Athletic apparel company Under Armour (NYSE: UAA) missed Wall Street’s revenue expectations in Q2 CY2026, with sales falling 3.2% year on year to $1.10 billion. Its non-GAAP profit of $0.05 per share was significantly above analysts’ consensus estimates.

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StockStory’s Take

Under Armour’s second quarter results were met with a significant negative market reaction, as revenue fell short of Wall Street expectations and declined year over year. Management attributed the shortfall to softer consumer demand, particularly in North America and Asia Pacific, and a promotional retail environment. CEO Kevin Plank described the quarter as a “reset,” emphasizing ongoing efforts to simplify the product lineup and improve operational efficiency. He noted that the company is focused on “selling so much more of so many less products at a much higher full retail price,” acknowledging that the business remains heavily reliant on promotions and faces challenges translating brand moments into consumer demand.

Looking ahead, Under Armour’s guidance reflects a more conservative revenue outlook but maintains operating income targets, supported by aggressive cost controls and a sharpened approach to marketing. Management is prioritizing fewer, more impactful product launches and tighter inventory management. CFO Reza Taleghani emphasized that gross margin improvement will rely on less discounting and operational discipline, stating, “We are maintaining our gross margin outlook for that reason. We want to make sure that we're continuing to elevate the brand as the year goes on.” The company’s focus remains on premiumizing the brand through innovation and more effective storytelling.

Key Insights from Management’s Remarks

Management identified several areas impacting second quarter performance, with SKU reduction, disciplined marketing, and product innovation at the center of its transformation strategy.

• SKU reduction underway: Under Armour is moving forward with a 25% reduction in product SKUs over the next 18 months, aiming to improve operational focus and reduce marketplace complexity. Management believes fewer, higher-quality products will drive stronger full-price sell-through and healthier margins.
• Marketing strategy reset: Marketing spend is being reallocated toward fewer, larger campaigns tightly linked to product launches and athlete moments, rather than broad promotional activity. Plank cited the success of the Bouncy Tee, which sold well at full price due to focused marketing and cultural relevance, as the new standard for launches.
• Wholesale and DTC channel focus: The company is rebalancing its approach across wholesale and direct-to-consumer (DTC) channels, pulling back on promotions in both. Plank noted improved alignment with key partners like DICK’S Sporting Goods and emphasized strengthening full-price retail execution.
• International market dynamics: EMEA (Europe, Middle East, and Africa) remained more resilient, with management attributing performance to strong distributor relationships, despite heightened competition and consumer headwinds in the U.K. Asia Pacific softness was exacerbated by aggressive discounting and inventory misalignment in China, which Under Armour is addressing through closer licensee alignment and better e-commerce execution.
• Operational discipline and restructuring: A major restructuring initiative is yielding cost savings, enabling Under Armour to maintain profitability guidance despite lower revenue. Taleghani highlighted progress in inventory management, with inventory levels now more aligned to demand and new product launches expected to further optimize sell-through.

Drivers of Future Performance

Management’s outlook for the remainder of the year centers on maintaining brand health and profitability by focusing on product quality, disciplined marketing, and tighter inventory management.

• Elevated focus on full-price sales: Under Armour’s strategy is to reduce reliance on promotions and increase full-price product penetration. Management expects new launches—like the Helix Tee and expanded apparel innovations—to drive higher average selling prices, improving gross margins even as volumes remain pressured.
• Cost discipline and SG&A control: The company is leveraging its restructuring program to keep selling, general, and administrative (SG&A) expenses in check. Adjusted SG&A is expected to decline at a low single-digit rate, supporting operating income targets despite revenue softness. Marketing investment will be targeted and efficient, with less spend on broad campaigns and more on high-return initiatives.
• Regional market execution: Recovery in North America and Asia Pacific is seen as dependent on improved traffic and better inventory alignment, while EMEA is expected to remain competitive but stable. Management warns that ongoing macroeconomic headwinds and competitive discounting, particularly in key international markets, remain risks to revenue acceleration.

Catalysts in Upcoming Quarters

In the coming quarters, our analysts will be watching (1) the rollout and consumer uptake of new product launches like the Helix Tee and expanded sportswear offerings, (2) the impact of further SKU reductions on inventory health and margin improvement, and (3) signs of traffic stabilization or improvement in North America and Asia Pacific. How Under Armour manages its promotional mix and executes brand storytelling will also be critical to tracking the turnaround.

Under Armour currently trades at $6.10, down from $6.39 just before the earnings. Is there an opportunity in the stock? The answer lies in our full research report (it’s free).

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