Under Armour stock steadies as investors weigh softer guidance and cost controls

Under Armour stock mirrors a period of transition for the Baltimore-based sportswear company (ISIN US9043112060) after management reduced its revenue outlook for fiscal 2025 and highlighted a renewed focus on costs and brand elevation. According to the company’s guidance for the fiscal year ending 31 March 2025, Under Armour expects revenue to decline at a low-double-digit percentage rate compared with the prior year, alongside pressure on earnings due to restructuring and marketing investments.

Revenue outlook points to low-double-digit decline

In its outlook for fiscal 2025, management communicated that Under Armour anticipates a low-double-digit percentage decline in revenue versus fiscal 2024, reflecting softer wholesale demand in North America and a more selective approach to promotions. This outlook followed fiscal 2024 revenue of around $5.7 billion, which was roughly flat compared with the prior year as growth in international markets helped offset a modest decline in North America. The quantified comparison between a roughly stable top line in fiscal 2024 and an expected low-double-digit contraction in fiscal 2025 underscores the extent of the reset that the company is attempting to engineer.

Under Armour also signaled that gross margin is expected to improve in fiscal 2025 as the company reduces promotional intensity, exits lower-margin product and optimizes its distribution mix. In fiscal 2024, gross margin expanded by more than one percentage point compared with fiscal 2023, helped by lower freight costs and better pricing. That margin expansion, against largely unchanged revenue, highlighted how cost levers and product mix can support profitability even in a subdued demand environment, and investors will be watching whether a similar pattern can hold as sales contract in fiscal 2025.

Profitability metrics and restructuring frame the reset

For fiscal 2024, Under Armour reported operating income in the low hundreds of millions of dollars, with an operating margin in the mid-single-digit percentage range. This result compared with an operating margin that was roughly one percentage point lower in fiscal 2023, reflecting the benefit of gross margin improvement and ongoing cost discipline. The quantified margin expansion year over year gave management confidence that efficiency measures can partly offset top-line volatility.

Net income in fiscal 2024 also increased versus fiscal 2023, helped by higher operating profit and lower freight expenses. Diluted earnings per share for fiscal 2024 were modestly above the prior-year level, reinforcing the message that Under Armour can generate earnings growth even when revenue is broadly unchanged. Against that backdrop, the decision to guide for a low-double-digit revenue decline in fiscal 2025, combined with one-time restructuring charges and increased marketing spend, signals that near-term earnings will be under pressure as the company invests in a brand reset.

Management has outlined a cost-saving program that targets tens of millions of dollars in annualized savings over the next several years, driven by organizational streamlining and supply-chain efficiencies. The near-term impact includes restructuring and impairment charges that weigh on reported operating income but are intended to improve the underlying cost base. For investors, the key question is whether these initiatives can sustain or expand the mid-single-digit operating margin once revenue returns to growth.

Regional mix, inventory and channel strategy

Under Armour’s performance remains heavily influenced by its regional mix and channel strategy. In fiscal 2024, North America accounted for the majority of revenue and posted a low-single-digit percentage decline, while international revenue grew at a double-digit percentage rate. This divergence meant that international markets increased their share of total revenue by several percentage points compared with fiscal 2023, highlighting the importance of growth outside the company’s home region.

Inventory management has also been a central theme. Over the course of fiscal 2024, Under Armour reduced its inventory balance by a double-digit percentage compared with fiscal 2023, reflecting efforts to clear excess stock and align supply with demand. This reduction, coupled with fewer off-price sales, supported the gross margin improvement noted above and gave the company more flexibility heading into fiscal 2025. The risk is that tighter inventory could constrain sales if demand rebounds faster than expected, but it also reduces markdown exposure.

Direct-to-consumer channels, including company-owned stores and e-commerce, delivered higher growth than wholesale in fiscal 2024 and contributed a growing share of revenue compared with fiscal 2023. This shift supports margin performance because direct channels typically carry higher gross margins than wholesale. However, the company has also emphasized the importance of strategic wholesale partners for brand visibility and scale, particularly in North America, which remains a challenging but essential market.

Curry Brand and performance apparel remain central

Under Armour is best known among consumers for its performance apparel, footwear and accessories, particularly in training, running and basketball. The company’s collaboration with NBA star Stephen Curry, marketed under the Curry Brand, has become one of its most visible franchises in basketball footwear and apparel. While Under Armour does not publicly break out detailed revenue for individual athlete-led sub-brands, management has highlighted basketball and running as categories with potential for renewed growth.

Performance apparel remains a core revenue driver and a category in which Under Armour has long differentiated itself through moisture-wicking fabrics and compression technology. In recent years the company has sought to elevate its product offering with more lifestyle-oriented designs while maintaining its athletic performance credentials. Success in this balancing act is important because the broader sportswear market has seen strong competition from both global incumbents and newer challengers that blend performance and fashion.

Under Armour stock and market context

Under Armour stock is listed in the United States, providing investors with liquid exposure to the global sportswear market. The company’s market capitalization runs into the billions of dollars, reflecting its position as a mid-cap name relative to larger athletic brands. Over the past year, the share price has traded within a range of several dollars per share, with volatility driven by earnings releases, guidance updates and broader consumer discretionary sentiment.

For investors, the most important metrics to monitor in the coming quarters will likely be revenue trend inflection versus the guided low-double-digit decline for fiscal 2025, the trajectory of gross and operating margins as cost savings take hold, and the pace at which inventory levels and direct-to-consumer penetration evolve. A stabilization or improvement in North America revenue, combined with continued double-digit growth internationally, would help rebuild confidence in the growth outlook. Conversely, a deeper-than-expected revenue contraction or stagnating margins could reinforce caution around Under Armour stock.