Under Armour’s first quarter of fiscal 2026 (QQ1 2026) delivered a modest gross-margin expansion and a net bottom-line loss amid a challenging operating backdrop dominated by tariff headwinds and softer consumer demand. Revenue totaled $1.134 billion, down 14.9% year over year, with gross margin at 48.2% (+70 bps YoY driven by favorable currency, pricing and product mix but offset by channel headwinds). The company reported a GAAP net loss of $2.6 million and an EPS of -$0.006, reflecting ongoing profitability pressures despite a largely intact revenue base and meaningful cost containment initiatives. Management emphasized a brand-led reinvention anchored in two core levers: (1) premiumizing top items and elevating full-price sell-through, and (2) a disciplined SKU reduction (targeting a 25% SKU reduction) to improve speed, pricing power, and storytelling across channels.
Management’s 2Q guidance underscores the near-term strain: revenue is expected to decline 6%–7% YoY, gross margin to deteriorate roughly 340–360 basis points, and adjusted operating income to be in the $30–$40 million range with adjusted EPS of $0.01–$0.02. Incremental tariff costs (~$100 million) and a less favorable regional mix are highlighted as near-term headwinds, with more of the gross-margin offset anticipated to flow into fiscal 2027 and beyond. While the near-term outlook is difficult, the company reiterates a longer-term thesis: rebuilding brand equity, driving higher average selling prices, and expanding premium product storytelling to restore growth and profitability.
Regionally, North America remains the primary drag (soft wholesale and e-commerce channels), while EMEA is showing profitable growth and APAC is stabilizing after a reset. The narrative around the brand is gaining momentum, supported by stronger consumer sentiment in certain demographics (notably 18–34-year-olds) and early success in premium product launches and digital initiatives (e-commerce experience, SMS program, influencer-led campaigns). The balance sheet remains liquid with cash of ~$911 million at QQ1, with a plan to redeem $600 million of near-term notes using June 2025 debt issuances, signaling near-term liquidity management although leverage remains a concern given a subdued EBITDA base.
Overall, the QQ1 2026 results reinforce a difficult near term but offer a roadmap for a multi-year turnaround centered on brand equity, selective pricing, and a tighter product portfolio. Investors should monitor tariff policy developments, the ramp of top-tier product launches, regional execution in NA/EMEA/APAC, the evolution of the top‑line mix (DTC vs wholesale), and the pace of margin recovery tied to the brand-first operating model.