Under Armour (UA, Financial) recently discussed its financial performance and future strategies in its FY25Q2 earnings call. The company aims to achieve a 50% gross margin in the long term, citing no structural barriers to this goal. A reduction in promotional activities, an increased Direct-to-Consumer (DTC) ratio, and a rise in average selling prices and segmentation are expected to contribute to this target. Footwear is projected to grow faster than apparel over time.
Under Armour plans to launch an updated version of its SlipSpeed product in Q1 2025, with more product releases expected in fall and winter of the same year. The company is enhancing product quality and focusing on scientific and design competition rather than price competition. There is also a significant opportunity in the sportswear market, prompting Under Armour to realign its SKU offerings and reduce them by 25% over the next 12-18 months to ease consumer selection and manage costs.
Marketing efforts are set to intensify, with investments aimed at building brand presence in Europe and Asia-Pacific, as well as top-tier promotions in the United States. Highlights include planned promotions during the 2025 NBA All-Star Game and March Madness. The marketing budget for the second half of the year will increase by approximately $40 million compared to the first half.
In North America, Under Armour acknowledges ongoing work but remains optimistic about consumer brand recognition. E-commerce business adjustments have positively impacted gross margins. Inventory levels are deemed appropriate, with expectations for a decrease by year-end as the company continues to optimize inventory management.
Dialogue with wholesale partners is positive, with partners anticipating market-disruptive products from Under Armour. Efforts are being made to reclaim more shelf space and better communicate the brand's evolving story to distributors.
