Executive Summary
Under Armour (UAA) reported QQ1 2025 results showing a revenue decline of 10% to $1.1836 billion, with a gross margin of 47.5% (up 110 bps year-over-year) driven by reduced discounting and favorable cost dynamics, but an ensuing operating loss of $299.7 million (GAAP) and a diluted loss per share of $0.70. Management emphasized the brand’s strategic pivot toward a premium, “sports house” positioning under the Protect This House framework and the ongoing SKU rationalization program aimed at trimming roughly 25% of product SKUs over the next 18 months. The quarter featured meaningful leadership additions (Eric Liedtke as EVP of Brand Strategy) and a sharpened focus on marketing effectiveness, elevated storytelling, and a deeper direct-to-consumer (DTC) propulsion for long-term profitability. Near-term guidance calls for a low-double-digit revenue decline for the full year with an 75–100 bps gross margin expansion, an adjusted operating income of $140–$160 million, and adjusted EPS of $0.19–$0.22. Management expects North America to be down 14–16% in FY25, with APAC under continued pressure, and projects roughly $500 million of cash by year-end with no revolver borrowings. The company remains financially healthy on a balance sheet, showing a cash position around $885 million and net debt of approximately $289 million (net cash), following debt repayments and share repurchases in Q1. The narrative is one of sequential execution risk but with a plausible path to higher brand equity and incremental margins as the SKU plan, marketing transformation, and premium product strategy mature.
Key Performance Indicators
QoQ: -11.14% | YoY:-10.12%
QoQ: -4 541.19% | YoY:-1 532.05%
QoQ: -115 591.67% | YoY:-3 672.65%
QoQ: -116 566.67% | YoY:-3 600.00%
Key Insights
Revenue: 1,183,665,000 USD; YoY -10.12%, QoQ -11.14% (vs. prior-year quarter). Gross margin: 47.5% (up 110 bps YoY; up 40 bps from an unfavorable mix). Operating income: -299,728,000 USD; YoY change -1,532.05%, QoQ -4,541.19%. Net income: -305,426,000 USD; YoY -3,672.65%, QoQ -115,591.67%. Diluted EPS: -0.70; YoY -3,600%, QoQ -116,566.67%. SG&A: 837.3 million USD; adjusted SG&A (excluding litigation reserve and transformation charges) ~555 million USD, down ~6% YoY. Inventory: down 15% Y...
Financial Highlights
Revenue: 1,183,665,000 USD; YoY -10.12%, QoQ -11.14% (vs. prior-year quarter). Gross margin: 47.5% (up 110 bps YoY; up 40 bps from an unfavorable mix). Operating income: -299,728,000 USD; YoY change -1,532.05%, QoQ -4,541.19%. Net income: -305,426,000 USD; YoY -3,672.65%, QoQ -115,591.67%. Diluted EPS: -0.70; YoY -3,600%, QoQ -116,566.67%. SG&A: 837.3 million USD; adjusted SG&A (excluding litigation reserve and transformation charges) ~555 million USD, down ~6% YoY. Inventory: down 15% YoY. Cash and liquidity: cash around 885 million USD; no borrowings under a 1.1 billion USD revolver; convertible senior notes repaid; net debt approx. -289 million USD (net cash). DTC and e-commerce: Direct-to-consumer down ~12%; e-commerce down ~25%, consistent with brand repositioning toward premium positioning. Channel mix: Wholesale down ~8%; licensing down ~14% (NA and Japan).
Income Statement
| Metric |
Value |
YoY Change |
QoQ Change |
| Revenue |
1.18B |
-10.12% |
-11.14% |
| Gross Profit |
562.68M |
-7.41% |
-6.12% |
| Operating Income |
-299.73M |
-1 532.05% |
-4 541.19% |
| Net Income |
-305.43M |
-3 672.65% |
-115 591.67% |
| EPS |
-0.70 |
-3 600.00% |
-116 566.67% |
Key Financial Ratios
operatingProfitMargin
-25.3%
operatingCashFlowPerShare
$0.35
freeCashFlowPerShare
$0.25
Management Commentary
Key management themes from QQ1 2025 earnings call: 1) Strategy and brand: Kevin Plank emphasizes the Protect This House plan and declares Under Armour a “sports house,” signaling a strategic shift toward premium storytelling, product leadership, and faster go-to-market. He also introduces Eric Liedtke as EVP of Brand Strategy to accelerate marketing transformation and brand-building capabilities. 2) Product and SKU strategy: Plank highlights a 25% SKU reduction over 18 months, with a focus on core base layers and premium “better and best” products, while preserving essential foundational categories. 3) Marketing and consumer engagement: The management team discusses a move toward premium positioning, greater emphasis on full-price selling in digital channels, and a more authentic, field-focused storytelling approach beyond gym-centric narratives. 4) Financial outlook and execution: Dave Bergman notes that the Q1 gross margin beat was driven by disciplined discounting in DTC, inventory reserve improvements, and freight/fx benefits, but cautions that full-year gross margin gains will be limited by rising freight costs and FX headwinds, as well as a more challenging channel mix. The team signals a back-half bias in marketing spend and a continued focus on cost control, SG&A reduction, and strategic investments in marketing and product. 5) Channel and regional dynamics: NA remains the primary drag, with a guided down 14–16% for FY25; APAC faces higher headwinds, while EMEA is expected to be flat to modestly positive; wholesale is expected to recover gradually as brand storytelling improves. 6) Cash flow and liquidity: Despite the earnings cadence, the business maintains a strong liquidity position with roughly $500 million of cash expected by year-end and no revolver borrowings, supporting ongoing investments in brand rebuilding and SKU rationalization.
Operator: Kevin Plank: 'Under Armour is a sports house, a term that we're using to define the landscape in which we compete.'
— Kevin Plank
quote2Text: "Dave Bergman: 'we are backloading a little bit more in the back half on marketing than we originally anticipated in our outlook.'"
— Dave Bergman
Forward Guidance
Management guidance and outlook (FY25) include: - Revenue: down low-double-digits for the full year, with North America down 14–16% and international down low single digits; EMEA expected to be flat; APAC down high single digits due to macro pressures. - Gross margin: an anticipated full-year improvement of 75–100 basis points, though Q1 overdrive is not expected to fully translate into FY25 due to ocean freight headwinds and FX impacts, plus a less favorable licensing/off-price mix. - SG&A: adjusted SG&A expected to decline in the low-to-mid single digits, including roughly $40 million of anticipated savings from restructuring and insurance recoveries. - Q2 guidance: revenue down about 12% versus the prior year; gross margin up 20–30 bps; adjusted SG&A down in the high single digits; adjusted Q2 OI guidance of $110–$120 million and adjusted EPS of $0.18–$0.20. - Cash and liquidity: year-end cash around $500 million with no revolver borrowings outstanding. Investment implications: If the brand narrative gains traction (premium storytelling, improved product-market fit, and a faster go-to-market cycle), UA could achieve higher gross margins and favorable DTC mix; success hinges on execution in North America (product/story/marketing alignment) and stabilization of APAC macro conditions. Key monitoring factors: trajectory of NA and APAC revenue, progress on SKU reductions, distribution channel mix (DTC vs wholesale), marketing ROI, UA Rewards contribution to LTV, and progress in the premium product pipeline (e.g., Unstoppable, Meridian, SlipSpeed).