Under Armour performs “ahead of expectations” despite double-digit sales dip

Sportswear giant Under Armour has revealed that its financial results for the first quarter fiscal 2025, ending 30 June 2024, were ahead of expectations despite declining revenues.

The retailer, which is on a quest to reposition itself as a premium brand, said that revenue was down 10% to £940 million ($1.2 billion).

Wholesale revenue decreased by 8% to £533 million ($681 million), while direct-to-consumer revenue was down 12% to £375 million ($480 million). Owned and operated store revenue declined 3%. However, Underarmour chalked this up to planned decreases in promotional activities. E-commerce revenue decreased by 25%.

As for categories, apparel revenue slipped by 8 % to $758 million, footwear revenue was down by 15% to £242 million ($310 million) and accessories revenue was down by 5% to £72 million ($93 million).

Gross margin increased 110 basis points to 47.5%, driven primarily by lower levels of discounting in the direct-to-consumer business and lower product costs. This was partially offset by unfavourable foreign currency impacts.

Operating loss was £234 million ($300 million( and adjusted operating income was £6 million ($8 million).

Looking ahead to fiscal 2025, the company expects revenues to be down at a low double-digit percentage rate. Meanwhile, adjusted operating income is expected to be £109-125 million ($140-160 million) versus the previous expectation of £101-117 million ( $130-150 million).

Kevin Plank, Under Armour President and CEO, said: "We are encouraged by early progress in our efforts to reconstitute a premium positioning for the Under Armour brand and pleased with our first quarter fiscal 2025 results that were ahead of expectations.

"Our renewed energy and alignment are proving to be critical enablers as we work to deliver superior products and storytelling while driving efficiencies, reducing promotional activity, and complexity."

"With the strongest product organization we've had in many years and strengthened brand leadership, we're confident in our ability to elevate our design and innovation over the coming seasons and amplify our unique connection with athletes as their brand of choice."

This follows the news that Under Armour agreed to pay £342 million ($434 million) in June to settle a class action lawsuit made in 2017. The sportswear giant was accused of misleading shareholders to believe it had stronger revenue growth to meet Wall Street forecasts.