Under Armour’s Turnaround Hits a Wall as North America Demand Craters

Under Armour, Inc. (NYSE: UAA) shares fell as much as 9% in early trading after the company forecast a mid-single-digit full-year revenue decline, replacing its previous expectation for only a “slight decline.” The pressure is concentrated in North America, its largest market, where revenue fell 9% to $609.8 million in the fiscal quarter ended June 30. CFO Reza Taleghani said a more difficult consumer environment in North America and parts of Asia Pacific is expected to continue through the second quarter. Inflation and weaker discretionary spending are making consumers more cautious about apparel, footwear, and accessories across the sportswear industry. Morningstar analyst David Swartz said the market is struggling, while tariff-related cost constraints are adding pressure. Competition is also intensifying as shoppers increasingly favor newer, innovation-focused brands such as On and Hoka. CEO Kevin Plank, who returned in 2024 to lead the turnaround, is pursuing a “do less, better” strategy. Under Armour has reduced its product assortment by about 25%, emphasizing higher-priced training, running, and team-sports products. It is also targeting younger Gen Z consumers with training shoes including “Surge 5” and “Radiant TR.” The reset has required $266 million in restructuring and transformation spending so far, with the broader turnaround scheduled for completion by year-end. Management expects product consolidation and inventory management to improve gross margins and brand reputation, but investors remain skeptical. Hedge fund ownership declined from 46 in the fourth quarter of the preceding year to 40 in the first quarter of this year. Short interest represents 23.98% of total float, underscoring concerns about the timing of a North American recovery and the company’s ability to preserve pricing power without margin-diluting promotions. Key indicators will be North American sales stabilization, continued gross-margin improvement, and stronger full-price sell-through. The source also says certain AI stocks may offer greater upside and less downside risk. Disclosure: None.