Under Armour's (UAA) Struggles with Profitability Persist Despite CEO's Turnaround Efforts

Under Armour's (UAA) recent Q4 FY2025 results show an 11% YoY decline in revenue to $1.2 billion and a net loss of $201 million with an EPS loss of $0.47. Despite a strategic reset and shift to a consumer-centric approach, the company continues to struggle with profitability. The stock trades at a relative discount but its path to sustainable growth remains uncertain. I maintain a Neutral stance until meaningful progress on revenue stabilization and margin improvement is seen.

Under Armour (UAA) recently reported its Q4 FY2025 results, showcasing a 11% year-over-year (YoY) decline in revenue to $1.2 billion, accompanied by a net loss of $201 million and an earnings per share (EPS) loss of $0.47. Despite these challenges, the company continues to implement its strategic reset, focusing on premium brand positioning and operational efficiency improvements [1].

The strategic reset, spearheaded by founder and CEO Kevin Plank, aims to shift Under Armour's product-focused approach to a more consumer-centric, category-managed operating model. However, the company's recent Q4 FY2025 results suggest that the turnaround efforts have yet to yield meaningful traction. Revenue declined across major markets, with U.S. sales falling 11%, international revenue dropping 13%, and the Asia-Pacific region declining 27% [1].

Under Armour's net loss for the year was $201 million, with an EPS loss of $0.47. This financial performance highlights the ongoing struggle to stabilize revenue and improve profitability. The company's gross margin improved by 170 basis points to 46.7% in Q4, indicating progress in cost management, but it is not enough to offset the revenue decline [1].

The stock currently trades near the midpoint of its 52-week range, $4.78 to $11.89, and has experienced a notable rise of 27% over the past three months. However, it still trades at a relative discount, with a price-to-sales ratio of 0.61x compared to 1x for the Consumer Discretionary sector, 2.42x for Nike (NKE), and 1.61x for Adidas (ADDYY) [1].

Analysts remain cautious about Under Armour's prospects. While some analysts, like Simeon Siegel at BMO Capital, maintain an Outperform rating with a lowered price target of $9, many others, such as Brooke Roach at Goldman Sachs and Joseph Civello at Truist, have lowered their price targets and reiterated Neutral or Hold ratings due to the company's ongoing challenges and the potential impact of elevated tariff rates [1].

In summary, Under Armour is undergoing a strategic reset to regain brand momentum and strengthen its market position. However, continued revenue declines and persistent negative profitability suggest deeper structural issues that won't be resolved quickly. The stock trades at a relative discount, but this valuation appears to reflect market doubts about the company's ability to execute a successful transformation. Analyst price targets indicate limited upside in the near term, given the associated risks. Until Under Armour demonstrates measurable improvement in revenue stabilization and margin improvement, the turnaround is likely to remain stalled.

References:
[1] https://www.tipranks.com/news/strategic-reset-fails-to-resolve-under-armours-uaa-struggles-with-profitability