Under Armour, Inc. SEC 10-K Report
Under Armour, Inc., a leading innovator in performance apparel, footwear, and accessories, has released its Form 10-K report for Fiscal 2025. The report provides a comprehensive overview of the company's financial performance, business operations, strategic initiatives, and the challenges it faces in a highly competitive market.
Financial Highlights
Net Revenues: $5,164.3 million, a decrease of 9.4% compared to the previous fiscal year, primarily due to lower demand in the wholesale channel and reduced discounting in the direct-to-consumer channel.
Gross Profit: $2,474.7 million, with a gross margin increase of 180 basis points to 47.9%, driven by supply chain benefits and pricing improvements.
Income (Loss) from Operations: $(185.2) million, compared to an income of $229.8 million in the previous year, reflecting increased restructuring charges and higher selling, general, and administrative expenses.
Net Income (Loss): $(201.3) million, compared to a net income of $232.0 million in the previous year, impacted by restructuring charges and increased expenses.
Basic Net Income (Loss) Per Share of Class A, B and C Common Stock: $(0.47), compared to $0.53 in the previous year, reflecting the overall decrease in net income.
Business Highlights
Revenue Segments: In Fiscal 2025, apparel, footwear, and accessories represented 67%, 23%, and 8% of net revenues, respectively. Licensing arrangements accounted for 2% of net revenues.
Geographical Performance: The North America segment accounted for approximately 60% of net revenues for Fiscal 2025, while EMEA, Asia-Pacific, and Latin America segments combined represented approximately 40%. Net revenues in North America decreased by 11.4%, EMEA increased by 0.4%, Asia-Pacific decreased by 13.5%, and Latin America decreased by 6.1%.
Sales Units: The company experienced a decrease in unit sales for both apparel and footwear, contributing to the overall decline in net sales.
New Product Launches: The company continues to innovate with products like UA Iso-Chill™, UA RUSH™, UA SMARTFORM™, and UA STORM™ in apparel, and cushioning technologies such as Charged Cushioning®, UA Flow™, HOVR®, and UA Micro G® in footwear.
Future Outlook: The company plans to grow its business through increased sales of apparel, footwear, and accessories, growth in the direct-to-consumer sales channel, and expansion of wholesale distribution. The digital strategy aims to enhance consumer engagement and strengthen brand connectivity.
Strategic Initiatives
Strategic Initiatives: The company is focused on driving premium brand-right growth and delivering improved profitability through increased sales of apparel, footwear, and accessories, growth in the direct-to-consumer sales channel, and expansion of wholesale distribution. The digital strategy is designed to enhance consumer engagement and strengthen brand connectivity through multiple digital touchpoints. Additionally, the company has implemented a 2025 restructuring plan aimed at strengthening financial and operational efficiencies, with a focus on reducing discounting and promotional activity in the direct-to-consumer channel.
Capital Management: The company has a share repurchase program authorized to repurchase up to $500 million of Class C Common Stock through May 2027, with $90 million repurchased during Fiscal 2025. The company also repaid $80.9 million of Convertible Senior Notes upon maturity using cash on hand. The amended credit agreement provides for an aggregate $1.1 billion of revolving credit commitments, with no amounts outstanding as of March 31, 2025. The company maintains a focus on managing liquidity through cash flows from operations, cash on hand, and borrowings available under credit and long-term debt facilities.
Future Outlook: The company plans to continue its long-term growth objectives by executing strategic initiatives across key business areas, particularly in North America. The 2025 restructuring plan is expected to be substantially complete by the end of Fiscal 2026, with anticipated charges of $140 million to $160 million. The company is actively monitoring global trade policies and macroeconomic factors, such as inflation and foreign currency fluctuations, which may impact future financial results. The company aims to maintain adequate liquidity and capital resources to support its strategic initiatives and capital management activities over the next twelve months.
Challenges and Risks
Economic and Industry Risks: The company's reliance on consumer purchases of discretionary items makes it vulnerable to economic downturns and inflation, which can negatively impact sales and profitability. Global events beyond the company's control, such as changes in trade policies, military conflicts, and public health crises, could disrupt operations and consumer spending.
Operational Risks: The company faces challenges in accurately forecasting demand, which could lead to excess inventory or shortages. It relies heavily on third-party suppliers and manufacturers, with no long-term contracts, making it susceptible to supply chain disruptions. Labor disputes at ports or with suppliers could also adversely affect the business.
Regulatory Risks: The company is subject to a wide array of laws and regulations, including those related to consumer protection, data privacy, and environmental matters. Non-compliance could lead to significant penalties and damage to the brand image. The evolving regulatory landscape, particularly around data privacy and sustainability, may increase compliance costs.
Emerging Risks: Climate change poses a risk to the supply chain and consumer preferences. The company must adapt to increased regulatory focus on sustainability and social matters, which could impact brand perception and operational costs. Additionally, the company faces risks related to cybersecurity threats, which could disrupt operations and damage reputation.
Management Strategies: Management is focused on executing strategic initiatives to drive long-term growth, including expanding direct-to-consumer sales and enhancing digital engagement. However, the success of these strategies depends on the company's ability to adapt to changing consumer preferences and manage costs effectively.
Market Risks: The company is exposed to foreign currency exchange rate fluctuations, which could adversely impact financial results as approximately 45% of net revenues are generated outside the United States. The company also faces risks related to interest rate changes and market conditions that could affect its access to capital and borrowing costs.
SEC Filing: Under Armour, Inc. [ UA ] - 10-K - May. 22, 2025