On August 8, 2024, Under Armour Inc (UAA, Financial) released its 8-K filing detailing the financial results for the first quarter of fiscal 2025, which ended on June 30, 2024. Under Armour, a Baltimore-based company founded in 1996, develops, markets, and distributes athletic apparel, footwear, and accessories globally. The company caters to professional and amateur athletes, sponsored teams, and active lifestyle consumers through direct-to-consumer and wholesale channels, including e-commerce and over 400 stores.
Performance Overview
Under Armour Inc (UAA, Financial) reported a 10% decline in revenue to $1.2 billion, down from $1.32 billion in the same quarter last year. Despite this, the company managed to exceed analyst estimates, which projected revenue at $1.15 billion. The company's gross margin improved by 110 basis points to 47.5%, primarily due to reduced discounting and lower product costs.
Segment Performance
North America revenue decreased by 14% to $709 million, while international revenue saw a 2% decline to $473 million. Within the international segment, EMEA revenue remained flat, Asia-Pacific revenue dropped by 10%, and Latin America revenue increased by 16%. Wholesale revenue fell by 8% to $681 million, and direct-to-consumer revenue decreased by 12% to $480 million, with eCommerce revenue dropping by 25% due to planned reductions in promotional activities.
Financial Achievements
Despite the revenue decline, Under Armour Inc (UAA, Financial) achieved several financial milestones. The company's gross margin increased to 47.5%, driven by lower discounting and product costs. Inventory levels were reduced by 15% to $1.1 billion, and cash and cash equivalents stood at $885 million with no outstanding borrowings under the $1.1 billion revolving credit facility.
Income Statement Highlights
| Metric | Q1 2025 | Q1 2024 | % Change |
|---|---|---|---|
| Net Revenues | $1,183.7 million | $1,317.0 million | -10.1% |
| Gross Profit | $562.7 million | $611.5 million | -8.0% |
| Operating Income (Loss) | $(299.7) million | $22.4 million | -1437.1% |
| Net Income (Loss) | $(305.4) million | $10.0 million | -3153.0% |
Challenges and Strategic Initiatives
Under Armour Inc (UAA, Financial) faced significant challenges, including a 42% increase in selling, general, and administrative expenses to $837 million due to a litigation reserve. Adjusted selling, general, and administrative expenses, excluding the litigation reserve and transformation expenses, were down 6% to $555 million. The company also incurred $25 million in restructuring charges as part of its fiscal 2025 restructuring plan.
“We are encouraged by early progress in our efforts to reconstitute a premium positioning for the Under Armour brand and pleased with our first quarter fiscal 2025 results that were ahead of expectations,” said Under Armour President and CEO Kevin Plank.
Outlook and Future Plans
Under Armour Inc (UAA, Financial) updated its fiscal 2025 outlook, expecting revenue to decline at a low double-digit percentage rate. The company anticipates a 14-16% decline in North America and a low-single-digit percent decline in its international business. Gross margin is expected to improve by 75 to 100 basis points, driven by reduced promotional activities and product costing benefits.
Under Armour Inc (UAA, Financial) also announced a $500 million stock repurchase plan, with $40 million of Class C common stock repurchased in the first quarter. The company continues to focus on operational efficiencies and brand elevation to drive future growth.
For more detailed financial information, please refer to the full 8-K filing.
Explore the complete 8-K earnings release (here) from Under Armour Inc for further details.
