Under Armour forecasts steeper annual sales decline on weak North America demand

Aug 7 (Reuters) - Under Armour on ‌Friday forecast a ​steeper ​annual revenue decline, underscoring the challenge of reviving growth as cautious consumers rein in spending on athletic apparel amid economic uncertainty in ‌its key North American market.

Persistent inflation and a softer consumer spending environment ⁠have pressured demand for apparel, footwear and accessories, forcing retailers and brands to rely on promotions ‌even as they seek to ‌protect margins through full-price sales and reduced discounting.

Revenue in Under Armour's North America business, its largest market, fell 9% to $609.8 million in the quarter ended ​June 30.

"As we navigate a challenging consumer demand environment, we continue to make progress in building a more focused Under Armour, despite updating our full-year revenue ⁠outlook," CEO Kevin Plank said.

Shares of the company were down about 1% in premarket trading after Under Armour ​said it now expects full-year revenue to decline by a mid-single-digit percentage, compared with its prior target of a "slight decline".

Plank, who ​returned to the top job in 2024, has ‌been working to reposition the brand through a broad turnaround plan that includes reducing the company's product assortment by about 25% ⁠and shifting its focus toward higher-priced offerings in categories such as training, running and team sports.

The company said it has incurred $266 million in restructuring and transformation expenses so far and ⁠expects to complete the plan by the end of the year.

"There isn't much evidence that ​its turnaround efforts are having a significant impact," Morningstar analyst David Swartz said.

Gross margin in the quarter expanded 590 basis points to 54.1%, primarily due to refunds received related to International ‌Emergency Economic Powers Act (IEEPA) tariff costs that were expensed in fiscal 2026.

Under Armour, however, maintained its full-year operating income forecast, helped ‌by the cost-control measures.

The apparel maker's quarterly revenue fell 3% to $1.10 billion from a ⁠year ago, compared with analysts' average ‌estimate of $1.11 billion, according ​to data compiled by LSEG, while adjusted profit per share of 5 cents beat estimates.

(Reporting by Sanskriti Shekhar in Bengaluru; Editing by ‌Leroy Leo)

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