Under Armour reported first-quarter financial results that prompted a downward revision to full-year revenue expectations, though the company maintained its adjusted operating income guidance. The athletic apparel company posted sales of $1.1 billion, representing a 3% decline from the prior year, as consumer demand weakened in key markets including North America and Asia-Pacific. The softer sales environment was attributed to reduced wholesale orders during spring and summer months and increased promotional activity across the retail sector.
Despite lower revenues, the company achieved profitability improvements through operational discipline. Adjusted operating income reached $52 million, exceeding the prior outlook range of $30 million to $40 million. Gross margin expanded 590 basis points to 54.1%, benefiting from tariff refunds of approximately 640 basis points related to prior-year costs, as well as supply-chain efficiencies. These gains were partially offset by unfavorable foreign exchange, product mix, channel mix, and increased discounting activity.
Regional performance showed significant variation, with North America revenue declining 9% and Asia-Pacific contracting 7% on a constant-currency basis. Within North America, direct-to-consumer revenue fell 6%, including a 12% decrease in e-commerce sales. Conversely, EMEA revenue increased 12% on a constant-currency basis, while Latin America rose 1% on a constant-currency basis. By product category, footwear sales declined 8%, apparel decreased 2%, and accessories fell 4%, though sportswear showed growth during the quarter.
Management signaled a strategic shift toward protecting margins rather than competing on price, with CEO Kevin Plank stating the company would not pursue lower-quality volume through excessive discounting. Under Armour plans to simplify its product lineup, reduce SKUs by an additional 25% over the next 18 months, and concentrate investment on key franchises including HeatGear, Velociti, and StealthForm. The company maintained its full-year adjusted operating income forecast of $140 million to $160 million and now expects gross-margin expansion of approximately 220 to 270 basis points, including about 150 basis points from tariff refunds.
For the second quarter, Under Armour projected revenue would decline at a high-single-digit rate, with adjusted operating income between $10 million and $20 million. The company ended the quarter with $1.1 billion in inventory, down 3% year-over-year, and $396 million in cash reserves.
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