UNDER Armor on Friday forecast a bigger drop in annual revenue, underscoring the challenge of reviving growth as cautious consumers in North America rein in spending on athletic apparel amid persistent inflation and economic uncertainty.
The challenges come as shoppers increasingly gravitate toward newer and more innovation-focused brands such as On and Hoka, intensifying competition for established players, including Nike, Adidas and Under Armor that are working to reignite growth.
"It's a difficult sportswear market right now. The tariff situation and other economic factors are not helping," Morningstar analyst David Swartz said.
Revenue at Under Armor's North America business, its largest market, fell 9 percent to $609.8 million in the quarter ended June 30.
"For the second quarter, we expect a more challenging consumer environment to persist, particularly in North America and parts of Asia Pacific," Chief Financial Officer Reza Taleghani said on a post-earnings call.
Under Armor said it now expects full-year revenue to decline by a mid-single-digit percentage, compared with its prior target of a "slight decline."
Kevin Plank, who returned as CEO in 2024, said consumers "don't need more choices, they need better ones." The company has been pushing ahead with its turnaround plan that includes reducing its product assortment by about 25 percent and focusing on higher-priced offerings in categories such as training, running and team sports.
The company has launched new products, including training shoes "Surge 5," "Radiant TR" and baseball cleats "Leadoff Icon Mid," priced from about $30 to $275, as well as jackets, hoodies and other sports accessories, to attract younger Gen Z customers.
Under Armor said it has incurred $266 million in restructuring and transformation expenses so far and expects to complete the plan by the end of the year.
"There isn't much evidence that its turnaround efforts are having a significant impact," Swartz said.
The profit outlook includes an about $70 million benefit from refunds related to International Emergency Economic Powers Act tariff costs in fiscal 2026 and a roughly $35 million hit related to the Middle East conflict.
The apparel maker's quarterly revenue fell 3 percent to $1.10 billion, compared with analysts' average estimate of $1.11 billion, according to data compiled by LSEG, while adjusted profit per share of 5 cents beat estimates.
Shares of the company were down about 3 percent at $6.22 in afternoon trading.