EPS of $0.00 decreased by 98.9% from previous year
Gross margin of 47.5%
Net income of 1.23M
""Our fiscal third quarter results exceeded expectations, driven by strong gross margin performance with revenue also surpassing our forecast. With these results, I’m pleased we were able to raise our full-year outlook again, demonstrating that our strategies to reposition the Under Armour brand are gaining traction."" - Kevin A. Plank
Under Armour Inc (UAA) QQ3 2025 Results: Revenue Decline Moderates as Gross Margin Expands and Brand Transformation Gains Traction
Executive Summary
- Under Armour’s QQ3 2025 revenue declined 5.7% year-over-year to $1.401 billion, better than the prior-year trough and ahead of the company’s November guidance implying a down mid-to-high single digits. The result was driven by improved gross margin and stronger-than-expected DTC performance, reflecting the company’s ongoing discipline in promotions and a shift toward premium product and better-better-best assortments.
- Gross margin expanded 240 basis points YoY to 47.5%, supported by supply chain benefits (roughly 100 bps), pricing benefits from reduced discounting in DTC (roughly 100 bps), favorable mix and currency benefits (approx. 45 bps total). Despite margin strength, operating income was modest at $14 million reported, as the quarter included $28 million impairment and $14 million restructuring charges, which the company expects to total $140–$160 million for fiscal 2025/2026. Adjusted operating income was $60 million and adjusted diluted EPS was $0.08 for the quarter.
- Management raised the FY2025 outlook modestly, guiding to ~10% revenue decline for the year (vs. prior low-double-digit decline), with improved North America performance and flat EMEA, plus a low-teens decline in APAC. Full-year adjusted EPS guidance was raised to $0.28–$0.30, implying a roughly $0.03 midpoint improvement.
- Management emphasis on a category-led operating model, price/power strategy, and a broader shift of marketing dollars toward brand-building assets suggests a longer path to profitability but with improving brand equity, pricing power, and loyalty engagement (4 million new North American members in the quarter). The company remains focused on reducing SKUs, accelerating premium product introductions (e.g., SlipSpeed Echo, Curry Brand footwear), and centralizing marketing to drive authentic consumer connections.
- Near-term risk remains: APAC demand dynamics, currency headwinds, and the challenge of balancing a path to growth in North America with ongoing restructuring and channel discipline. Investors should monitor progress in North American DTC, SKU optimization, and the ramp of new product launches as catalysts for a broader revenue inflection.
Key Performance Indicators
Revenue
1.40B
QoQ: 0.14% | YoY:-5.72%
Gross Profit
665.16M
47.48% margin
QoQ: -4.45% | YoY:-0.82%
Operating Income
13.51M
QoQ: -92.19% | YoY:-81.08%
Net Income
1.23M
QoQ: -99.28% | YoY:-98.89%
EPS
0.00
QoQ: -99.26% | YoY:-98.88%
Revenue Trend
Margin Analysis
Key Insights
Revenue: $1.401 billion in Q3 FY2025, down 5.72% YoY, up 0.14% QoQ.
Gross Margin: 47.5% in Q3, up 240 bps YoY from 45. - Gross Profit: $665.2 million (YoY change: -0.8% approx).
Operating Income: $14.0 million reported; Adjusted Operating Income: $60.0 million (excludes impairment of $28.0 million and $4.0 million transformation charges).
Net Income: $1.23 million; Net Income Margin: 0.088% (YoY: large deterioration due to one-time charges).
- Revenue: $1.401 billion in Q3 FY2025, down 5.72% YoY, up 0.14% QoQ.
- Gross Margin: 47.5% in Q3, up 240 bps YoY from 45. - Gross Profit: $665.2 million (YoY change: -0.8% approx).
- Operating Income: $14.0 million reported; Adjusted Operating Income: $60.0 million (excludes impairment of $28.0 million and $4.0 million transformation charges).
- Net Income: $1.23 million; Net Income Margin: 0.088% (YoY: large deterioration due to one-time charges).
- EPS (GAAP): $0.0029; Diluted EPS: $0.0028; Adjusted Diluted EPS: $0.08.
- Cash Flow: Operating cash flow $311.3 million; Free cash flow $262.9 million; Net change in cash +$195.3 million; Cash at end of period $745.2 million; Cash balance prior year ~$549.8 million; Net debt $578.3 million.
- Balance Sheet: Total assets $4.631 billion; Total liabilities $2.646 billion; Total stockholders’ equity $1.984 billion; Inventory ~$1.101 billion; Cash & equivalents $726.9 million; Total debt $1.305 billion.
- Liquidity/ratios: Current ratio 2.01; Quick ratio 1.186; Cash ratio 0.542; Gross Margin 47.5%; Operating Margin 0.96%; Net Margin 0.088%; Return on Equity 0.062%; Debt/Total Capitalization 0.397; Cash Flow to Debt 0.239.
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
1.40B
-5.72%
0.14%
Gross Profit
665.16M
-0.82%
-4.45%
Operating Income
13.51M
-81.08%
-92.19%
Net Income
1.23M
-98.89%
-99.28%
EPS
0.00
-98.88%
-99.26%
Key Financial Ratios
currentRatio
2.01
grossProfitMargin
47.5%
operatingProfitMargin
0.96%
netProfitMargin
0.09%
returnOnAssets
0.03%
returnOnEquity
0.06%
debtEquityRatio
0.66
operatingCashFlowPerShare
$0.72
freeCashFlowPerShare
$0.61
priceToBookRatio
1.8
priceEarningsRatio
724.24
Net Income vs. Revenue
Expense Breakdown
Management Commentary
- Strategy and operating model: Kevin Plank emphasizes a category-led operating model with greater accountability to drive faster decision-making and clearer success metrics. He frames “growth by constraint” as a path to doing more with less and delivering higher-quality revenue through better product, storytelling, and marketplace discipline.
- Brand and marketing shift: Management highlights a pivot away from performance marketing toward authentic storytelling and elevated brand experiences. They plan to redeploy a significant portion of marketing spend to brand activation and “underdog muse” narratives, with a focus on athlete-based content (Notre Dame, Curry, Zay Flowers, Justin Jefferson, etc.).
- Product and innovation: The company discusses a robust product roadmap, including SlipSpeed Echo, the Curry Fox 1 signature shoe, and premium fleece items like the UA Icon Heavyweight Hoodie. They emphasize reducing SKU counts by 25% and streamlining the materials library to improve margins.
- North America and eCommerce discipline: North American eCommerce promotional activity is being scaled back to improve full-priced sales mix and loyalty growth (4 million new members in NA this quarter). Management calls out ongoing work to restore shelf space and profitability in owned stores and through premium channels.
- Regional dynamics: NA improving but still a modest growth trajectory; EMEA remains the “best performing region” with stabilization in pricing power; APAC faces macro-driven competitive intensity and higher discounting, with a recent focus on local-for-local marketing and leadership changes in APAC.
- Financial discipline and guidance: The company notes a total restructuring charge trajectory of $140–$160 million for fiscal 2025–26; gross margin upside is driven by supply chain tailwinds, lower freight costs, and reduced promotional activity; management expects to deliver EBITDA-like margin improvements through 2025–26 as the business transitions.
"Our fiscal third quarter results exceeded expectations, driven by strong gross margin performance with revenue also surpassing our forecast. With these results, I’m pleased we were able to raise our full-year outlook again, demonstrating that our strategies to reposition the Under Armour brand are gaining traction."
— Kevin A. Plank
"We took some big steps forward with North America in fiscal 2025 and we’re really excited about the progress there... we’re going to lay down our go-to-market plans and make sure that the market is touched in a way that’s more authentic and viral, including leveraging our new marketing leadership to drive a more youthful, local-for-local approach."
— David Bergman
Forward Guidance
- Revenue trajectory: FY2025 revenue expected to decline about 10% (vs prior guidance of a similar decline), with North America down 12–13%, EMEA flat, and APAC down low-teens on a currency-adjusted basis.
- Margin and profitability: Gross margin guidance increased by ~160 bps for the year, driven by continued supply chain tailwinds and manufacturing cost savings; SG&A is expected to decline at a low-single-digit rate on an adjusted basis as the company reinvests in brand and operations.
- Earnings: Adjusted diluted EPS guidance raised to $0.28–$0.30 for FY2025 (midpoint up about $0.03 versus prior). The fourth quarter remains a headwind due to order book softness, APAC pressures, and higher Q4 promotions in North America.
- Strategic actions to monitor: (i) North America DTC effectiveness and the pace of converting promotions into higher full-priced mix, (ii) the ramp of premium products and the go-to-market efficiency of the new category-led structure, (iii) the APAC re-acceleration playbook including local-for-local marketing and pricing discipline, and (iv) conversion to a tighter SKU set and improved end-to-end planning to reduce working capital risk.
- Key risks: Foreign currency headwinds, tariff exposure (limited impact given minimal exposure to China-sourced goods), and potential macro volatility in APAC and Europe; execution risk associated with the broader marketing and product launches given the 18-month product go-to-market cycle.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
UAA Focus
47.48%
0.96%
0.06%
724.24%
LEVI
60.00%
2.00%
1.11%
91.32%
HBI
41.70%
11.00%
20.10%
21.40%
VFC
56.30%
7.97%
9.99%
12.63%
RL
68.40%
18.20%
11.70%
12.06%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
Under Armour is mid-transition from a volume-driven, promotions-heavy model to a more selective, premium-focused strategy. The QQ3 2025 results show meaningful gross margin expansion and evidence of a brand-led inflection, but the company will need sustained execution across product, marketing, and distribution to drive revenue growth. The 18-month product go-to-market cadence, sharper SKU discipline, and targeted marketing investments position UA to improve profitability over the next 2–3 quarters, with the potential to reach a mid-teens operating margin as the premium mix and DTC monetization gains mature. The valuation remains elevated relative to earnings (illustrated by the provided peer metrics) but could justify a higher multiple if the company delivers consistent revenue inflection, margin normalization, and a meaningful upswing in North American full-price sell-through. Key catalysts include the SlipSpeed Echo launch, Curry Brand traction, improved North American DTC performance, and progress in APAC branding and pricing power. Investors should monitor (a) the pace of order-book improvement into fiscal 2026, (b) the cadence of premium product introduction and retail partnerships, (c) ongoing SG&A and cost-saving initiatives, and (d) currency headwinds and cross-regional rollout efficiency.
Key Investment Factors
Growth Potential
- Durable gross margin expansion provides a potential path to higher profitability if the mix shifts toward premium and better/best products.
- Strong Direct-to-Consumer discipline and loyalty growth (NA NA: +4 million members) can drive higher revenue per consumer and improved retention; potential upside from_labelled 'under-dog muse' branding and storytelling that can widen market share among youth and college athletes.
- Curry Brand and other signature footwear (e.g., SlipSpeed Echo) broaden the product cadence and international growth opportunities, especially in APAC’s digital-native channels.
Profitability Risk
- Near-term earnings volatility remains due to impairment/ restructuring charges; ongoing capital allocation to brand-building vs. cost synergies may pressure near-term margins.
- APAC region still has high promotional activity, competitive intensity, and macro headwinds which could delay margin normalization.
- Dependency on wholesale/off-price channels for clearance in some regions could compress margins if promotions reignite.
- Elevated valuation metrics (per reported P/E and related multiples in the peer universe) imply high growth expectations; execution risk could meaningfully impact share price if targets slip.
Financial Position
- Solid liquidity with cash and cash equivalents around $727–745 million and healthy operating cash flow generation ($311.3 million) leading to free cash flow of $262.9 million in the quarter; net debt approx. $578 million.
- Balance sheet strength is supported by total assets of $4.63 billion and stockholders’ equity of $1.98 billion; inventory at $1.10 billion remains a focus for turn optimization, though the company indicates inventory is largely in line with prior year.
- Debt: Total debt of ~$1.305 billion with a debt-to-capitalization ratio of ~0.397, giving a manageable leverage profile in the context of a near-term investment in brand and product upgrades.
SWOT Analysis
Strengths
Strong brand equity in performance apparel and a broad athletic lifestyle footprint
Pricing power ambitions and a push toward better and best product tiers
DTC leadership via eCommerce discipline and loyalty program expansion (NA: +4 million members)
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