Under Armour Faces Profit Halving Due to Tariffs Amid Sales Decline

Under Armour, the renowned sportswear manufacturer, has projected a significant 50% decrease in profitability for the year 2025, attributing this downturn to the impact of tariffs. CEO Kevin Plank disclosed this forecast during a recent analyst meeting, highlighting an expected $100 million in additional costs stemming from trade levies. This financial strain is compounded by a persistent decline in sales, with a 4% drop in the first quarter revenues to $1.1 billion and a further 6% to 7% decrease anticipated in the following quarter.

In response to these challenges, Under Armour is implementing strategic measures, including price hikes and a simplification of its product range. Notably, the price of its flagship tech T-shirt has risen to $25, with potential further increases on the horizon. The company has also introduced a premium-priced hat at $45, significantly above the market average for similar products. These steps are part of a broader initiative to elevate the brand's market positioning towards a more premium segment.

Despite the adverse effects of tariffs and declining sales, there are glimpses of progress. The company reported a 70 basis points improvement in gross margins in the latest quarter, attributed to a refined product mix and disciplined pricing strategies. Neil Saunders of GlobalData observed that while the rate of sales decline has slowed from previous double-digit figures, sales volumes remain over 14% lower than those in 2022.

Saunders also pointed out that Under Armour's efforts to streamline its offerings and enhance product quality are commendable. However, the brand continues to face stiff competition in a saturated market, with rivals like Hoka and On gaining traction for their trendier appeal. At certain retail outlets, Under Armour's products risk being overshadowed by these emerging brands, underscoring the need for the company to further differentiate its offerings to reclaim its market standing.

For more information on Under Armour's financial strategies and market challenges, visit https://www.underarmour.com.