Under Armour, Inc. - 10-Q Summary (Q3 Fiscal 2026)
Business Context and Reporting Period
This report covers the quarterly period ended December 31, 2025 (Fiscal Q3 2026) for Under Armour, Inc., a global developer and marketer of branded athletic performance apparel, footwear, and accessories. The company operates through four geographic segments: North America, EMEA, Asia-Pacific, and Latin America.
Key Financial Metrics
| Metric | Q3 2025 (3 Months) | Q3 2024 (3 Months) | YTD 2025 (9 Months) | YTD 2024 (9 Months) |
|---|---|---|---|---|
| Net Revenues | $1,327.8 million | $1,401.0 million | $3,795.2 million | $3,983.7 million |
| Gross Profit | $589.7 million | $665.2 million | $1,766.8 million | $1,924.0 million |
| Gross Margin | 44.4% | 47.5% | 46.6% | 48.3% |
| Operating Income (Loss) | $(149.8) million | $13.5 million | $(129.4) million | $(113.1) million |
| Net Income (Loss) | $(430.8) million | $1.2 million | $(452.3) million | $(133.8) million |
| Diluted EPS | $(1.01) | $0.00 | $(1.06) | $(0.31) |
| Cash & Equivalents | $464.6 million | (Balance Sheet as of Dec 31, 2025) | ||
| Total Debt (Principal) | $1,000.0 million | (Includes $600M defeased notes) |
Material Changes vs. Prior Period
- Revenue Decline: Net revenues decreased 5.2% in Q3 and 4.7% YTD, driven by declines in North America (-10.3% Q3) and Asia-Pacific (-5.1% Q3). Footwear sales dropped 12.0% in Q3.
- Margin Compression: Gross margin decreased 310 basis points in Q3 to 44.4%, primarily due to tariff impacts (200 bps), a more promotional environment in North America (140 bps), and unfavorable channel mix.
- Restructuring Charges: The company recorded $75.0 million in restructuring charges for Q3 (up from $13.9 million prior year), largely due to the separation of the Curry Brand ($69.7 million non-cash contract termination costs) and facility impairments.
- Legal Contingencies: A significant litigation reserve of $98.5 million was recorded in Q3 related to insurance carrier disputes regarding coverage for prior securities litigation settlements.
- Tax Provision: The effective tax rate was negative (168.9%) in Q3 due to the recording of valuation allowances against U.S. federal deferred tax assets, driven by forecasted losses and the aforementioned legal reserve.
Guidance, Outlook, and Risks
- Restructuring Plan: The Board approved an expanded 2025 restructuring plan totaling up to $255 million in pre-tax charges, expected to be substantially complete by the end of Fiscal 2026.
- Tariff Impact: Management anticipates a negative impact of approximately $80 million to Cost of Goods Sold in Fiscal 2026 due to increased tariffs, expected to reduce gross profit by ~160 basis points.
- Debt Management: In June 2025, the company issued $400 million of 7.25% Senior Notes due 2030. Proceeds were used to defease the $600 million Senior Notes due 2026 via an escrow trust; these notes remain on the balance sheet but are effectively settled.
- Share Repurchases: Under a $500 million program authorized in May 2024, the company repurchased $25 million of Class C stock in the first nine months of 2025. Approximately $385 million remains available.
- Internal Controls: The company disclosed a material weakness in internal controls over financial reporting related to balance sheet account reconciliations. Remediation is ongoing and expected to be complete by the end of Fiscal 2026.
Investor Verification Checklist
- Legal Reserve Accuracy: Verify the status of the $98.5 million litigation accrual regarding insurance coverage disputes and potential for additional costs or interest.
- Restructuring Execution: Monitor the progress of the $255 million restructuring plan, specifically the separation of the Curry Brand and associated non-cash charges.
- Tariff Exposure: Assess the actual impact of global trade policy changes on Q4 and Fiscal 2026 margins versus the projected $80 million cost increase.
- Internal Control Remediation: Review future filings for confirmation that the material weakness in financial reporting controls has been remediated.
- Debt Covenants: Confirm continued compliance with the amended credit agreement covenants (leverage and interest coverage) given the current operating loss position.