Revenue Up 8 Percent; Company Updates Full Year 2018 Outlook

BALTIMORE, July 26, 2018 – Under Armour, Inc. (NYSE: UA, UAA) today announced financial results for the second quarter ended June 30, 2018. The company reports its financial performance in accordance with accounting principles generally accepted in the United States of America ("GAAP”). This press release refers to “currency neutral” and “adjusted” amounts, which are non-GAAP financial measures described below under the “Non-GAAP Financial Information” paragraph. References to adjusted financial measures exclude the impact of the company’s restructuring plans and the related tax effects, as well as adjustments to our one- time impacts of the 2017 U.S. tax reform legislation, which we refer to as the U.S. Tax Act. Reconciliations of non-GAAP amounts to the most directly comparable financial measure calculated in accordance with GAAP are presented in supplemental financial information furnished with this release. All per share amounts are reported on a diluted basis.


“Through the first half of 2018, we are making progress toward our transformation of running a more operationally excellent company while amplifying the power of the Under Armour brand,” said Under Armour Chairman and CEO Kevin Plank. “The ongoing improvements in our structure, systems and go-to-market process across our global business better position us to drive a more consistent, predictable path to deliver for our consumers, customers and shareholders over the long-term.”


Second Quarter Review


  • Revenue was up 8 percent to $1.2 billion (up 7 percent currency neutral).
    • Revenue to wholesale customers increased 9 percent to $710 million and direct-to- consumer revenue was up 7 percent to $414 million. The direct-to-consumer business represented 35 percent of global revenue in the quarter.
    • North America revenue increased 2 percent to $843 million (up 1 percent currency neutral) and the international business continued to deliver strong growth with a 28 percent increase to $302 million (up 24 percent currency neutral), representing 26 percent of total revenue. Within the international business, revenue in EMEA was up 31 percent (up 25 percent currency neutral), up 34 percent in Asia-Pacific (up 28 percent currency neutral) and up 7 percent in Latin America (up 12 percent currency neutral). 
    • Apparel revenue increased 10 percent to $747 million, driven by strength in training and running. Footwear revenue was up 15 percent to $271 million with strength in running and team sports. Accessories revenue decreased 14 percent to $106 million due to softer demand. 
  • Gross margin decreased approximately 110 basis points to 44.8 percent due to inventory management initiatives and a $6 million impact related to restructuring efforts. Adjusted gross margin decreased 60 basis points to 45.3 percent driven predominantly by inventory management initiatives. 
  • Selling, general and administrative expenses increased 10 percent to $553 million, or 47.0 percent of revenue driven by continued investments in our direct-to-consumer, footwear, and international businesses, along with a reserve related to a commercial dispute. 
  • Restructuring and impairment charges were $79 million. 
  • Operating loss was $105 million. Adjusted operating loss was $20 million. 
  • Net loss was $96 million. Excluding the impact of the restructuring plan, adjusted net loss was $34 million. 
  • Diluted loss per share was $0.21. Adjusted diluted loss per share was $0.08. 
  • Inventory increased 11 percent to $1.3 billion. 
  • Cash and cash equivalents increased 19 percent to $197 million.

2018 Restructuring Plan


On February 13, the company announced a 2018 restructuring plan, which detailed expectations to incur total estimated pre-tax restructuring and related charges of approximately $110 million to $130 million. After further review, the company has identified approximately $80 million of additional restructuring initiatives and now expects to incur approximately $190 million to $210 million of pre-tax restructuring and related charges in 2018. In the second quarter, we recognized pre-tax costs totaling $85 million consisting of $64 million in cash related charges and $21 million in non-cash charges. Based on the updated restructuring plan, in 2018 the company expects to incur: 


  • Up to $155 million in cash related charges, consisting of up to $75 million in facility and lease terminations and up to $80 million in contract termination and other restructuring charges; and, 
  • Up to $55 million in non-cash charges comprised of up to $20 million of inventory related charges and up to $35 million of asset related impairments. Plank concluded, “As we work through our multi-year transformation, we continue to proactively attack underperforming areas of our business including our SG&A cost structure and inventory. All of this will help create a better and stronger Under Armour through even greater operational efficiencies. We are unwavering in building our global brand and confident we’re on the right track.”

Updated Fiscal 2018 Outlook  


  • Net revenue is now expected to increase approximately 3 percent to 4 percent reflecting a low to mid-single-digit decline in North America and international growth of greater than 25 percent. From a product perspective, apparel is expected to grow at a mid-single digit rate, footwear at a low-single digit rate, and accessories is expected to decline at a low-single digit rate. 
  • Gross margin is now expected to be flat to down slightly versus the prior year rate of 45.0 percent. Adjusted gross margin is now expected to improve slightly compared to 2017 as benefits from product costs and lower planned promotional activity are offset by increased inventory management actions. 
  • Operating loss is now expected in the range of $50 million to $60 million. Excluding the impact of the restructuring plan, adjusted operating income is expected to be $130 million to $160 million. 
  • Interest and other expense net is expected to be approximately $45 million. 
  • Excluding the impact of the restructuring efforts, adjusted diluted earnings per share is expected to be in the range of $0.14 to $0.19.
  • Capital expenditures are now planned at approximately $200 million.

Conference Call and Webcast


Under Armour will hold its second quarter 2018 conference call and webcast today at approximately 8:30 a.m. Eastern Time. The call will be webcast live at http://investor.underarmour.com and will be archived and available for replay approximately three hours after the live event.


Full Earnings Report

Download the full earnings report in PDF format here.

Under Armour Contacts:


Lance Allega VP, Investor Relations (410) 246-6810


Kelley McCormick SVP, Corporate Communications (410) 454-6624