Under Armour, Inc. 10-Q Summary: Q1 Fiscal 2026
Business Context and Reporting Period
This report covers the quarterly period ended June 30, 2025 (First Quarter of Fiscal 2026). Under Armour, Inc. is a global developer, marketer, and distributor of branded athletic performance apparel, footwear, and accessories. The company operates across four geographic segments: North America, EMEA, Asia-Pacific, and Latin America.
Key Financial Metrics
| Metric | Q1 2025 | Q1 2024 |
|---|---|---|
| Net Revenues | $1,134.1 million | $1,183.7 million |
| Gross Profit | $546.5 million | $562.7 million |
| Gross Margin | 48.2% | 47.5% |
| Operating Income (Loss) | $3.3 million | ($299.7 million) |
| Net Income (Loss) | ($2.6 million) | ($305.4 million) |
| Operating Cash Flow | $48.9 million | $153.0 million |
| Cash and Equivalents | $911.0 million | $884.6 million |
| Total Debt (Principal) | $1,000.0 million | $600.0 million |
Material Changes vs. Prior Period
- Revenue Decline: Net revenues decreased 4.2% year-over-year, driven by declines in North America (-5.5%), Asia-Pacific (-10.1%), and Latin America (-15.3%). EMEA was the only region with growth (+9.6%).
- Product Mix: Footwear revenue dropped significantly by 14.3%, while Accessories grew 8.1% and Apparel declined slightly by 1.5%.
- Profitability Improvement: Operating loss narrowed dramatically from $299.7 million to a profit of $3.3 million. This improvement was primarily due to a $307.0 million (36.7%) reduction in Selling, General, and Administrative (SG&A) expenses, largely excluding a one-time $274 million litigation reserve recorded in the prior year.
- Restructuring: Restructuring charges decreased to $12.8 million from $25.1 million as the company executes its 2025 restructuring plan.
- Debt Issuance: The company issued $400 million in 7.25% Senior Notes due 2030 in June 2025, increasing total debt principal to $1 billion. Proceeds are intended to refinance the $600 million Senior Notes due 2026.
Guidance, Outlook, and Risks
- Restructuring Plan: The 2025 restructuring plan is expected to total $140 million to $160 million in pre-tax charges, substantially complete by the end of Fiscal 2026. Approximately $49.8 million in remaining charges are estimated.
- Tariff Impact: Management anticipates a negative impact of approximately $100 million to Cost of Goods Sold in Fiscal 2026 due to incremental tariff rates, expected to reduce gross profit by roughly 200 basis points.
- Internal Controls: The company disclosed a material weakness in internal control over financial reporting regarding the review and execution of balance sheet account reconciliations. Remediation efforts are ongoing, and disclosure controls were deemed ineffective.
- Litigation: A proposed settlement of $8.9 million (funded by insurance) for consolidated derivative litigation is pending court approval. Additionally, an appeal regarding insurance coverage for a prior securities settlement remains pending.
- Share Repurchases: No shares were repurchased in Q1 2025. Approximately $410 million remains available under the $500 million program authorized in May 2024.
Investor Verification Checklist
- Verify the timeline and execution of the debt refinancing plan to retire the $600 million Senior Notes due 2026.
- Monitor the progress of remediation for the material weakness in internal controls over financial reporting.
- Assess the actual impact of anticipated tariffs on gross margins in upcoming quarters.
- Review the status of the pending derivative litigation settlement and the insurance coverage appeal.
- Track the recovery of footwear sales, which declined 14.3% year-over-year.