Sales decline doesn't dampen optimism: Under Armour raises expectations, focuses on premium strategy

Business

Under Armour store. Credits: Courtesy of Oberalp

Sportswear giant Under Armour, Inc. is remaining optimistic despite a revenue decline, seeing opportunities to further expand its premium market position and position the brand more broadly, according to its second quarter 2025 financial report.

Under Armour reported a decline in sales of 11 percent to 1.4 billion dollars. In North America, the brand's largest market, sales fell by 13 percent to 863 million dollars, with market conditions such as global inflation cited to have played a major role in this decline. The company noted that it will continue to focus on a sharper strategy to improve its market position.

Internationally, the decline in sales was limited to 6 percent, with regions such as Asia-Pacific and Latin America falling by 10 and 13 percent, respectively. The EMEA region (Europe, Middle East and Africa) showed a more stable picture with a decline of only 1 percent.

Wholesale sales fell 12 percent to 826 million dollars, while direct-to-consumer sales fell 8 percent to 550 million dollars. Online sales within this channel saw a sharp 21 percent decline due to Under Armour's decision to scale back online promotional activities to protect margins.

Apparel, a core product of the brand, was down 12 percent to 947 million dollars, while sales of shoes were also down 11 percent to 313 million dollars. Accessories, on the other hand, saw a slight increase of 2 percent to 116 million dollars.

Despite the decline in sales, Under Armour increased its gross margin by 200 basis points to 49.8 percent. This result was due to lower costs for products and freight, fewer (online) promotions and a more favorable channel mix. The company also reduced its selling, general and administrative expenses by 15 percent, which amounted to 520 million dollars. Adjusted operating income, after some restructuring costs and insurance payments, came to 166 million dollars. These improved margins helped Under Armour to adjust its expectations for full-year profitability.

Under Armour optimistic for 2025

Under Armour is facing many financial challenges. Since May 2024, the company has been implementing a restructuring plan to save costs. This was then followed by additional measures announced in September, including the closure of a distribution centre in California. Total restructuring costs were estimated at approximately 140 million to 160 million dollars. To date, the company has spent 40 million dollars, mostly in cash.

Despite challenging market conditions, Under Armour is raising its gross margin guidance, expecting an increase of 125 to 150 basis points. The company now expects an operating loss of 176 to 196 million dollars, which is lower than previous estimates. Under Armour also announced an additional investment of 25 million dollars in marketing to position the brand more strongly as a premium brand.

CEO Kevin Plank explained: “Our results show that our choices are working to strengthen our brand position and grow long-term. We continue to invest in premium products, storytelling and new market opportunities to solidify our position.”

This article originally appeared on FashionUnited.NL. It was translated to English using an AI tool called Genesis and edited by Rachel Douglass..

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