Under Armour, Inc. (UA) Income Statement

The revenue decline has been consistent, with quarterly growth rates ranging from -0.6% to -11.7% over the past ten quarters, indicating a structural demand issue rather than a temporary blip. The company's heavy reliance on North America and wholesale channels, as noted in the business intelligence, likely exacerbates this trend, as retailers manage inventory cautiously. The lack of a recurring revenue stream and the recent SKU reduction plan suggest that top-line pressure may persist in the near term.

The wide fluctuation in gross margin suggests a lack of pricing power and a heavy reliance on promotional activity, particularly through the Factory House outlet channel. The 2027Q1 gross margin of 54.1% is an outlier, likely due to a favorable product mix or lower input costs, but the average over the period is closer to 47%, which is below peers like Columbia Sportswear (50.2%) and Ralph Lauren (69.9%). This indicates that Under Armour's brand strength is insufficient to command premium pricing, and margin expansion will require a fundamental shift away from discounting.

The operating margin has been negative in four of the last five quarters, with the exception of 2026Q1 which saw a 26.3% margin, likely due to a one-time gain or cost timing. SG&A expenses have remained relatively stable around $500-600M per quarter, even as revenue declined, suggesting that the cost structure is not flexible enough to adapt to lower sales. The restructuring plan aimed at SKU reduction may help in the long run, but the current de-leveraging indicates that fixed costs are a significant burden.

The cost structure is heavily weighted towards COGS, which is typical for apparel manufacturers, but the variability in COGS suggests sensitivity to input costs and promotional activity. SG&A expenses have not been reduced proportionally to revenue declines, indicating a lack of expense discipline. The company's reliance on outsourced manufacturing in Asia exposes it to freight and tariff risks, which could further pressure margins if not managed carefully.

The 2026Q1 operating income of $298.7M is an outlier, as the company has not come close to that level in any other quarter. This could be due to a favorable settlement, a one-time gain, or a significant reduction in SG&A that quarter. The subsequent quarters reverted to negative operating margins, indicating that the improvement was not sustainable. This inflection point highlights the underlying weakness in the company's core operations, which have not been able to generate consistent profitability.