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Under Armour (UAA) is plummeting following its Q4 report as weak FY27 guidance and ongoing margin pressure overshadowed largely in-line quarterly results. While the athletic apparel company continued to show encouraging international momentum and progress on its restructuring efforts, investors remain concerned about persistent weakness in North America, rising tariff costs, and a slower-than-expected earnings recovery.

• Adjusted EPS of $(0.03) missed estimates by $0.01, while revenue declined 0.8% yr/yr to $1.17 bln, roughly in line with expectations. Gross margin contracted 220 bps to 45.5%, pressured by higher product costs, unfavorable channel mix, and rising tariffs.
• North America revenue declined 7% to $641 mln as the company continues working through softer wholesale demand, elevated promotions, and efforts to clean up distribution. Management acknowledged the North American business remains the company's biggest operational challenge entering FY27.
• International revenue increased 10% to $539 mln, led by continued strength across Asia-Pacific (+13%), Latin America (+22%), and EMEA (+7%). Management highlighted strong brand momentum overseas as UAA continues benefiting from healthier inventory levels and improving consumer engagement internationally.
• Direct-to-consumer trends remained mixed, with stronger full-price selling and improved inventory discipline partially offset by softer traffic and cautious consumer spending trends. The company continues prioritizing premium brand positioning over aggressive promotional activity.
• UAA guided FY27 EPS to $0.08-0.12, well below consensus expectations of $0.23, while forecasting overall revenue to decline slightly yr/yr. Management expects low-single-digit declines in North America to be only partially offset by low-single-digit growth across EMEA and Asia-Pacific.
• The company extended its 2025 Restructuring Plan through the end of 2026, increasing projected total restructuring costs to approximately $305 mln from $255 mln previously. Management said the restructuring remains focused on simplifying operations, improving profitability, reducing organizational complexity, and repositioning the brand for more sustainable long-term growth.
• Executives emphasized ongoing efforts to elevate product innovation, improve storytelling, and sharpen UAA's performance identity, particularly within training, running, and basketball categories. The company also continues tightening marketplace distribution as part of its broader premiumization strategy.
• UAA acknowledged the external environment remains highly uncertain, citing tariff pressures, cautious wholesale ordering patterns, and uneven consumer demand trends. Despite these headwinds, leadership believes the company is making meaningful progress stabilizing the business and improving operational discipline.

Briefing.com Analyst Insight:

Investors are disappointed that UAA's turnaround remains a longer and more margin-challenged process than previously hoped. While international growth trends were encouraging and management continues making progress cleaning up inventory, tightening distribution, and repositioning the brand, the weak FY27 EPS outlook reinforces concerns that North America may take several more quarters to stabilize. Gross margin pressure from tariffs and product costs also suggests profitability recovery could remain uneven even as restructuring efforts continue. The key debate going forward is whether UAA can successfully rebuild brand heat and premium positioning in North America while maintaining the stronger momentum currently emerging across international markets.