Under Armour's Q3 2025: A Strategic Shift Towards Growth and Profitability

Under Armour, Inc. (NYSE: UAA, UA) reported its third-quarter fiscal 2025 results on February 6, 2025, showcasing a strategic shift towards a category-led operating model and enhanced marketplace discipline. The company's earnings performance exceeded expectations, driven by strong gross margin improvement and a raised full-year outlook. This article delves into the key aspects of Under Armour's Q3 2025 earnings call and the strategic initiatives that contributed to its success.

Improved Gross Margin and Reduced Promotional Activities

Under Armour's gross margin increased by 240 basis points to 47.5% compared to the previous quarter. This significant improvement was driven by less direct-to-consumer discounting, lower product and freight costs, and favorable impacts from changes in foreign currency. The company's eCommerce revenue decreased by 20% due to ongoing planned decreases in promotional activities, further contributing to the improved gross margin. This strategic shift allowed Under Armour to optimize its product offerings and pricing, leading to improved profitability.

Raised Fiscal 2025 Outlook

Under Armour raised its full-year outlook for adjusted EPS to $0.28 - $0.30, compared to the previous estimate of $0.24 - $0.27. This increase in guidance reflects the positive impact of the company's strategic shift on its overall earnings performance. Kevin Plank, President and CEO of Under Armour, stated, "Our updated product strategy and enhanced marketplace discipline combined with the shift to a category-led operating model are driving our transformation." This quote validates the significant contribution of the company's strategic shift to its Q3 2025 earnings performance.



Restructuring Plan Impact

Under Armour's restructuring plan, announced in May 2024, aimed to improve the company's financial and operational efficiencies. By the end of the third fiscal quarter of 2025, the company had recognized $42 million in restructuring and impairment charges and $15 million in other related transformational expenses under the plan. Of the total $57 million incurred thus far, $40 million is cash-related, and $17 million is non-cash-related. The company anticipates that the remaining charges outlined in the updated restructuring plan will be realized during fiscal years 2025 and 2026.

In conclusion, Under Armour's Q3 2025 earnings performance demonstrates the success of its strategic shift towards a category-led operating model and enhanced marketplace discipline. The company's improved gross margin, reduced promotional activities, and raised fiscal 2025 outlook highlight the positive impact of these initiatives on its financial performance. As Under Armour continues to execute its strategic plan, investors can expect the company to build on this momentum and drive long-term growth and profitability.