Under Armour Raises 2026 Forecast; Stock Gains 13%

Under Armour raised its annual financial outlook on Friday after reporting third-quarter fiscal 2026 results that exceeded Wall Street expectations. The sportswear retailer’s stock climbed more than 13% in early trading as CEO Kevin Plank signaled that the company’s turnaround strategy is gaining traction despite persistent macroeconomic headwinds and high tariff-related costs.

The company now expects fiscal 2026 adjusted diluted earnings per share (EPS) to range between 10 cents and 11 cents, a substantial increase from its prior guidance of 3 cents to 5 cents. Under Armour also narrowed its annual revenue outlook, now projecting a decline of approximately 4%, compared with its previous forecast of a 4% to 5% drop.

"Our third quarter adjusted operating results exceeded expectations, and despite a few unfortunate, non-recurring impacts, we are encouraged by the progress we are making in the business to reignite brand momentum," Plank said in a statement. "In North America, we believe the December quarter marked the most challenging phase of our business reset, and we expect greater stability ahead as we build on this progress globally."

Strategic Turnaround and North American Stabilization

Since returning as CEO in April 2024, Plank has implemented a comprehensive restructuring plan aimed at reversing declining sales and intensifying competition. Central to this strategy is a 25% reduction in product lines and a shift away from aggressive discounting to protect brand equity. The company is increasingly prioritizing premium, higher-margin offerings in core categories such as training, running, and team sports.

During a post-earnings call, Plank said that “North America is beginning to turn the corner.” While regional revenue declined 10% to US$757 million for the quarter ended Dec. 31, 2025, executives described the fall order book as “encouraging.” Although retail foot traffic remains subdued, the company noted that “underlying indicators are improving.”

Patrick Ricciardi, an analyst at Third Bridge, highlighted the complexity of the transition. “Elevating product and pricing takes time, and the company faces a delicate balance between growing higher-end offerings and protecting near-term sales from its core, lower-priced basics,” Ricciardi said.

Financial Performance and Category Breakdown

Under Armour reported total revenue of US$1.33 billion for the third quarter of fiscal 2026 (3Q26), representing a 5% decline year over year (6% on a currency-neutral basis). Despite the contraction, the result exceeded analysts’ expectations of US$1.31 billion. Excluding one-time items, the company earned 9 cents per share, outperforming the projected loss of 2 cents per share.

Performance across product categories reflected ongoing consumer caution:

• Apparel: Revenue decreased 3% to US$934 million

• Footwear: Revenue declined 12% to US$265 million

• Accessories: Revenue dropped 3% to US$108 million

International markets partially offset the North American decline, with total international revenue rising 3% to US$577 million (up 1% on a currency-neutral basis). Within international regions:

• EMEA (Europe, Middle East, and Africa): Revenue increased 6% (up 2% currency-neutral).

• Asia-Pacific: Revenue declined 5% (down 5% currency-neutral).

• Latin America: Revenue surged 20% (up 13% currency-neutral), emerging as the company’s fastest-growing region.

The company also maintains a strategic foothold in eyewear through a licensing agreement with Safilo, which was extended in January 2025 through 2031.

Tariff Pressures and Cost Management

The fiscal 2026 outlook is significantly influenced by the reimposition of US tariffs on imports from key manufacturing hubs, including Vietnam and Indonesia. Under Armour estimates that these tariffs will add approximately US$100 million in incremental costs during the fiscal year.

As a result, the company projects full-year gross margin contraction of approximately 190 basis points. In the third quarter, gross margin declined 310 basis points to 44.4%, primarily due to tariff-related costs, pricing pressures, and an unfavorable regional sales mix.

GAAP results were affected by several non-recurring charges. Under Armour reported a quarterly net loss of US$431 million, largely driven by a US$247 million valuation allowance on US federal deferred tax assets. The operating loss totaled US$150 million, reflecting a US$99 million litigation reserve related to an insurance carrier dispute and US$75 million in restructuring charges.

Despite these charges, liquidity remains solid. Cash and cash equivalents stood at US$465 million, and the company holds US$600 million in restricted investments earmarked for the repayment of senior notes due in June 2026.

The Restructuring Plan

The "Fiscal 2025 Restructuring Plan," announced in May 2024, is now expected to cost up to US$255 million in total. This includes US$107 million in cash charges and US$148 million in non-cash charges. As of the end of the third quarter, Under Armour had recorded US$178 million in restructuring and impairment charges, along with US$47 million in transformation-related expenses. The company expects to recognize the remaining charges by the end of fiscal 2026.

Notably, adjusted selling, general, and administrative (SG&A) expenses—excluding litigation and restructuring costs—declined 7% to US$563 million in the third quarter, reflecting lower marketing expenditures and savings generated through restructuring initiatives.

Analyst Sentiment and Market Perception

Wall Street sentiment remains cautiously constructive. The average 12-month price target stands at US$6.17, representing a 21.46% increase from prior consensus estimates. Several firms revised their targets upward following the earnings release:

• Barclays (Adrienne Yih): US$8.00 (Equal-Weight)

• Goldman Sachs (Brooke Roach): US$7.00 (Neutral)

• Citigroup (Paul Lejuez): US$6.20 (Neutral)

• Telsey Advisory Group (Cristina Fernandez): US$6.00 (Market Perform)

While analysts acknowledge an improving earnings trajectory, most maintain neutral ratings, citing ongoing challenges in restoring net margins and improving return metrics. As of Sept. 30, 2025, Under Armour’s net margin stood at -1.41%, with return on equity at -1.01%.

Vision for Fiscal 2026

For the remainder of fiscal 2026, Under Armour anticipates continued regional divergence. Revenue is projected to decline 8% in North America and 6% in Asia-Pacific, partially offset by a forecast 9% increase in EMEA.

“Our transformation is accelerating as we sharpen our focus and strengthen execution,” Plank said. “Our strategy is gaining traction through better products, bolder storytelling, and a more disciplined market presence, positioning Under Armour to operate with greater intention and confidence going forward.”

The company maintains a balanced capital structure, with a debt-to-equity ratio of 1.02—slightly below industry averages. As Under Armour approaches the end of its fiscal year, management remains focused on navigating the delicate balance between premiumization, cost discipline, and the elevated expenses associated with a shifting global trade environment.