Under Armour (Under Armour (UAA)) had a rough Tuesday. The stock cratered nearly 20% after the company reported fourth-quarter earnings that missed Wall Street's expectations and warned that Middle East-related supply chain disruptions will keep squeezing margins into fiscal 2027.
During the earnings call, management said the disruptions have driven up freight and sourcing costs. While pricing actions and tariff refunds should help offset some of the pain, the conflict is expected to remain a headwind for the coming year.
Fourth-Quarter Results
Under Armour posted an adjusted loss of 3 cents per share for the quarter, slightly worse than the 2-cent loss analysts had penciled in. Revenue dipped 1% year over year to $1.171 billion, just above the $1.167 billion consensus estimate.
North America revenue fell 7% to $641 million, while international revenue climbed 10% to $539 million. Wholesale revenue slipped 3% to $748 million, but direct-to-consumer revenue rose 5% to $406 million.
By category, apparel revenue was flat at $778 million, footwear held steady at $282 million, and accessories inched up 2% to $94 million.
The big trouble spot was gross margin, which tumbled 470 basis points to 42%. The company blamed higher tariffs, elevated product costs, pricing pressure, and an unfavorable regional mix.
On the bright side, Under Armour said it cut stock keeping units by 25%, improved inventory quality, and kept pushing premium products like its Bounce Cotton Tee and performance footwear. The operating loss came in at $34 million, but excluding transformation and restructuring charges, adjusted operating income was $3 million.
The company ended the quarter with $309 million in cash and equivalents, plus $605 million in restricted investments earmarked for repaying senior notes due in June 2026.
Under Armour Outlook
The real shocker was the guidance. Under Armour forecast fiscal 2027 GAAP earnings ranging from a loss of 4 cents per share to breakeven — far below the 25 cents per share analysts expected. On an adjusted basis, the company sees earnings of 8 to 12 cents per share, compared with the 23-cent consensus.
Investors didn't wait around to digest the news. Under Armour shares were down 19.80% at $4.855 at the time of publication Tuesday.
