Under Armour Inc. (NYSE: UAA) reported third-quarter fiscal 2026 financial results on Friday that reflected a complex intersection of structural transformation and macroeconomic headwinds. While the company recorded a significant GAAP net loss due to non-cash tax charges and restructuring costs, it raised its full-year adjusted profitability outlook. Investors responded to the better-than-expected adjusted earnings and signs of stabilization in the North American market, with shares holding steady in early trading following the announcement.
Fiscal Third Quarter Financial Performance
For the quarter ended December 31, 2025, the Baltimore-based athletic apparel maker reported a 5% decrease in revenue to $1.33 billion, down 6% on a currency-neutral basis. The performance was largely in line with analyst expectations, as growth in international markets was offset by a double-digit decline in North America.
Net Loss: The company recorded a GAAP net loss of $431 million, or $1.01 per diluted share. This figure was heavily impacted by a $247 million non-cash valuation allowance on U.S. deferred tax assets.
Adjusted Earnings: On an adjusted basis, net income was $37 million, resulting in adjusted diluted earnings per share of $0.09, which surpassed consensus estimates.
Gross Margin: Gross margin contracted by 310 basis points to 44.4%. Management attributed this primary decline to the impact of higher U.S. tariffs, alongside promotional pricing and unfavorable channel mix.
Inventory: Tighter supply chain management resulted in a 2% year-over-year decrease in inventory, totaling $1.1 billion.
Regional and Segment Breakdown
The quarterly results highlighted a sharp geographic divergence. North American revenue fell 10% to $757 million, primarily due to a softer wholesale environment. In contrast, international revenue rose 3% to $577 million.
| Segment | Revenue Performance (YoY) | Key Drivers |
| Apparel | -3% ($934M) | Softness in training, golf, and running categories. |
| Footwear | -12% ($265M) | General category declines, partially offset by outdoor growth. |
| EMEA | +6% | Strength in both wholesale and direct-to-consumer channels. |
| Latin America | +20% | Continued expansion in emerging regional markets. |
| Asia-Pacific | -5% | Improving sequence despite full-price wholesale challenges. |
Strategic Reset and Restructuring
The results arrive as Under Armour continues to execute its “Fiscal 2025 Restructuring Plan,” a multi-year effort to simplify the business model and reduce SKU complexity. During the third quarter, the company incurred $75 million in restructuring charges. The total estimated cost of the plan has been revised upward to $255 million as the board approved additional actions, including further contract terminations and asset impairments.
Kevin Plank, Under Armour’s President and Chief Executive Officer, indicated that the company is emerging from the most volatile period of its turnaround strategy. He noted that the December quarter represented the most challenging phase of the business reset and expressed confidence that the organization is moving toward a period of greater predictability and stability. According to Plank, the focus has now shifted from structural change to consistent execution and brand premiumization.
Updated Fiscal 2026 Outlook
Despite the revenue pressure, Under Armour raised its adjusted profitability guidance for the full fiscal year ending March 31, 2026. The company now expects:
Revenue Decline: Approximately 4% (improved from the previous range of 4% to 5%).
Adjusted Operating Income: Approximately $110 million, reaching the high end of its previous $95 million to $110 million range.
Adjusted Diluted EPS: Between $0.10 and $0.11, significantly higher than the prior forecast of $0.03 to $0.05.
Macroeconomic and Industry Context
Under Armour’s margin compression reflects a broader industry struggle with shifting trade policies. The 200-basis-point hit from tariffs reported this quarter highlights the vulnerability of apparel manufacturers to global supply chain volatility. However, the company’s ability to exceed adjusted earnings targets suggests that internal cost-saving measures—specifically a 7% reduction in adjusted SG&A expenses—are beginning to mitigate these external pressures.
Analysts remain focused on whether the “Curry Brand” separation and the pivot toward a higher-margin, premium product mix can reignite demand in the stagnant North American market as the company moves into fiscal 2027.
Reasons to Pass on UAA
- Revenue remains in decline: Third-quarter revenue fell 5% year over year, with the company still guiding to a full-year revenue contraction.
- North America continues to underperform: Revenue in the company’s largest market declined 10%, reflecting persistent wholesale weakness.
- Large GAAP loss underscores earnings volatility: The quarter included a $431 million GAAP net loss driven by tax valuation allowances and restructuring charges.
- Material margin compression: Gross margin declined 310 basis points, pressured by tariffs, promotions, and channel mix.
- Footwear weakness persists: Footwear revenue dropped 12%, highlighting challenges in a key strategic category.
- Restructuring costs are rising: Expected costs under the restructuring plan increased to $255 million, extending transformation risk.
- Earnings improvement driven by cost cuts: Adjusted earnings outperformance was supported mainly by SG&A reductions rather than revenue growth.
- Tariff exposure remains elevated: Higher U.S. tariffs reduced margins by roughly 200 basis points during the quarter.
- Turnaround execution still uncertain: Management points to stabilization, but sustained demand recovery—particularly in North America—has yet to be demonstrated.