustainability of the 9.0% revenue decline in the North America segment, the company's largest market.
- Debt Covenants: Review the impact of the August 2026 credit agreement amendment on leverage ratios and interest coverage requirements.
- Inventory Levels: Evaluate the $1.1 billion inventory balance against the backdrop of softening consumer demand and increased promotional activity.