Under Armour’s Restructuring Plan Faces Market Skepticism

Under Armour is navigating a critical strategic pivot. As the company streamlines operations and repositions its brand portfolio, its stock performance reflects significant investor concern. The core challenge lies in whether these initiatives can effectively counter persistent revenue declines and margin pressure.

The company's Q2 FY2026 results (period ending September 30, 2025) presented a contradictory picture. While adjusted earnings per share (EPS) of $0.04 surpassed analyst consensus estimates of $0.03, significant headwinds were evident elsewhere. Revenue fell by 5% year-over-year to $1.3 billion. A primary drag was the 8% contraction in the crucial North American market. Furthermore, gross margins contracted by 250 basis points to 47.3%. Company leadership attributed this compression to ongoing supply chain challenges and increased tariff expenses.

A Costly and Expanded Strategic Overhaul

In response to these pressures, management has significantly scaled up its restructuring program. The estimated total after-tax cost has now been raised to $255 million. This figure includes an additional $95 million in measures unveiled in mid-November. The program's objective is a fundamental optimization of the cost structure and a tightening of the operational model.

Should investors sell immediately? Or is it worth buying Under Armour?

A pivotal element of this new direction involves the planned separation of the Stephen Curry-associated "Curry Brand." Slated to begin operating more independently with the launch of the Curry-13 shoe in February 2026, this move aims to better monetize what the firm views as an undervalued asset. Under Armour projects global basketball revenue from this brand to reach between $100 million and $120 million in FY2026.

Guidance and Future Hurdles

The substantial costs associated with this transformation are expected to result in a GAAP operating loss of $56 to $71 million for the current fiscal year. On an adjusted basis, however, operating income is projected to be between $95 and $110 million. The near-term trajectory for Under Armour shares will likely hinge on two factors: market reception to the execution of the Curry Brand strategy, and evidence of a reversal in the North American sales slump. Upcoming quarterly reports will be scrutinized for signs that these strategic bets are beginning to yield tangible results.