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 to analysts that the company is preparing for an additional $100 million in costs related to trade levies. This financial strain is compounded by a persistent decline in sales, with a 4% drop in the first quarter to $1.1 billion and an anticipated further decrease of 6% to 7% in the following quarter.

In response to these challenges, Under Armour is implementing strategic measures, including price increases and a streamlined product lineup. The company has already raised the price of its signature tech T-shirt to $25, with considerations for further hikes, and introduced a $45 hat, significantly pricier than most market alternatives. These steps are part of a broader initiative to reposition the brand towards a more premium market segment.

Despite the adverse conditions, there are glimpses of progress. The latest quarter saw a 70 basis points improvement in gross margins, thanks to a better product mix and disciplined pricing. Neil Saunders of GlobalData observed that while the rate of sales decline has slowed from previous double-digit figures, sales are still over 14% lower than 2022 levels. Saunders acknowledged Under Armour's efforts to refine its product offerings and enhance quality but highlighted the brand's ongoing struggle to differentiate itself in a competitive market, where it risks being overshadowed by trendier competitors like Hoka and On.

The situation underscores the broader challenges faced by companies in navigating tariff impositions and market competition. Under Armour's strategic adjustments reflect an attempt to adapt to these pressures, but the path to recovery remains uncertain. For more details on Under Armour's financial strategies and market positioning, visit https://www.underarmour.com.