Under Armour's Q1 Revenue Falls 4.2%, Adjusted Operating Income Jumps

Under Armour (UA) Q1 revenue fell 4.2% to $1.13bn, missing estimates, due to weakness in North America and e-commerce. Gross margin improved by 0.7 percentage points to 48.2%, helping offset top-line declines. Adjusted operating income rose to $24m, up from $8m in the prior year. However, the future outlook remains uncertain due to tariff and demand risks.

Under Armour (NYSE:UA), the athletic apparel and footwear maker, reported a 4.2% decline in Q1 fiscal 2026 revenue to $1,134 million, missing analyst estimates of $1,155 million. This drop was primarily driven by a 5.5% decrease in North America, the company's largest market, and a 12% contraction in e-commerce sales [1].

Despite the revenue setback, Under Armour achieved a 0.7 percentage point improvement in gross margin to 48.2%, which helped mitigate some of the top-line declines. Adjusted operating income also increased significantly, rising to $24 million from $8 million in the prior year [1].

However, the future outlook remains uncertain due to ongoing tariff and demand risks. The company's revenue forecast for the second quarter of fiscal 2026 anticipates a 6–7% decline, with weakness expected in North America and Asia-Pacific. Gross margin is projected to drop by 3.4–3.6 percentage points, primarily due to expected tariff impacts and channel mix shifts [1].

Under Armour's strategic focus on premiumization, digital engagement, and supply chain excellence continues to shape its business strategy. The company's deliberate pullback on promotional activity and shift toward full-price sales in its direct-to-consumer (DTC) channels contributed to recent declines in DTC and e-commerce sales. Despite these challenges, the company remains committed to its transformation plan, which includes restructuring actions aimed at saving $75 million annually by the end of fiscal 2026 [1].

Investors should closely monitor Under Armour's inventory trends, as a rising balance could put pressure on margins if demand continues to soften, particularly in footwear and Asia-Pacific. Management's transparency on the transformation plan and restructuring actions is clear, but the impact of premiumization, supply chain actions, and new product launches will take time to play out [1].

References:
[1] https://www.nasdaq.com/articles/under-armour-ua-q1-revenue-falls-42
[2] https://www.reuters.com/business/retail-consumer/under-armour-forecasts-downbeat-sales-tariff-volatility-shares-drop-2025-08-08/