VALUATION HIGHLIGHTS

1. Performance Apparel constitutes 64% of the Trefis price estimate for Under Armour's stock.
2. Footwear constitutes 23% of the Trefis price estimate for Under Armour's stock.

WHAT HAS CHANGED?

1. Under Armour Q2 2026 Snapshot

In Q2 2026, Under Armour reported revenue of $1.33 billion, down about 5% year-over-year. The weakness was driven largely by an 8% drop in North America revenue, while the international business held up a bit — with EMEA (Europe, the Middle East, and Africa) up 12%. Gross margin compressed by 250 basis points to 47.3%, reflecting headwinds from higher tariffs, supply-chain costs, and unfavorable channel/region mix. SG&A expenses increased — total SG&A rose to $582 million, partly driven by the absence of prior-year insurance recovery and some restructuring/ transformation costs.

SG&A expenses increased — total SG&A rose to $582 million, partly driven by the absence of prior-year insurance recovery and some restructuring/ transformation costs. On a non-GAAP basis, the company reported adjusted net income of $15 million, yielding adjusted EPS of $0.04, which slightly exceeded analyst expectations.

Note: Under Armour's FY'25 ended on March 31, 2025. Q2 FY'26 refers to the quarter that ended on September 30, 2025.

2. Outlook

Management narrowed its full-year revenue guidance to a 1 percent decline at best and down 2 percent at worst, basically admitting that demand is still slogging along. Gross margin guidance stayed intact at up 2 to 2.2 percentage points, helped by cleaner inventories and lower freight, which is nice but hardly heroic. Operating income was raised to $237–247 million, a small upgrade that signals tighter cost control rather than a surge in momentum. The company still expects EPS between $0.49 and $0.53, and its cash flow and capex plans didn’t budge.

POTENTIAL UPSIDE & DOWNSIDE TO TREFIS PRICE

Below are key drivers of Under Armour's value that present opportunities for upside or downside to the current Trefis price estimate:

• Apparel Revenues : Under Armour's Apparel Revenues declined from $3.9 billion in 2023 to around $3.5 billion in FY 2025. We expect the figure to fall in FY 2026, before increasing gradually to reach the $4 billion mark in the long run. If revenues only reach $3 billion by the end of our forecast due to a slower-than-expected apparel market growth in the U.S., it will imply a nearly 5% downside to the Trefis estimate.


• Gross Profit Margin: Under Armour's Gross Profit Margin has stayed in the region of 45%-50% historically, despite the downward pressure of increased competition, the negative impact of currency fluctuations, and increased air freight costs. The company has been able to consistently introduce new products and increase its average unit prices, which has helped sustain margins. However, we expect headwinds from tariffs, a less favorable mix, or regional drag to pull the margin down to 46% in FY 2026 from 47.9% in FY 2025.

BUSINESS SUMMARY

Under Armour is a manufacturer and distributor of performance apparel, footwear, and accessories for men, women, and children. The company's products use moisture-wicking fabrics that are engineered in many designs and styles for wear in nearly every climate. The company sells its products worldwide, though a significant percentage of sales come from North America (about 60% in FY2025). The company's distribution includes both wholesale and retail channels. Its products are worn by athletes at all levels, from youth to professional, on playing fields around the globe, as well as by consumers with active lifestyles.

SOURCES OF VALUE

The primary sources of Under Armour's value are its apparel and footwear businesses, and together they contribute around 90% of Under Armour's value, as per our estimate. Apparel is more valuable than Footwear and Accessories businesses for the following reasons:

Market leader in performance apparel market

Under Armour is the current market leader in the performance apparel market with over 70% market share. All three apparel gear lines of the company, i.e., HEATGEAR, COLDGEAR, and COLDBLACK, are extremely popular among professional athletes as well as consumers. However, in the footwear and accessories businesses, Under Armour faces tougher competition from established players such as Nike and Adidas.

KEY TRENDS

Under Armour’s store expansion bolsters margins through sales mix shift

Direct-to-consumer margins run nearly 30% higher than wholesale, so Under Armour’s push into its own channels is lifting profitability. In FY2025, DTC made up about 40% of total revenue. Management emphasized a strategic pullback in e-commerce—reducing discounting even at the expense of lower online volumes—while physical stores stabilized, posting a 1% GAAP sales gain as upgraded formats and experiences drew customers. Meanwhile, outlet rationalization trimmed store count but improved mix, with fewer blanket promotions and a sharper focus on curated, full-price assortments.

Tariffs and Sourcing Pressures

Supply chain and inventory management remained top priorities. With about 30% of production volume sourced from Vietnam, 20% from Jordan, and 15% from Indonesia, the company flagged ongoing supply chain and tariff risks. The company continued to diversify sourcing where possible and leaned on its Factory House outlets to clear excess inventory. Management detailed active control over purchase orders and close monitoring of demand shifts, aiming to limit old or obsolete stock.

UA’s New Launches Face Fierce Competition

Product innovation is a persistent driver. New offerings like the UA Halo (a premium sportswear family blending performance and style), footwear lines such as the Velociti running shoe, and breakthroughs in material science are positioned as growth vectors. However, the sharp year-over-year decline in footwear revenue (GAAP) in FY 2025 raises concerns about competitive intensity, especially as key rivals invest heavily in technology, digital, and athlete partnerships. The success of new product launches in the coming quarters will be closely watched as a measure of brand and commercial traction.

Focus on the international business

While international sales currently contribute only 40% of Under Armour's net sales (as of March 31, 2025), the company plans to increase this figure further going forward.

The company plans to expand in the key markets of Asia (China, Korea, and Japan), Europe (the U.K., France, and Germany), Australia, New Zealand, and Latin America (Brazil, Mexico, Argentina, and Chile) to enhance its international business.

Focus on the women's business

Being previously popular for its men's products, Under Armour is now focusing on women's products to enhance its revenues. It is making efforts to elevate its brand image among women customers by altering the retail experience at its stores to suit them.

The company is taking several measures to accomplish this goal. It has expanded its creative talent within the women's business and altered its product portfolio and retail presentation to suit the tastes of female customers. Additionally, the retailer has also signed endorsement deals with female athletic and fitness icons such as Haley Cavinder, Nika Mü̈hl, Diamond Miller, Laeticia Amihere, Marina Mabrey, Alicia Sacramone, and Lauren Holiday.