Under Armour 2025 Results: Falling Sales, Rising Margins, and a Strategic Reset

Disappointing Quarter or the Beginning of a Turnaround?

Under Armour has released its financial results for the fourth quarter and full fiscal year of 2025, painting a complex picture. The company reported a double-digit decline in sales, operational losses, and weakness across major markets. However, behind the disappointing figures lies a deeper story—one of strategic restructuring, disciplined cost control, and early signs of a brand recalibration aimed at long-term resilience. Under the renewed leadership of founder Kevin Plank, the company is refocusing on performance-driven athletic apparel and repositioning itself for sustainable growth.

Revenue Decline but Improved Profit Quality

In Q4 2025, Under Armour generated revenue of approximately $1.3 billion, an 11% decline year-over-year. For the full fiscal year, total revenue reached $5.7 billion, down 3% from 2024.

Despite the top-line pressure, the company managed to improve its gross margin, which reached 46.7% in the fourth quarter—up 170 basis points compared to the same period last year. The improvement was driven by a reduction in promotions, improved supply chain efficiencies, and a tighter grip on operational costs. Essentially, the company opted to sacrifice volume in favor of higher-quality revenue and brand positioning.

Regional Breakdown: Global Weakness Led by North America and Asia-Pacific

All major regions posted year-over-year declines. North America, Under Armour’s core market, saw an 11% drop. Asia-Pacific recorded the steepest fall at 27%, reflecting both a slowdown in consumer demand and intensified competitive pressures. Europe declined modestly by 2%, while Latin America saw a 10% decline. These trends highlight the macroeconomic headwinds and the challenges of reestablishing momentum in key geographic segments amid a more disciplined go-to-market strategy.

Product Segments: Apparel and Footwear Decline, Accessories Hold Steady

The apparel segment declined 11% during the quarter, while footwear posted a sharper 17% drop. In contrast, the accessories category grew by 1%, maintaining relative stability. The underperformance in footwear raises questions about Under Armour’s ability to compete effectively in a market dominated by giants like Nike and Adidas.

Sales Channels: Digital Weakness Signals Strategic Shift

Declines were recorded across both wholesale and direct-to-consumer (DTC) channels. Wholesale revenue dropped 10%, while DTC fell 15%, driven primarily by a 27% plunge in e-commerce sales. The company attributed this to a deliberate pullback in online discounting and a strategic shift toward more profitable channels. While this approach negatively impacted near-term sales, it aligns with the long-term goal of enhancing brand equity and profit margins.

Bottom Line: Operational Loss but Healthy Cash Flow

Despite the improvement in gross margin, Under Armour posted an operating loss of $72 million in Q4. Full-year net income came in at $170 million, marking a 42% decline compared to 2024. Diluted earnings per share stood at $0.38.

On a more positive note, inventory levels were reduced by approximately 9%, and the company maintained positive cash flow. For fiscal 2026, management projects free cash flow in the range of $600 million to $700 million, driven primarily by working capital optimization and tighter inventory controls.

Strategic Realignment: Back to Performance with “Protect This House 3.0”

Founder Kevin Plank’s return to the CEO role brought a renewed sense of direction. The company launched a refined strategy under the banner of “Protect This House 3.0,” emphasizing a return to its athletic performance roots. Key priorities include enhancing product quality, reducing promotional dependency, optimizing distribution channels, and streamlining global operations.

These strategic pivots are already yielding early benefits in margin expansion and operational balance, though the journey ahead will require consistency, focus, and disciplined execution.

Looking Ahead: Not a Growth Spike—A Foundation for Stability

Fiscal year 2025 marked a transitional phase for Under Armour—defined by declining revenues and profits, but also by the initial groundwork for a longer-term transformation. Key challenges remain, including elevated competition, sluggish digital momentum, and geographic softness. Yet, the company is displaying better operational control, more thoughtful pricing, and a renewed focus on its core identity.

The outlook doesn’t rest on immediate revenue growth. Instead, it reflects a disciplined rebuild—aimed at positioning Under Armour on a more stable and strategically sound footing, capable of supporting gradual, sustainable growth in the coming years.