Under Armour Inc. reported third‑quarter fiscal 2026 results that surpassed expectations, posting adjusted earnings of $0.09 per share versus a consensus estimate of a $0.02 loss. Revenue fell 5% to $1.33 billion, but the figure still beat analysts’ forecast of $1.31 billion by $20 million. Gross margin contracted 310 basis points to 44.4%, while the company lifted its full‑year operating‑income guidance to $110 million and raised its earnings‑per‑share outlook to $0.10‑$0.11.
The earnings beat was driven largely by disciplined cost management and the acceleration of the company’s restructuring program, which has already generated $224 million in savings and is expected to total $255 million. While the restructuring created one‑time charges that weighed on operating income, the company’s ability to maintain a high operating‑margin percentage—despite a 5% revenue decline—allowed it to deliver a positive adjusted EPS. The company’s pricing power in its core apparel and performance‑wear segments helped offset the impact of higher tariff costs and a weaker footwear mix.
Revenue decline was concentrated in North America, where sales dropped 10.3% to $1.02 billion, reflecting ongoing challenges in the U.S. market and a 12% decline in footwear revenue. International sales grew 3% to $310 million, driven by stronger demand in EMEA and Latin America, but the growth was partially offset by a 1% currency‑neutral decline in Asia‑Pacific. The mix shift toward higher‑margin apparel and performance products helped cushion the overall revenue impact.
Gross margin compression was primarily a result of increased U.S. tariff costs, which rose by 1.5 percentage points, and a less favorable channel and regional mix that reduced the company’s average selling price. The company also faced pricing headwinds in the footwear category, where competitors have been able to maintain lower cost structures. Despite these headwinds, the company’s focus on high‑margin product lines and efficient supply‑chain practices helped keep the margin contraction within the range of 310 basis points.
Management highlighted the progress of the restructuring and the company’s confidence in its long‑term strategy. CEO Kevin Plank said, “Our third‑quarter adjusted operating results exceeded expectations, and despite a few unfortunate, non‑recurring impacts, we’re encouraged by the progress we’re making in reigniting brand momentum.” He added that the December quarter was the most challenging phase of the North American reset, but that the company expects greater stability as it builds on this progress globally. The updated operating‑income guidance to $110 million reflects the company’s belief that the restructuring will continue to deliver cost savings and that demand in international markets will support a rebound in the second half of the year.
The company’s cash position remains strong, with $465 million in cash and cash equivalents and $600 million in restricted investments earmarked for senior notes due in June. The company also repaid $200 million of revolver borrowings, leaving no outstanding balance on its $1.1 billion revolving credit facility. These liquidity measures provide a buffer as the company navigates ongoing tariff pressures and continues to invest in its brand and product innovation.
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