UAA Cuts Revenue View but Keeps Profit Outlook as Margins Recover

Under Armour, Inc. UAA has lowered its fiscal 2027 revenue expectations while keeping its profitability targets intact, creating a split post-earnings picture. Softer demand is pressuring sales, but better margins and tighter spending are helping cushion the decline.

That divergence puts execution at the center of the investment case. The next test is whether Under Armour can preserve profitability while rebuilding demand without leaning more heavily on promotions.

UAA's Sales Outlook Weakens on Softer Demand

Fiscal 2027 revenues are now expected to decline at a mid-single-digit rate, versus the prior expectation for a slight decrease. Management tied the revision mainly to softer demand in North America and Asia-Pacific.

North America revenues are also projected to decline at a mid-single-digit rate for the year. Under Armour is prioritizing healthier revenue and tighter inventory management rather than pursuing short-term volume that could pressure margins or brand positioning.

Peer results show that demand and channel pressure are not unique to Under Armour. NIKE, Inc. NKE reported a 7% decline in fourth-quarter NIKE Direct revenues. lululemon athletica inc. LULU said first-quarter Americas revenues fell 3% and lowered its 2026 revenue outlook.

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Under Armour Holds Its Profitability Targets

Despite the weaker sales forecast, adjusted operating income guidance remains $140-$160 million. Adjusted earnings guidance also remains 8-12 cents per share, indicating that management expects cost actions to offset much of the top-line pressure.

The first quarter offered evidence of that operating control. Adjusted operating income reached $52.4 million, above the company's prior outlook of $30-$40 million, even as revenues declined 3.2% year over year to $1,098 million.

UAA's Gross Margin Outlook Survives the Revenue Cut

Under Armour still expects fiscal 2027 gross margin to expand 220-270 basis points. About 150 basis points of that improvement is tied to refunds of tariff costs that were expensed in fiscal 2026.

Excluding that benefit, management still expects margin gains from pricing actions, lower discounting and a more favorable channel mix. Those drivers matter because the margin story is not expected to rely entirely on the tariff recovery.

Under Armour Leans Harder on SG&A Discipline

Adjusted selling, general and administrative expenses are now expected to decline at a low-single-digit rate, compared with the prior expectation for a low-single-digit increase. Under Armour is cutting discretionary spending while protecting selected strategic investments.

Marketing is also being concentrated behind fewer initiatives. Management expects tighter spending and prioritization to help maintain profitability while it continues investing in product innovation and efforts aimed at rebuilding full-price demand.

UAA Faces a Tougher Second-Quarter Setup

The second quarter is expected to remain difficult. Revenues are projected to decline at a high-single-digit rate as weakness persists in North America and parts of Asia-Pacific.

Adjusted operating income is forecast at $10-$20 million, while adjusted loss per share is expected at 1-3 cents. The quarter should provide another test of how effectively cost control can absorb continued revenue contraction.

UAA's Ratings Reflect a Mixed Post-Earnings Setup

The earnings update leaves investors with a clear trade-off. Margin recovery and expense discipline are helping protect profitability, but the revenue reset means the turnaround still depends on generating healthier consumer demand.

UAA currently carries a Zacks Rank #3 (Hold), which supports a wait-and-see posture rather than a fresh buy signal. Its Growth Score of A contrasts with a Value Score of D and Momentum Score of F, while the VGM Score is C, leaving the stock's Style Score profile mixed. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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