Under Armour's Middle East Warning Sparks Nearly 20% Stock Meltdown

Benzinga Earnings
05/13

Under Armour, Inc. (NYSE:UA) (NYSE:UAA) shares fell Tuesday after the company reported fourth-quarter results that missed Wall Street earnings expectations and warned that Middle East-related supply chain disruptions will continue weighing on margins in fiscal 2027.

During the quarterly conference call, the company said the disruptions increased freight and sourcing costs during the quarter. Under Armour added that the conflict is expected to remain a headwind in fiscal 2027, although pricing actions and tariff refunds are expected to partially offset the impact.

Fourth-Quarter Results

Under Armour reported an adjusted loss of 3 cents per share for the quarter, missing analyst estimates for a loss of 2 cents per share. Revenue declined 1% year over year to $1.171 billion, slightly above the Street estimate of $1.167 billion.

North America revenue fell 7% to $641 million, while international revenue rose 10% to $539 million.

Wholesale revenue decreased 3% to $748 million, while direct-to-consumer revenue increased 5% to $406 million.

By category, apparel revenue was flat at $778 million, footwear revenue was unchanged at $282 million, and accessories revenue increased 2% to $94 million.

Gross margin declined 470 basis points to 42%, primarily due to higher tariffs, elevated product costs, pricing pressure and an unfavorable regional mix.

The company said it reduced stock keeping units by 25%, improved inventory quality and continued pushing premium products, including its Bounce Cotton Tee and performance footwear lineup.

Operating loss totaled $34 million. Excluding transformation and restructuring charges, adjusted operating income was $3 million.

Under Armour ended the quarter with $309 million in cash and equivalents. The company also held $605 million in restricted investments designated for repayment of senior notes due in June 2026.

Under Armour Outlook

Under Armour forecast fiscal 2027 GAAP earnings ranging from a loss of 4 cents per share to breakeven, well below analyst expectations of 25 cents per share.

The company expects adjusted earnings of 8 cents to 12 cents per share for fiscal 2027, compared with analyst estimates of 23 cents per share.

UAA Price Action: Under Armour shares were down 19.80% at $4.855 at the time of publication on Tuesday, according to Benzinga Pro data.

Photo via Shutterstock

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