During the quarter, operating income is anticipated to vary between a $10m deficit and a breakeven point.
In the earnings call, Under Armour chief financial officer David Bergman said: “Last quarter, we noted that, before any global trade policy changes, we expected a modest revenue decline in fiscal 2026 as we focused on strengthening the brand and increasing higher quality sales.
Go deeper with GlobalData
“Since then, changing trade policies have created additional headwinds, including on the demand side, making it more difficult to predict the future environment, but also highlighting the importance of our disciplined Brand First strategy.”
Bergman stated that in light of the anticipated $100m increase in the cost of goods sold for fiscal 2026, which equates to a negative gross margin impact of roughly 200 basis points, the company is implementing countermeasures.
These include sharing costs with suppliers and partners, seeking alternative sourcing possibilities, and applying targeted price changes.
The outlook comes as the company reported a result that “met or exceeded” expectations in the first quarter of fiscal 2026 (Q1 FY26), with revenue reaching $1.13 billion, a 4% decline from $1.18 billion in the previous year’s quarter.
US Tariffs are shifting - will you react or anticipate?
Don’t let policy changes catch you off guard. Stay proactive with real-time data and expert analysis.
By GlobalDataThe company’s North American segment experienced a 5% decrease to $670m, while international sales saw a marginal 1% drop to $467m.
Revenue in Europe, Middle East, and Africa (EMEA) division bucked the trend with a 10% increase in revenue, or 6% on a currency-neutral basis.
However, the Asia-Pacific and Latin American markets faced downturns of 10% and 15%, respectively, with currency-neutral figures mirroring these declines.
Revenue from Under Armour’s owned and operated stores rose by 1% over the quarter and sales from e-commerce, which represent 31% of the direct-to-consumer segment, declined by 12%.
Under Armour president and CEO Kevin Plank said: “We are pleased our quarterly results met or exceeded our expectations as we drive a bold transformation – sharpening Under Armour into a brand where sports credibility, innovation and style meet operational discipline. Despite ongoing uncertainty, our brand is gaining strength and we’re executing our strategic plan with clarity and confidence.”
Key metrics from Q1 FY26
Gross margin improved slightly by 70 basis points to reach 48.2%, primarily supported by favourable foreign exchange rates, pricing adjustments, and product mix. This was partially offset by an unfavourable channel mix and increased supply chain costs compared to the prior year.
Under Armour’s selling, general, and administrative expenses saw a substantial decrease of 37% to $530m, largely due to significant legal reserve expenses incurred in the previous year. The quarter also included $13m in restructuring charges and $8m in transformation-related SG&A expenses, totalling approximately $21m.
Operating income stood at $3.32m for the quarter. When excluding transformation expenses and restructuring charges, adjusted operating income reached $24m.
Net loss for Q1 FY26 was $2.61m, showing considerable improvement from a net loss of $305.42m in the same period last year.
This translates to diluted loss per share of $0.01 in Q1 FY26.
Outlook
During the second quarter (Q2) of fiscal 2026, Under Armour anticipates revenue decreases across various regions such as North America and Asia-Pacific alongside growth in EMEA.
Gross margin is projected to fall between 340 to 360 basis points due to supply chain challenges and potential tariff impacts.
SG&A expenses are set to rise at a low double-digit percentage rate; however, excluding transformation-related costs from the restructuring plan, an increase is expected at a high-single-digit rate driven by higher marketing investments.
Diluted loss per share is projected between $0.07 and $0.08 for Q2 FY26, with adjusted diluted earnings per share anticipated between $0.01 and $0.02.
