What's the outlook for UA's earnings beyond 2025?

**Under Armour's (UA) earnings outlook beyond 2025 appears cautious, with challenges and opportunities intertwined.** Here's a detailed analysis:

1. **Short-Term Challenges**:
- **Revenue Decline Expectations**: Under Armour expects a low double-digit percentage decline in revenue for 2025, with a more pronounced 14% to 16% drop in North America. This is due to strategic shifts and market conditions.
- **Earnings Projections**: Analysts forecast a significant decline in earnings per share (EPS) in the upcoming quarter, with expectations of $0.03 per share, a 84.2% drop from the previous year. This reflects the company's strategic investments impacting short-term profitability.
- **Inventory and Cash Flow**: The company has been managing restructuring and transformational expenses, with significant charges expected. Inventory levels are flat, indicating a need for careful management to match demand with supply.
2. **Strategic Initiatives for Improvement**:
- **Gross Margin Improvement**: Despite revenue declines, Under Armour has seen gross margin improvements, up by 240 basis points to 47.5%. This is due to reduced discounting, lower product and freight costs, and favorable currency exchange rates.
- **Product Strategy and Market Focus**: The company is focusing on strengthening its brand and product strategy, enhancing marketplace discipline, and shifting to a category-led operating model. This aims to improve product positioning and appeal.
- **Digital and Direct-to-Consumer Focus**: Under Armour is investing in digital platforms and direct-to-consumer channels to simplify its operations and reduce reliance on promotional sales.
3. **Long-Term Outlook and Analyst Views**:
- **Analyst Expectations**: Beyond 2025, analysts project a more stable revenue growth rate, with a 4.0% annual increase expected over the next three years. This suggests a gradual recovery from the current decline.
- **Price Target and Valuation**: The stock has hit a 52-week low, but some analysts see potential in the long term, with a fair value analysis suggesting the stock may be undervalued. However, price targets from Citi and CFRA are more cautious, reflecting the need for cost management and brand turnaround.
4. **Brand Turnaround and Competitive Landscape**:
- **Brand Reinvigoration**: Under Armour is working on rebuilding brand strength, expecting a low double-digit revenue decline in the short term but with plans to simplify its business and focus on core products.
- **Competitive Pressures**: The company faces challenges from a competitive athletic retail market, especially from larger rivals with stronger global presence. Managing to regain lost shelf space and enhance innovation will be crucial.

In conclusion, while Under Armour is navigating a period of strategic transition and facing near-term earnings pressure, its efforts to improve gross margins, enhance product positioning, and invest in digital channels offer a positive long-term outlook. The company's ability to execute these strategies successfully will be key to its earnings recovery beyond 2025.