Q1 Balances Weaker Sales with Better Margins
TCF POST Report
BALTIMORE— Under Armour entered fiscal 2027 with a sharper focus on profitability and brand positioning, but the first quarter showed that the performance apparel company is still facing a difficult demand environment, particularly in its core North American market and Asia-Pacific.
Revenue for the three months ended June 30 fell 3.2% to $1.10 billion, from $1.13 billion a year earlier. On a constant-currency basis, the decline was steeper at 4.4%, indicating that currency movements provided some support to the reported result.
The underlying picture is mixed. Apparel remained relatively resilient, while footwear experienced a much sharper contraction. Regionally, North America remained the biggest drag, while EMEA delivered double-digit growth and Latin America also expanded.
Under Armour President and CEO Kevin Plank stated a challenging consumer demand environment and their efforts toward a more focused business. “By simplifying the business, we are operating with greater discipline and better positioned to protect profitability, while still investing in a sharper product portfolio through clearer storytelling to drive a more premium Under Armour that will consistently earn demand at full price,” he added.
Under Armour Q1 FY2027: Revenue by Major Product Category
| Category | Revenue (US$ million) |
| Apparel | 734.0 |
| Footwear | 245.3 |
| Accessories | 95.7 |
Source: Under Armour Q1 FY2027 results.
Apparel Proves More Resilient Than Footwear
Apparel generated $734.0 million, down only 1.7% from $746.6 million in the comparable quarter. It accounted for roughly two-thirds of Under Armour’s reported revenue, making its relative resilience important to the company’s overall performance.
Footwear, by contrast, declined 7.7% to $245.3 million, compared with $265.9 million a year earlier. Accessories also weakened, falling 4.4% to $95.7 million.
The divergence suggests that Under Armour’s current product challenge is not evenly distributed across the portfolio. Apparel is providing a degree of stability, while footwear is putting considerably more pressure on the topline.
For a company attempting to create a “more premium Under Armour” and earn demand at full price, this distinction is strategically significant. Management said it is simplifying the business and sharpening its product portfolio, with clearer product storytelling intended to strengthen full-price demand.
North America Remains the Central Problem
The regional numbers reveal an even sharper divide.
North America revenue dropped 9.0% to $609.8 million, compared with $670.3 million in the year-earlier quarter. This was by far the largest regional decline in absolute terms.
By comparison, international revenue increased about 5%, supported particularly by EMEA and Latin America. The international performance therefore prevented the overall revenue decline from becoming significantly larger.
Under Armour Q1 FY2027: Regional Revenue Performance
| Region | Year-on-year change |
| EMEA | +12.1% |
| Latin America | +7.7% |
| Asia-Pacific | -6.6% |
| North America | -9.0% |
Source: Under Armour Q1 FY2027 results.
EMEA was the standout performer, with revenue rising 12.1% to $278.7 million. On a constant-currency basis, growth remained strong at 10.3%.
Latin America increased 7.7% to $58.8 million, although constant-currency growth was only 0.7%, showing that currency movements contributed substantially to its reported growth.
Asia-Pacific was the second major weak point. Revenue fell 6.6% to $152.6 million, and the constant-currency decline widened to 9.5%.
Asia-Pacific Becomes a Bigger Strategic Concern
Asia-Pacific’s performance is particularly important because Under Armour has now incorporated softer demand in the region into its full-year outlook.
The company previously expected a low-single-digit increase in Asia-Pacific revenue for fiscal 2027. It now expects a low-single-digit decline, reflecting weaker-than-anticipated demand. North America’s outlook has also deteriorated, moving from a previously expected low-single-digit decline to a mid-single-digit decline.
That revision makes Asia-Pacific more than a quarterly issue. It has become one of the principal factors behind the company’s more cautious full-year revenue expectations.
The contrast with EMEA is striking: EMEA grew strongly in the quarter and maintained double-digit constant-currency growth. Under Armour’s international business is therefore not moving uniformly; regional consumer demand and market conditions are producing very different outcomes.
Profitability Improves Despite Weaker Sales
The topline decline did not prevent a significant improvement in profitability.
Gross margin increased 590 basis points to 54.1%, from 48.2% a year earlier. However, this improvement needs to be interpreted carefully. A substantial part of the increase came from refunds associated with the recovery of tariff costs related to the International Emergency Economic Powers Act that had been expensed in fiscal 2026.
Operating income rose to $46.7 million, compared with only $3.3 million a year earlier. Adjusted operating income increased to $52.4 million, from $24.4 million.
Net income was modest at $545,000, but adjusted net income reached $21.0 million, compared with $8.6 million in the year-earlier quarter.
This creates an important tension in the results: Under Armour is improving profitability while accepting weaker revenue.
Cost Discipline Becomes Central to the Turnaround
The company’s strategy is increasingly focused on protecting margins rather than chasing revenue at any cost.
SG&A expenses increased 2% to $543 million, partly reflecting targeted investments to strengthen the brand. At the same time, Under Armour continues to implement its Fiscal 2025 Restructuring Plan.
The company incurred another $6 million in restructuring and transformation costs during the quarter, taking cumulative program costs to $266 million. Total costs under the program are expected to reach approximately $305 million, with substantial completion targeted by December 31, 2026.
The restructuring effort is therefore approaching an important phase: Under Armour is spending heavily to simplify the organization while simultaneously trying to reduce its underlying cost base.
Inventory Remains an Important Watch Point
Inventory declined 3% year on year to $1.1 billion, according to the company.
That is directionally positive in an environment where weaker consumer demand can create excess stock and increase promotional pressure. However, inventory at quarter-end was higher than the March 31 balance, rising from approximately $915 million to $1.11 billion.
For Under Armour, maintaining inventory discipline will be important if management wants to protect its stated objective of reducing discounting and increasing full-price selling.
Wholesale Proves More Resilient Than Direct-to-Consumer
The channel picture also reveals an important shift.
Wholesale revenue fell only 1.6% to $638.5 million, while direct-to-consumer revenue dropped 5.8% to $436.5 million. Within DTC, e-commerce revenue declined 12%, while owned-and-operated stores declined 3%.
This means the company’s direct digital business remains under particular pressure.
The contrast between wholesale and DTC could influence Under Armour’s marketplace strategy as it attempts to balance distribution with tighter control over brand presentation and full-price selling.
Fiscal 2027 Outlook Becomes More Cautious
Under Armour has now shifted from expecting a slight fiscal-year revenue decline to anticipating a mid-single-digit percentage decline.
The company specifically cited softer demand in North America and Asia-Pacific. Nevertheless, it maintained its profitability targets, forecasting full-year operating income of $96 million-$116 million and adjusted operating income of $140 million-$160 million.
Gross margin is still expected to improve by 220-270 basis points, supported by pricing actions, lower discounting and a more favorable channel mix. The company also expects approximately $70 million of benefit from refunds associated with prior-year tariff expenses.
At the same time, Under Armour estimates approximately $35 million of headwinds related to the conflict in the Middle East, adding another layer of uncertainty to the year’s profitability equation.
Industry Takeaway
Under Armour’s first-quarter numbers point to a portfolio- and geography-led reset rather than a simple cyclical slowdown.
The strongest part of the business is currently apparel, while footwear is significantly weaker. Regionally, EMEA is delivering robust growth, Latin America is expanding on a reported basis, while North America and Asia-Pacific are contracting.
For textile, apparel and footwear industry observers, the most significant signal is the company’s willingness to trade some near-term revenue for margin quality, tighter marketplace control and reduced discounting.
The challenge is whether that strategy can eventually rebuild demand. The first quarter shows that Under Armour can improve profitability even while sales decline, but the revised fiscal-year outlook also makes clear that the company has not yet solved its demand problem—particularly in North America and Asia-Pacific.
In short, apparel is cushioning the business, footwear is dragging on growth, EMEA is outperforming, Asia-Pacific is weakening, and Under Armour is betting that a leaner, more premium business can restore demand without sacrificing margin.