Under Armour, Inc.UAANYSE
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Operator: Good day. And welcome to the Under Armour Third Quarter 2026 Earnings Conference Call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the appropriate key. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then 1 on a touch-tone phone. To withdraw the question, please press star then 2. Please note this event is being recorded. I would now like to turn the conference over to Lance Allega, Senior Vice President of Finance and Capital Markets. Please go ahead.
Lance Allega: Good morning. Welcome to Under Armour's fiscal 2026 third quarter earnings call. Today's call is being recorded and a replay will be available at our Investor website shortly after it ends. Joining us this morning are Kevin Plank, Under Armour's President and CEO, and Dave Bergman, our CFO. Before we begin, please note that certain statements made on today's call are forward-looking as defined under federal securities laws. These statements reflect management's current expectations as of February 6, 2026, and are subject to risks and uncertainties that could cause actual results to differ materially. For a detailed discussion of these factors, please refer to this morning's press release, filings with the SEC, including our most recently filed Form 10-Ks and Form 10-Q, and other public disclosures. In today's call, we may reference non-GAAP financial measures. We believe these metrics offer additional insights into the underlying trends of our business when considered along with our GAAP results. Reconciliations of these measures to their most comparable GAAP metrics are included in the press release and can be found on our investor website at about.underarmour.com. With that, thank you for being here and your interest in Under Armour, and I'll now turn the call over to Kevin.
Kevin Plank: Thanks, Lance, and good morning to everyone taking the time to join us today. Under Armour is a global performance brand with opportunity and relevance that is both present today and capable of significantly scaling as we find our operating rhythm. Entering the next phase of our turnaround, the focus is on execution. We're not declaring all the work finished yet, but we are making real progress. With a disciplined strategy, structure, and team now in place, that progress is becoming more consistent. For too long, the organization carried unnecessary complexity. Too many handoffs, too many approvals, too much focus on one's individual job versus the broader brand objective we're trying to solve for: having athletes fall in love and know why they need Under Armour. Since coming back to the CEO chair nearly two years ago, we have narrowed our focus, moved decisions earlier, and reduced friction across the system. That work has simplified the operating system. Inventory is down year over year. Assortments are tighter. Planning is more precise, and we have additional opportunity to continue to improve. The structure of the company has been addressed and is enhancing our speed to market, SKU productivity, athlete insight, and especially accountability for all the above. In the third quarter, although we had a few nonrecurring impacts in our GAAP results that are frustrating, our adjusted results came in ahead of expectations across most line items. We modestly raised our full-year adjusted operating income outlook. This is a good proof point that our underlying business is becoming steadier, and we're seeing fewer surprises and greater predictability, which is where we believe we should be at this stage of our turnaround. Looking at our journey, fiscal 2025 is about assessing our greatest needs to address our operating infrastructure and stand up the expertise necessary for our reset, with a few additions from outside, but primarily from within the organization. For Under Armour by Under Armour. Years of consulting and rented in...
David Bergman: ...took us on a path that was not the unique brand position and engine that allowed UA to cut through in the first place. Fiscal 2026 was about implementing that structure, including the foundation category-managed operating model, a renewed go-to-market, and a clearly articulated strategic business plan. We're now building on that infrastructure by changing nothing, running that same play again in fiscal 2027 and beyond, becoming sharper as the kinks work through, which we are still feeling some of, but moving forward. What is new has been layering in the how we are running the business. The operating principles that will manifest the thematic of selling so much more, of so much less at a much higher full retail price. I spent the month of January presenting these holistic principles called unleashing intentionality, in dozens of individual and group settings to teammates and partners. Taking this message directly to key stakeholders, ensuring our entire offense and defense know exactly who we are, what we are building, and how we plan to execute to achieve our mid and long-term ambitious goals. To support this next phase, we recently made targeted leadership changes to accelerate speed. Kara Trent is now Chief Merchandising Officer, with end-to-end responsibility for product mix, pricing, and margin performance. Adam Peak has been named President of The Americas. Eric Glitke is now Chief Marketing Officer and EVP of Strategy. And Yaseen Sade has transitioned to an external senior advisor role to ensure design continuity. These changes reflect exactly where we are in the transformation, moving with tighter alignment and a more decisive operating cadence. This work is not done on a spreadsheet but by bringing our teams together, removing slow process barriers, and facilitating conversations to create a much more intentional line of products across apparel, footwear, and accessories. Products that we can be famous for while highlighting the areas we already are, like UA heat and cold gear. The recent org changes now have all product teams in one conversation, including physically in one room sharing information to remove redundancy and increase speed. In addition to the 25% of SKUs we began eliminating in fiscal 2025 that is now complete, we have additional opportunity to be even more efficient. Not only with SKUs and styles, but the raw materials that support the products we make. More to come on this in future calls. But the new structure is actively digging into this work, and the early reads are incredibly positive.
Kevin Plank: Looking ahead, key indicators are moving in the right direction. Brand health in the US continues to improve; awareness, consideration, and engagement are trending higher, particularly among younger athletes. Digital engagement remains strong, and when products, storytelling, and distribution align, we see a positive consumer response. So let's talk about product, because product is everything. And at Under Armour, we say that product is our currency. It always has been the engine that will ultimately drive this turnaround. This is also the hardest part of the transformation. There was no switch to flip. We are rebuilding capability, discipline, and credibility inside the organization and in the market. That work takes time. And importantly, we're now seeing real evidence that it is working. Across apparel and accessories, the proof points are starting to stack up. Base layer remains a steady engine for the business with heat and cold gear standing out. New styles, refreshed design language, and modern colorways are driving higher ASPs and strong double-digit growth in these products. That matters because it's an early signal that intentional product thought leadership can help us rebuild pricing power. We're seeing similar momentum elsewhere. ICON fleece is performing well, and our women's Meridian franchise continues to gain traction as new silhouettes and colors attract a broader, more engaged consumer base. These products reflect a stronger point of view and improved execution across categories. Spring/Summer 2026 is another meaningful step forward. You'll see more elevated products entering the market with a more consistent cohesive design language. We're introducing improved women's Vanish Elite collection, alongside continued evolutions across icon, sportswear, and footwear. In accessories, our Stealthform hat and no way backpack continue to push the price ceiling, supported by premium performance attributes in a clean, focused product story. When design intent is strong and segmentation is disciplined, consumers respond. Sell-through for newer franchises is improving year over year. Full price realization is trending higher even from a lower base. Wholesale partners are engaging more positively with upcoming assortments and buying. The shift in the footwear, which has been on a long challenging recovery path. I want to be very direct about it. Year-to-date sales are down about 14% reflecting structural issues we are actively unwinding. For multiple seasons, we tried to grow by expanding the assortment. More styles, more price points, more incremental updates. Without consistent demand over the scale to support it. That diluted volume pressured margins and increased inventory risk. We are addressing each of these. We're exiting low productivity styles, reducing redundant SKUs, and eliminating launches that lack a defined role, strong margin profile, or scalable growth opportunity, with the primary criteria being every product must have a reason to be built by Under Armour. It must have a story. In parallel, we're tightening our price tier architecture and concentrating investment behind fewer higher impact franchises that can win consistently. This disciplined approach sharpens our focus areas across training, running, and sportswear, while building momentum in team sports where we are increasingly confident in both our product and our growth trajectory, all of which should drive improved returns over time. We're already seeing proof points. In run, the Velocity Elite 3 delivered strong sell-through at launch and run specialty. And sharper segmentation across the franchise is driving healthier performance at more accessible price points. With velocity distance and Pro 2. The Acerta 11, launched in November, we talked about on the last call, continues to perform really well and is delivering a meaningfully higher ASP versus the assert 10 as we predicted. And as we outlined last quarter, we positioned this velocity run-inspired redesign in a Charge plus midsole as an outstanding $75 accessible price point offering. Rowan Los Angeles Dodgers back-to-back World Series champion Freddie Freeman as a product ambassador. Starting to drive increased demand in a millions of annual units program. This reflects our strategy in action. Simplifying the line, strengthening franchises, and reinforcing Under Armour's running credibility. In sportswear, just this week, we launched the HP Low, a $100 basketball-inspired silhouette built for all-day comfort. Pairing a premium leather upper with a cushioned court-to-street ride and a bold expression of the UA logo. The price-to-value of this shoe is off the charts and believe that it can be a gateway product for Under Armour to take share in court shoes and sportswear. Coming off our fall launch, the $120 solo model continues to build momentum. Additionally, we introduced the ARC 96 at $125 a modernized run-inspired silhouette that blends premium materials with elevated cushioning the distinctive design language. With social response and sell-through as key indicators, we're very encouraged by the evolution of these sportswear styles, all excellent examples of what's to come. While the reset of our footwear business is still underway, the actions we're taking combined with strong early signals for our innovation and design-led product give us growing confidence that we can stabilize the footwear category next year rebuild momentum with consumers and wholesale partners. Overall, our products are becoming stronger assets, not just something we sell, but primary driver of demand and value creation. We're building more intentional product segmentation across innovation levels, price points, and usage models. Every product is gaining a defined consumer role and will have a distinct identity. Over time, this approach will deepen consumer understanding of the brand support more consistent pricing discipline. Pathway to improve demand and margin contribution. Our storytelling is also getting sharper. We're moving up with greater purpose, connecting the right products to real sports moments meeting athletes where they are and driving higher engagement per dollar. Social is leading that effort particularly on TikTok. Our influencer strategy continues to expand reach and reinforce credibility. While activations like We Are Football and Run Club events with recording artist, Gunna, are evolving into community-led platforms that generate authentic energy and momentum for the brand. Team sports remain a core driver of momentum and brand authority. In American football, we continue to deepen our presence through authentic on-field storytelling and partnerships, including the launch of the first overtime national high school championship at our UA Stadium here in Baltimore, and expanded collegiate relationships with Georgia Tech, the first Under Armour school to wear Under Armour in 1996. And the University of Wisconsin, a long-standing partner. This week, we launched our spring 2026 activation spotlighting women's flag football, the next era of the game. Debuting just this past Wednesday on National Girls and Women in Sports Day. Click clack, the next era, reimagines our iconic original 2006 ad in a fresh Gen Z forward way. With the sport exploding in the 2028 Summer Olympics, on the not-so-distant horizon, UA athletes, Ashley Klam, Diana Flores, Lynne O'Brien, and Isabella Garrasi helped set the pace for the sport. The message is clear. Flag football is here to stay. At the highest level of the sport, our on-field credibility in the NFL continues to build spanning established athletes like Philadelphia Eagles, Davonta Smith, and rising stars such as Seattle Seahawks rookie, Nick Amonowari. In his first year in the league, Nick will take the Super Bowl stage this Sunday, a powerful and energizing milestone that underscores the momentum of our athlete roster and the growing relevance of our brand at the very top of the game. We're also investing in the next generation of athletes. Our UA Next All America Game Week showcased top high school talent across football and volleyball. Broadcast on ESPN and where we sold out the product capsule. We signed our first click clack NIL class and continue to build our presence in track and field as we prepare to host the inaugural UA Track and Field Nationals this spring at IMG Academy in Florida. This month, UA is on the world stage. In Italy, Lindsey Vonn, our longest-serving athlete. Will compete for Team USA and Kayle McCar will take the ice for team Canada at the Winter Olympics. Then next month, that momentum carries as the World Pass Baseball Classic. Many of our iconic UA Major League Baseball players will compete at the highest level on yet another global stage. In EMEA, momentum continues to build across global football. Activations including the UA Mansory collab, delivered strong engagement and sell-through. In our full funnel, be the problem football, and unapologetic women's campaigns are outperforming benchmarks and strengthening our brand's cultural relevance. We don't see these as isolated moments. We see them as repeatable proof points that our brand is regaining momentum at scale. This authenticity enables UA to meet approximately $5 billion in annual consumer demand while rebuilding trust, and deepening durable connections with athletes around the world. This is a foundation for sustained relevance, demand stability, and long-term value creation. Switching next to the regions. North America is beginning to turn the corner. We believe December marks the bottom of the reset. Traffic, yes, remained soft, but underlying indicators are improving. We continue efforts to strengthen our premium online position even amid a promotional environment. E-commerce conversion is up and factory house performance is improving. Digital engagement tools such as SMS and TikTok shop are delivering strong growth. In wholesale, our focus remains on rebuilding the right partner relationships. And we're making real progress. A Q3 product campaign led by Cold Gear compression with DICK'S Sporting Goods delivered solid results, and its partners gained confidence in our product and storytelling collaboration is growing. And we are encouraged by how our fall order book is shaping up. In EMEA, the business remains solid and continues to be the clearest expression of our premium strategy in action. Performance is being driven by disciplined execution, across the region with a more intentional approach to promotions that protects brand equity and pricing integrity. At the same time, solid wholesale performance is reinforcing the quality of our partnerships and the strength of demand in key markets. Together, these factors are delivering consistent reliable results and underscoring the resilience of the business in the region. In APAC, where I spent seven days in January visiting five key cities with our teams and partners, we continue to make progress on our reset. And the region remains a critical long-term growth opportunity. There, we're taking decisive actions to manage inventory, sharpen assortments, and elevate the retail experience. Together, these efforts are positioning APAC for stabilization over the next twelve months and more sustainable growth beyond. So to close, there are no shortcuts in a turnaround like this. Progress is earned through discipline and consistent execution. The business is simpler. Revenue volatility is stabilizing. The margin trajectory is improving. Inventory is cleaner. And Under Armour remains a brand athletes actively choose with authenticity and a competitive edge that would be difficult, if not impossible, to replicate. Under Armour is unique. It just is. Now if there's one thing to take away from today's call, we believe that the most disruptive phase of our reset is now behind us. We're past the period of structural change and operating noise and the organization is now focused squarely on execution and stabilization. When we look at the fundamentals, they are where we expected them to be at this point in the reset. Our operating model is in a much better place. Our business plan is well defined and increasingly repeatable. And our go-to-market approach is more focused and disciplined. Each is making progress, and each is reinforcing the other. The strategies we're executing are strengthening our foundation and positioning Under Armour to deliver more consistent performance and long-term value creation going forward. With that, I'll turn it over to Dave to review the quarter and our outlook. Thank you.
David Bergman: Thanks, Kevin. Turning to our third quarter performance, we met or exceeded our outlook across all major line items. This performance reflects the discipline, focus, and growing consistency in execution as the turnaround continues to progress. While there was some non-recurring noise in the reported numbers for the period, the underlying performance of the business remains solid and consistent. With that context, I'll start at the top of the P&L and walk through the details. Revenue declined 5% to $1.3 billion, slightly better than the outlook we shared in November. The outperformance relative to our plan was partially due to approximately one percentage point of growth from a timing shift of some wholesale deliveries from Q4 into Q3. Digging into the results by region, North America revenue declined 10% primarily due to a decrease in wholesale, with a slightly smaller decline in our direct-to-consumer business. In EMEA, revenue increased 6% on a reported basis and 2% on a currency-neutral basis, with growth in both wholesale and direct-to-consumer during the quarter. APAC revenue decreased 5% on both reported and currency-neutral basis, marking a sequential improvement from the year-over-year declines we saw in the first half of the fiscal year. The Q3 decline was driven primarily by our full-price wholesale business while DTC revenue was down only slightly, partially offset by positive licensing growth. And in Latin America, revenue increased 20% or 13% on a currency-neutral basis, driven by balanced growth throughout the business. From a channel perspective, wholesale revenue decreased 6% due to lower full-price and third-party off-price sales, partially offset by growth in our distributor business. Direct-to-consumer revenue decreased 4% primarily due to a 7% decline in e-commerce revenue. Sales in our owned and operated stores were down 2% in the quarter. And licensing revenue increased 14% driven by the strength of our international licensees and modest growth in North America. Finally, by product type, apparel revenue decreased 3% due largely to softness in train, golf, and run, while sportswear was flat for the quarter. Footwear revenue decreased 12% reflecting declines across most categories partially offset by growth in outdoor. And accessories revenue decreased 3%, driven largely by declines in golf, outdoor, and team sports, with a partial offset from growth in sportswear. Third-quarter gross margin declined 310 basis points year over year to 44.4%, in line with our outlook. This decline was primarily driven by 180 basis points of supply chain headwinds, including 200 basis points of pressure from higher U.S. tariffs, 140 basis points from pricing amid a more promotional environment in North America, and a combined 40 basis points from unfavorable channel and regional mix. These headwinds were partially offset by 30 basis points of foreign currency impacts and 20 basis points from a more favorable product mix. Turning to SG&A, third-quarter expenses increased 4% to $665 million driven primarily by a $99 million litigation reserve expense related to a previously disclosed insurance carrier dispute. Within SG&A, we also recorded approximately $3 million in transformation costs related to our fiscal 2025 restructuring plan. Excluding these items, adjusted SG&A was down 7% to $563 million mainly due to lower marketing spend driven by timing with a greater share of our fiscal 2025 marketing investment recognized in the second half, along with continued benefits from restructuring actions and disciplined management of discretionary costs. In the third quarter, we recorded $75 million of restructuring charges and $3 million in transformation-related SG&A expenses, totaling $78 million under our fiscal 2025 restructuring plan. Since the plan's inception, we have incurred $224 million in charges and transformation expenses, of which $89 million are cash-related and $135 million are non-cash. We continue to expect total charges and expenses under the plan to be up to $255 million with any remaining amounts expected to be incurred by the end of 2026. Thus far, the actions we've taken under the plan to streamline our business have resulted in $35 million in savings in fiscal 2025, and are on track to deliver an additional $55 million in fiscal 2026. Moving down the P&L, we reported a third-quarter operating loss of $150 million. Excluding the litigation reserve expense, transformation expenses, and restructuring charges, our adjusted operating income was $26 million, again exceeding our outlook. The bottom line, our reported diluted loss per share was $1.01. This result includes the impact of the insurance appeal decision, transformation expenses, restructuring charges, and a $247 million non-cash valuation allowance against certain U.S. federal deferred tax assets. Regarding this valuation allowance, accounting rules required us to reduce the value of our U.S. federal deferred tax assets and record a non-cash tax expense due to cumulative GAAP U.S. losses over the past three years. These losses have been driven largely by restructuring and impairment charges, litigation reserve expenses, and other non-operating items. Importantly, this valuation allowance has no impact on current cash flow, does not signal deterioration in the underlying business, and should reverse over the next few years as U.S. profitability improves. Excluding the items discussed earlier and the U.S. federal deferred tax asset valuation allowance, our adjusted diluted earnings per share for the quarter was $0.09. Separately, part of our Q3 adjusted EPS overdrive relative to our outlook was due to a favorable tax development on the IRS's approval of a tax method change that mitigated the use of our U.S. losses to offset foreign earnings under the U.S. GILTI provisions. As a result, our full-year fiscal 2026 non-GAAP estimated effective tax rate is lower than originally anticipated and more reasonable. So with that, we recorded a cumulative three-quarter catch-up tax benefit in the third quarter. This tax update accounted for approximately $0.06 of our EPS in the quarter. Now, turning to the balance sheet. Third-quarter inventory was down 2% year over year to just over $1 billion. We ended the quarter with $465 million in cash and cash equivalents and $600 million in restricted investments. As a reminder, that $600 million is fully set aside and dedicated to covering all remaining principal and interest on our senior notes due in June. These restricted investments are not available for general use and should not be viewed as part of our operating liquidity or discretionary debt profile. Furthermore, we continued to prioritize balance sheet strength during the quarter, including repaying approximately $200 million of revolver borrowings and ending the period with no amounts outstanding under our $1.1 billion revolving credit facility. As a result, we entered the final quarter of this fiscal year with a strong liquidity position and meaningful financial flexibility with more than sufficient resources to meet all expected obligations. Now moving to our fiscal 2026 outlook. With one quarter left in the fiscal year, we've updated our expectations largely toward the high end of our previous ranges. Breaking that down further, we now expect full-year revenue to decline approximately 4% compared with our prior expectation of a 4% to 5% decline. This reflects our expectation that North America revenue will decline approximately 8% and APAC revenue will decline approximately 6%, partially offset by growth of approximately 9% in EMEA. This implies a meaningful improvement in fourth-quarter revenue trends as we continue executing our strategies and move toward the stabilization we expect in fiscal 2027. Turning to gross margin, we now expect the full-year rate to decline by approximately 190 basis points compared with our prior outlook of a 190 basis to 210 basis point decline. Drilling down further, U.S. tariffs will drive most of the decline, along with unfavorable channel and regional mix and pricing headwinds. These pressures are partially offset by foreign currency tailwinds and a more favorable product mix. We remain highly focused on controlling costs and expect adjusted SG&A expenses to decline at a mid-single-digit rate, unchanged from our prior outlook. With even greater confidence in our ability to leverage given the slight improvement in the revenue outlook. This implies a considerable decline in fourth-quarter SG&A expenses driven primarily by year-over-year marketing timing and lower compensation-related costs. This translates to an expected adjusted operating income of approximately $110 million at the high end of the $95 million to $110 million outlook we provided in mid-November. The bottom line, we now expect adjusted diluted earnings per share of $0.10 to $0.11 driven in part by the favorable tax planning developments I noted earlier. These updates are expected to yield a full-year fiscal 2026 effective tax rate roughly in line with the fiscal 2025 rate. In closing, we are operating with focus, discipline, and growing confidence as we complete a pivotal year in Under Armour's transformation. Our third-quarter performance reflects meaningful progress in simplifying the business and driving more disciplined execution, supported by a leaner, more agile operating model. The foundation continues to give us flexibility to manage near-term challenges while positioning the company for improved financial performance over time. While work remains, we believe the most disruptive phase of this reset is behind us. And with a clear strategy, disciplined capital deployment, and continued focus on cost optimization and margin expansion, we are confident these actions will better position us to drive sustainable profitable growth and shareholder value over the long term. Finally, before we close out today's prepared remarks, this being my last call in this role, I want to pause and say thank you. With a special thanks to Kevin, our entire Board, and to all my teammates around the world. After twenty-one years at Under Armour, including nine as CFO, I've had the privilege of working alongside extraordinary teammates who bring passion, resilience, and an unwavering commitment to this brand every day. Together, we have navigated periods of growth, transformation, and real challenges. We have done so with locked arms in the humble and hungry mentality that makes this place so special. As we work through the coming CFO transition, with Reza joining the brand, I do so with complete confidence in our teams. And in the strength of the foundation we have now established together. We are reaching that crucial turning point. And thus I believe Under Armour's best days are still ahead. With that, we'll open the call to questions. Operator?
Operator: We will now begin the question and answer session. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw the question, please press star then 2. Our first question comes from Simeon Siegel with Guggenheim. Please go ahead.
Simeon Siegel: Thanks. Hey, guys. Morning. Dave, just want to say it's been great working with you. Best of luck on your next chapter.
David Bergman: Thank you.
Simeon Siegel: Kevin, your December comment is interesting and encouraging. Can you speak to what makes you confident about that the quarter was the lowest revenue decline for North America and just that the region and Under Armour overall will see stabilization in FY '27? And then along those lines, just as you think about this path forward, I think you mentioned stabilization in footwear in '27. Can you elaborate a little bit on that more? Thank you.
Kevin Plank: Yeah. Thank you, Simeon. And, let me just start with leadership. First of all, I'm becoming more and more proud, I think, of the ecosystem that we built here at UA to be able to have internal talent like Kara Trent be able to move from a merchandising role into America to a similar one in Europe, to heading up Europe and then having the ability to bring her back here a little more than two years ago. And I think stabilization was something that was her number one goal, and we did a, care delivered and along with an amazing team of people, that just made that happen. And then I also just want to make note that the credit of a fourteen or fifteen-year Under Armour vet in Adam Peak who we brought back to the brand about eleven months ago and have the ability to create that kind of clarity and role and succession. So I think it starts with, the confidence we have in giving stability to our partners. Within that, you know, structurally, believe that we now have the right model in place. I think that we're attacking the right issues. And that, of course, begins with product. We clearly have done a really solid job in laying out our design ethos and a language that consumers can look to, expect, and begin to make more and more repeatable. As I said, we started with our concept of winning with the winners, and that's getting behind heat and cold gear. And then meanwhile, we're introducing new styles and silhouettes that, again, just becoming more consistent with. From a storytelling standpoint, I think it's you're just starting to feel the brand more. And that goes to the launch we did with the women's flag football campaign on Wednesday, and please take a chance to look at our investor relations page and see the recent spot that we just put out, which is pretty impressive. Probably the most telling thing, though, is going to be no matter what I say, Kara walked into a pretty tough situation, and we were just looking at declines especially at the wholesale level, which is always a great indicator of how a year is going to turn out. And I can say, definitively for the first time in quite some time, we're no longer looking at significant declines. And, obviously, I'm hedging my statements there. But we're at a place that we like the way the order book is shaping up right now. That also just goes back to just pure relationships with partners because, hopefully, you can hear it in our voice. And if you were watching, you could see it in our eyes. But there's just a different level of confidence, swagger, whatever you want to call it, which I think leads to the most important indicator, which is just culturally. This business is feeling it. That's exuding out. It's exuding through the desire of the number of phone calls we get of people that want to be here. And it's just a trend. It's hard to put it into words. And after twenty years public and celebrating thirty years this year as a business, I've just seen a lot. So feel very good about what the North American position looks like. Moving on to footwear. As I said, we're not trying to hide anything here. Footwear is a billion-plus dollar business for us. We believe has the opportunity to be much larger. As we compare ourselves to others in our space, we're seeing other partners or other brands do a lot more with a lot fewer items. That's pretty narrative to the way that I'm driving across the organization right now. Is how can we just skinny up. I think I did a pretty good job covering it in my prepared remarks. Of let's just stop trying to chase volume through additional units. Let's get behind. Let's get clarity with the way that works from the product to the story to the distribution. And I think that our new operating model, what we spent the majority of calendar year 2025 doing implementing, and then running now for a year. I think we're going to start seeing those benefits. So I can talk about the authenticity on field, and I think we made a good job making the statement that Under Armour's authentic athletic credibility is something which is nearly impossible to recreate. So we're going to lean there. We're going to leverage and you're going to see, you know, really clear ideas, like, when we talk about things like running we have a really clear point of view of who we are and run. Know, we build running shoes for athletes that are running to train for their sport. In addition to that, we also have the ability to make Formula One race cars like the Velocity 3 at $250 per share in Lokate. But a part of it is some of the work that our team has been digging into we just took up the Velocity family that had six shoes in its franchise ranging from a 110 to $250. We just went from six shoes in that franchise to four. Being more targeted. Being more deliberate with the storytelling that we're going to do and put behind it, which makes it easier for, a, our teams to be able to build b, our sales team be able to sell, see the wholesale partners, be able to write orders for, and most importantly, the consumer to be able to make an easy purchase decision with a really clear point of view from the brand. So, in some instances, and maybe just the last point here, when I think about it, I mentioned sportswear and talked about three price points from a 100 a hundred and twenty, and a $125 with the Solo, the HP Low, and the footwear that we now have in place there. We're just we're getting very intentional. That word is no accident on this call. You'll hear it over and over. And it's basically it's tattooed into anyone who walks through this building. So, we're doing a good job doing that. So thank you for that question, Simeon.
Simeon Siegel: That's great. Your excitement is really clear. Best of luck for the rest of the year.
Kevin Plank: Thank you.
Operator: Our next question comes from Jay Sole with UBS. Please go ahead.
Jay Sole: Thank you so much. Kevin, you mentioned that North America is beginning to turn the corner and the wholesale partners are engaging. You're seeing the fall order book shaping up nicely. I'm wondering if all that progress, that operational progress in North America is also transferable to Europe and the APAC regions. Are you seeing progress in those regions as well? Do you expect sequential improvement as we go through, you know, calendar 2026?
Kevin Plank: Yeah. Thank you, Jay. EMEA has been a strong suit for the company for quite some time, and delivering no less this year with about 9% growth there. So we really like the team. Again, it's the consistency that we have, a, in the team on the ground, the leadership of, again, being able to move in, another Under Armour legacy athlete like Kevin Ross into the leadership position following Kara has been a real asset. Relationships there have really never been stronger. And calling out specifically JD Sports and Sports Direct, the buy-in, the partnership is something that, you know, they're really getting behind the brand because we've been delivering, and we've been consistent. And in places like France where we're probably the number one underground brand in the country, we're seeing that begin to translate out. At the same time, EMEA is becoming more and more promotional particularly in The UK, which is our largest market. So it's something we have our eye on. And what you're seeing, frankly, from the other brands is there's a lot of people that are out there buying business. So we know that that does not work. And so we're really holding the line, I think, for being opportunistic where we can or more importantly, maybe we have to in some instances. But, you know, we like what EMEA is doing. We believe it will continue to grow for us. We're not sure at what levels right now as we think and look out into the new year. But it's certainly an area of strength for us. And, you know, I guess I get to sit here like a bit of an old hat now, thirty years doing this, where I just look at things of progress. But, you know, that feeling from the team, I'm going to be over in Europe next week and get to see Lindsey Vonn hopefully ski and win and compete and win some gold. So and I'll be visiting our office in Amsterdam too and delivering the unleashing intentionality directly to our team too. So, we like what's happening in Europe. Again, we're not declaring victory anywhere. What you see is you feel a brand that's it's I think we're right where we're supposed to be at this moment in our turnaround.
Jay Sole: Got it. Thank you so much.
Operator: Our next question comes from Bob Drbul with BTIG. Please go ahead.
Bob Drbul: Hi. Good morning. I guess just Kevin, you think about the go forward especially in footwear, how are you thinking about segmentation in a pretty competitive market? Is increased penetration and success of better and best to stabilize is that the key to stabilization here? Or will it be good level driven? Thanks.
Kevin Plank: Yeah. We've used a vernacular of good, better, best of really just thinking about the line that's been critical, as we've been working through this reset. As I said in the past, we've made a lot of good. We've made something better and nowhere near enough best. Now if you ask me for our druthers, we sit at $5 billion-ish in revenue. We'd love to maintain our good. Of course, be opportunistic where we can. But we really like to concentrate our growth at the better and best level. Frankly, those clear lines of segmentation have not been there. And as we said, going through this premiumization, as we're really focusing. And so even with things I gave the example about our velocity franchise earlier. Clear segmentation is there. And what I'll get into maybe a little bit later, is as we're thinking about the way that we're approaching this is becoming more consistent for the consumer. You know, I think one thing that I'm driving very much so is our global continuity. And what's ironic is that in a brand that was founded effectively on two products, if not two fabrics, heat gear and cold gear, if you ask today what our two most important franchises that we have, it's heat gear and cold gear. Then we make a lot of other stuff. So number one, we want to go where the money is. We want to leverage those places where we're already currently winning. And so establishing clear good, better, best that compression category, that base layer category, make sure that we continue to win there. And then we're looking where we can create extensions. What we don't want to be we're not interested in being a fashion company. We'll be fashionable. But we're looking for more continuity where today, we're carrying a global commonality of a number that's somewhere in the twenties. Meaning that each year or if you went to each region between APAC, EMEA, and The States, you'd find about 20% commonality in stores. We're looking to drive that much higher with a much more consistent brand voice and making sure that we're lining up with the distribution that we have because I think it's a unique position of our industry that sports brands especially, you know, we've got the ability to sell at good. And as long as we have the quality and we have product that can compete, we can do better and best very well. So you'll see a much better and broader offering. But not unlike the example I laid out in our footwear with some of our sportswear styles including the Arc 96, the HP Low, and the Solo. We're looking to get into that business, and we're not coming in at a $160. We're being very thoughtful about the way we're approaching it because our footwear ASP, which as you've heard is my number one driver, I'm thinking about how we can grow the business. And we have the organization thinking about it. It's been a number with it that hasn't been carrying three digits. And so we're looking to start building a much stronger platform a $100 plus in footwear, which may be a good, good carryover from the last question too.
Bob Drbul: Thank you. Dave, good luck.
David Bergman: Thank you.
Operator: Our next question comes from Sam Poser with Williams Trading. Please go ahead.
Sam Poser: Thank you for taking my questions. I have a handful. But one, Kevin, you talked a lot about the product. You talked a bit about the storytelling. Can you discuss sort of what you're doing to create I just watched the ad very quickly, but what you're doing to create more of an emotional connection both with your performance product and then with your product like the HP and Sola and some of that better those better kinds of introductions both in footwear and apparel.
Kevin Plank: Yep. Thank you, Sam. One thing is certain is that the world does not need another capable apparel and footwear manufacturer. The world needs hope and they need a dream, and that means that it's our job to make them feel something when they participate with our brand and it's that little girl or little boy that maybe strap it on their first Under Armour compression shirt and feeling like they just put on a superpower or sliding a shoe on their foot. We've got opportunity. And I don't think that we've maximized that opportunity yet. I was talking about in the sportswear categories, you can see is that the price to value in things like that new HP Lowe shoe at a $100, it is extraordinary. And so that is incredibly intentional from the brand and saying, we need to get them to look. And if you check the site and say, there's nobody better at you than doing that, and find out what people are saying about it. It's what do you think of this UA shoe? And then they're sort of eye-popping and saying, wow. That's a $100. I think people have been critical of us, and we've been critical of ourselves of improving the price to value relationship of the products that we put out there. So a, the product has to be there. Then we have to give them a reason to wear the product. Our authenticity with athletes and teams and leagues all over the planet are something that give us a global presence. But as you know, it's about winning here in The States, so finding that credibility. So we're taking a very deliberate city attack strategy, making sure we get things like sportswear in there. Not to be lost on that, and the reason that people buy our sportswear is because we are authentic. Because we are on field and we have a great positioning. But I think when you look at the levers that will drive that, it's athlete credibility, it's clever and inspirational imaging. And it's confidence, Sam. It's just confidence from us. I think that's the one thing that you see of us being the first ones to really drive and get behind, women's flag show it in such an aspirational way. We think, a, we can invite new young women and inspire them and give them the confidence to participate in the game. That we think will help their overall self, is the thing that helps us show up here and go to work every day, and be so passionate about what it is that we do. So brands need to make you feel something. I certainly feel that that commercial some of the feedback we've had in just a few days from young women that are just sending thank yous and watching the handles of some of the incredible young stars that we have featured in the commercial, like Ashley, they're just these letters that are saying, thank you so much for doing this. You've inspired me. I'm going to go take a chance, and I want to be an athlete now. That you'll see more and more of that where product attributes are important. Having our naming architecture, etcetera, in place matter. Making consumers feel something is where we're focused for the brand.
Sam Poser: Thank you. I just want to follow-up. In your flagship store in Baltimore, you have all those high school local high teams who have their helmets up. When I was there, you had the two high schools that I forget what that was called, but the two high schools that are like the rivalry, I think it was. And I'm wondering if you're thinking of applying that both in other full-line stores, but as well as the outlet stores. And then second and then the other question is, if somebody can break down sort of APAC by country and three, the management realignment, with Yassine taking an external role. If you could talk a little bit about that, that would be great. Thanks.
Kevin Plank: Well, Sam, with in North America alone, we have 16,000 football-playing high schools in the country, and that just means they have a large enough budget if you sort of want to simplify it. Under Armour has about 3,000 of those high schools right now, so our presence is significant. The opportunity we have to grow in the team sports, which has been a real bright spot for the brand consistently for us, double-digit growth that we continue to see outfitting teams, sidelines, coaches, etcetera. So that's our anchor. The other thing is the other stuff is, frankly, the easy things that we're supposed to be able to sell as a result of being authentic on field. I think we've done a good enough job setting the consumer up for that, giving them products that will get them to and from the field, you know, to and from the court. But we have all the credibility in the world when it happens actually on field or on court. And so opening that up, which is things like buying into the sportswear business by offering such great value with some of those new work shoe offerings we have is something that hopefully will help translate a little more in driving more top and bottom line for us. And I think, Sam, on APAC, you know, we don't normally break down by country, but you know, obviously, it's a super critical region for us. We've got some new leadership there that's really focused on the brand and rebuilding the brand, which is great. We've also got a new country leader in China who's very seasoned, and she's digging in really, really quickly, which is awesome. So we've talked about that APAC is a little bit behind as far as North America on the turnaround efforts, but that we feel like we can turn it around more quickly. It is a challenging environment there. You know, a little bit of softening consumer sentiment. It's a pretty promotional environment. But I think we've got the right leadership there now. The right intention, and the right focus. And we keep rebuilding on the brand voice and driving full-price sales, and that's where the focus is there. I think we could probably say the worst declines for APAC are behind us at this point. And we really start to drive forward again. So we're excited. Dan, what was your last question?
Sam Poser: About Yassine and his changed role.
Kevin Plank: Yeah. So Yassine has been an incredible partner for us. In just really helping to drive a consistent brand aesthetic. Across the organization. So that red thread is now beginning to pull across. You know, it's when structure follows strategy and you know, the people follow the structure, as you've seen and I've started talking about his role where he could be most helpful to the brand, it was a really easy decision for both of us. And so, you see us going back to his agency world and Under Armour is his first client, and this is all in a very positive way. He begins a new chapter with getting remarried, etcetera. So we're excited for Yassine and what he's going to be doing going forward as it relates to Under Armour. This aesthetic is something that we're driving. The unleashing intentionality presentation that I talked about that we've been rolling out, it's about getting consistent. It's about establishing clear good, better, best, and in categories where we have multiple styles, and you could take something as our woven pants, our unstoppable pants as they're classically called. We've just been editing. We've just been going through and just cleaning the brand up or we're going from, you know, 10 different pants, in multiple styles with, frankly, though, 10 different fabrics and 10 different drawstrings or waistbands or closures or buttons and logo applications and reducing it down to three. Good, better, and best. That simplification that we're going to do on the raw material side of really thinking about how we can be a better supply chain company is a lot of what's driving the thinking that we're doing right now. And when we just made this shift February 2 the new structure and having Kara sit in as our maestro as the chief merchandising officer, getting those five different category managers that are running 10 different categories vertically. We all sat in the same room. And we've had, you know, we've got the planners in there, and we have 15, 20 people that are just really driving cross-functional communication and what that means. And as a part of that, we need the red thread in design. So now that we have a chief merchandising officer, that's setting the tempo, they're setting the music for us, they're writing the sheet music, then you have the category managers that are driving and really implementing what is the consumer insights that we can do. Marketing is driving, ensuring that every product we built has a story. Ensuring that that design comes across in a horizontal way to drive the red thread of what actually makes it Under Armour, what makes it consistent, and what makes this Under Armour good level, Under Armour better level, under our best level. But you should find a much more consistent deliberate, and get ready for it intentional Under Armour going forward. So, we're excited about working with Yassine, Kara, all the other leaders that we have in place now.
Sam Poser: Thank you.
Operator: Our next question comes from Peter McGoldrick with Stifel. Please go ahead.
Peter McGoldrick: Yeah. Thanks for taking my question, Dave. All the best in the future. I want to dig in on the complexity reduction and for greater progress in the future. It seems like much or some of the heavy lifting from SKU rationalization and organization have been made already. I was curious if you can help us think about the improvements that we should expect in the coming quarters and how that would manifest in the cost structure of the business, whether it be raw materials or other items?
Kevin Plank: Yeah. Thank you, Peter. Let me give this in two parts. I'll take the first, and Dave will take the back end of it. I've used this analogy as coming back in the CEO chair in April 2024. You know, walking and seeing our innovation head, Kyle Blakely, having a conversation where we were talking about we might need more resources because of the number of fabrics that we're having to go to market with every season. And the number came out as we're making more than 300 fabrics and we just came down and said, why are we making so many? Can we run the eighty-twenty on that? And the eighty-twenty is that there's actually 30 fabrics that are driving 80% of our volume, yet we're spending that time driving nearly another 300 fabrics in development. We're just looking at it holistically, like, how do we get rid of all this stuff? Become more simple, become more narrowed, and more deliberate? Applying a good, better, best structure, which is what Kara's job is doing, setting the margin targets, of where it sits for apparel, where it sits for footwear, setting the profitability targets, SKU targets, etcetera, being really clear at the top. And then making sure that there's products that will fall out of that line. So we've actually spent the last two weeks, since getting into this new cadence with, as I said in the last question, with our GMs and just going through line by line, product by product, finding out where we can maybe have 15 or 16 or 17 training shirts, and with a business like training shirts, where Under Armour has five products that sit in the NPD top top 10, nine products that sit in the NPD top 25, as I've mentioned, our focus here is how do we drive ASP. Because while we may be listed in the top 10 and top 25, we're not certainly not driving anywhere near the highest ASP. We'd see there's opportunity, a, to be able to drive more volume, b, more consistent with our messaging to the consumer, and then as well be able to get more consistent by having less fabrics, having less basically, inventory we have fewer things with clearer stories for the consumer, that hopefully will manifest into a much clearer brand with a much brighter bottom line.
David Bergman: Yeah, Peter. And I think as far as, you know, when you think about the go forward, there's some different pieces. What Kevin's getting at absolutely should be able to drive a little bit better margin as far as pricing on raw materials and actual, you know, production based on volumes and less SKUs. That's clear, and that's what we're going to be driving for. And that'll probably benefit more, you know, think about, like, back half fiscal twenty-seven, more into fiscal twenty-eight and beyond. But I think also keep in mind, you know, right now, fiscal twenty-seven would have a full year of tariff cost. Assuming tariff rates don't change. So, you know, the actions that Kevin speaking to will help offset that. In addition to some of the pricing changes that we're driving through that you'll start to see in the market more in back half of fiscal twenty-seven as well. So kind of a balance there is the best way I would put it.
Peter McGoldrick: Appreciate that. Thank you.
Operator: Our final question comes from Brooke Roach with Goldman Sachs. Please go ahead.
Brooke Roach: Good morning, Kevin and Dave. Thank you for taking our question. Can you elaborate on the channel and product category puts and takes you expect in the North America business as you drive stabilization into fiscal year twenty twenty-seven? Are there any businesses that you expect to drive faster or slower stabilization? Are you seeing the same level of wholesale order book improvement across accounts and product lines that might over index to premium versus the value segments of your business? Thank you.
David Bergman: Thanks, Brooke. Definitely appreciate the question. But getting into details on fiscal twenty-seven is not something we're really at this point going to do. We're going to do that more when we get to the early May call. But I would say that we've talked a lot about all the deliberate actions that we've been taking over the last year or so, and Kara was definitely driving a lot of that in her new role. And then, obviously, now she's transitioning into product, which is going to be awesome with chief merchandising officer. And we've got Adam Peak stepping in. He's a veteran, and he's going to take the reins to keep driving forward with those relationships in North America. So the wholesale discussions have been positive. I think a lot of the newer product is really resonating. So we should see that come through as we think about, you know, the full-price wholesale business. Next year and beyond. But it does still take some time. We've talked about that. You know, the orders that you're placing now are definitely further out in the future as far as when it comes through on the revenue side. So it is a journey. We've talked a lot about being excited about reaching that stabilization period as we drive into fiscal twenty-seven. And that's exactly what we're going to do. I think there's opportunities in each of the channels as we go forward. But we're going to be deliberate. We're going to continue to be smart about how we deploy promotions and discounting and continue to try and step off that journey more and more and reach the sweet spot there. As we continue to double down on our big partnerships with our on the wholesale side. So a lot of different moving pieces, and we are excited about the momentum on the product, on the brand, on the relationships. And we're excited to talk more about that when we get to the early May call.
Kevin Plank: And, Brooke, maybe I'll just give you the sort of high-end version from that answer as well, which is I said earlier about winning with the winners. Today, Under Armour is famous for base layer. We're famous for heat gear and cold gear. Getting a really clear segmentation within both of those categories is a massive opportunity for us, ensuring that we can be present, you know, in distribution at the appropriate price and making sure there's a real reason for a consumer to spend more for it too. So that's been a lot of the work that Kara and the team are really attacking right now, and then extrapolating that out to, you know, multiple categories and as it relates to, you know, appropriate distribution. So we're definitely in this fight, but we got a really good strong base to build from, and you'll see, you know, better and better from us with that.
Brooke Roach: Great. Thanks so much. Best of luck.
Kevin Plank: Thanks, Brooke.
Operator: This concludes our question and answer session. I would like to turn the conference back over to Kevin Plank for any closing remarks.
Kevin Plank: Thank you, operator, and the listeners out there. I'd like to close with one final thought. We're thrilled to welcome Reza to UA's going to be filling some very big UA shoes as CFO for the next chapter with this brand. But I just want to start and say, Dave, thank you. Twenty-one years at Under Armour mean you joined just before the IPO in November 2005. We've been through a lot. Your alma mater, James Madison, made it to the college football playoffs, which is just another proof point that you can do anything. And you have here. Not even close to my terps. Joining from a great run at PwC, you're an accountant who became our controller to our CFO for the last nine years. But always the best teammate, partner, CFO, and even more importantly, an amazing husband, father, and friend. You and I have been through a lot of stuff. Dick and Finn, we've had amazing times together, and we've also been tested. Yet here we are still standing. Moving forward. You remain a major shareholder. Know you'll always be a part of this team and will honor and do a great job for you and all of our stakeholders. I give you my highest compliment. You're a true professional. Thank you. And on behalf of the brand, a heartfelt overwhelming thank you, Dave Bergman. We appreciate everyone joining us on today's call and ask you to have a great day.
David Bergman: Thank you, operator.
Kevin Plank: Thank you, Kevin. Thank you, UA.
Operator: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.