Under Armour Shares Sink 12% After Margin Forecast Cut and Raised Middle East Cost Hit

Under Armour reported fiscal second-quarter 2027 results on November 6 that narrowly beat headline estimates but sent shares tumbling roughly 12% to 13% as the company slashed its gross margin outlook and raised its estimate of losses tied to the Middle East conflict. Revenue came in at $1.24 billion, just above the $1.23 billion consensus but down 7% year over year, while adjusted EPS of $0.00 edged past the expected loss of $0.01. Adjusted operating income reached $24.9 million and adjusted gross margin was 47.0%, down 30 basis points from a year earlier.

The sharper market reaction came from forward guidance. For the third quarter, Under Armour projected adjusted EPS of negative $0.03 to negative $0.01, well below the $0.05 consensus, with adjusted operating income ranging from negative $5 million to positive $5 million. The company also raised its estimate of operating income losses tied to the Middle East conflict to $45 million, up from a prior estimate of $35 million, citing additional external cost pressures and planned inventory actions.

For the full fiscal year 2027, Under Armour maintained its revenue outlook for a mid-single-digit decline and kept its adjusted EPS guidance at $0.08 to $0.12, roughly in line with the $0.11 consensus. However, it cut its gross margin expansion forecast to 170 to 220 basis points from a prior range of 220 to 270 basis points, and narrowed adjusted operating income guidance to $140 million to $160 million.

Revenue declines were broad-based across regions and categories. North America fell 6.9% year over year to $737.2 million, EMEA dropped 8.5% to $290.6 million, and Asia-Pacific declined 8.8% to $163.5 million. Latin America was the lone bright spot, rising 3.0% to $55.4 million. By channel, wholesale revenue was $725.0 million and direct-to-consumer came in at $493.9 million. The company recorded $13 million in restructuring-related charges during the quarter, including $11 million in restructuring charges and $2 million in transformation SG&A expenses, as it continues a broader business transformation aimed at sharpening its product offering and improving financial performance.