Aug 7 (Reuters) - Under Armour on Friday forecast a steeper annual revenue decline, underscoring the challenge of reviving growth as cautious consumers rein in spending on athletic apparel amid economic uncertainty in its key North American market.
Persistent inflation and a softer consumer spending environment have pressured demand for apparel, footwear and accessories, forcing retailers and brands to rely on promotions even as they seek to protect margins through full-price sales and reduced discounting.
Revenue in Under Armour's North America business, its largest market, fell 9% to $609.8 million in the quarter ended June 30.
"As we navigate a challenging consumer demand environment, we continue to make progress in building a more focused Under Armour, despite updating our full-year revenue outlook," CEO Kevin Plank said.
Shares of the company were down about 1% in premarket trading after Under Armour said it now expects full-year revenue to decline by a mid-single-digit percentage, compared with its prior target of a "slight decline".
Plank, who returned to the top job in 2024, has been working to reposition the brand through a broad turnaround plan that includes reducing the company's product assortment by about 25% and shifting its focus toward higher-priced offerings in categories such as training, running and team sports.
The company said it has incurred $266 million in restructuring and transformation expenses so far and expects to complete the plan by the end of the year.
"There isn't much evidence that its turnaround efforts are having a significant impact," Morningstar analyst David Swartz said.
Gross margin in the quarter expanded 590 basis points to 54.1%, primarily due to refunds received related to International Emergency Economic Powers Act (IEEPA) tariff costs that were expensed in fiscal 2026.
Under Armour, however, maintained its full-year operating income forecast, helped by the cost-control measures.
The apparel maker's quarterly revenue fell 3% to $1.10 billion from a year ago, compared with analysts' average estimate of $1.11 billion, according to data compiled by LSEG, while adjusted profit per share of 5 cents beat estimates.
(Reporting by Sanskriti Shekhar in Bengaluru; Editing by Leroy Leo)
