Under Armour financials teardown: what the FY2026 10-K shows

Under Armour (NYSE: UAA/UA) reported a $495.6M net loss for fiscal 2026, the year ended March 31, 2026. That headline reads like a company in freefall, and it is not, exactly. That gap between the headline and the operating reality is the whole point of a teardown. When you read a 10-K the way a CFO diligences an acquisition, you stop reacting to the loss and start asking which line items are accounting noise and which ones describe the actual business. With Under Armour, the answer is uncomfortable in a different way than the headline suggests. This is the live case study in what happens when a brand tries to cost-cut its way back to growth.

The $496M loss is a head fake, read the operating line instead

Start with the number everyone quotes and then take it apart. The $495.6M net loss is mostly non-cash. It includes a roughly $247M valuation allowance against U.S. federal deferred tax assets, which swung income tax expense by about $297.6M to a $294.8M charge and drove the effective tax rate to -146.9%. Add about $128M of restructuring on top. Strip both and adjusted net income was actually about +$50M positive.

So is the business fine? No. Here is the line that matters: operating income was -$163.1M, an operating margin of -3.3%. The core business lost money before any tax or restructuring noise touched the statement. That is the honest read. The headline overstates the damage because it is loaded with a non-cash tax charge, and the adjusted number understates it because it nets back to a positive that the operating business cannot actually produce.

A valuation allowance is worth pausing on, because operators net it out and move on. A company books one against deferred tax assets when its own management concludes it may not generate enough future U.S. profit to use those assets. In plain terms, Under Armour's finance team signaled doubt about near-term U.S. profitability and put a number on it. That is management telling you something, not hiding something.

When I sit with founders reading their own P&L for the first time before a raise, the reflex is always to fixate on the bottom line. The discipline I push is the opposite: read upward from operating income, because that is the line a buyer or a board will trust. A $496M loss with $50M of adjusted income and a negative operating line tells three different stories, and only one of them is the operating truth.

Metric	FY2023	FY2024	FY2025	FY2026
Revenue	5,903.2	5,701.9	5,164.3	4,966.4
Gross profit	2,643.8	2,630.3	2,474.7	2,258.9
Gross margin %	44.8	46.1	47.9	45.5
SG&A	2,380.2	2,400.5	2,602.0	2,294.3
Marketing spend	620.3	568.5	549.9	502.3
Operating income	263.6	229.8	-185.2	-163.1
Net income	374.5	232.0	-201.3	-495.6

Three years of falling revenue, and falling marketing to match

This is the spine of the teardown. Revenue has fallen for three straight years: $5,903M in FY2023, then $5,702M, then $5,164M, then $4,966M in FY2026. That is down 3.8% year over year and down 15.9% from the peak. A single down year is a stumble. Three in a row is a trend, and trends are what you underwrite against.

Now lay marketing spend next to it. Marketing fell every single year too: $620.3M, $568.5M, $549.9M, $502.3M, a 19.0% reduction over the period. In FY2026 alone, marketing and advertising was cut $47.6M, or 8.6%. Here is the part that should make an operator wince. As a percentage of revenue, marketing barely moved, from 10.5% to 10.1%, because revenue fell in lockstep with the spend. The brand did not get more efficient. It shrank demand creation and sales together, at the same rate, for three years.

That is the doom loop, and it is the most transferable lesson in the filing. When a brand is losing heat, cutting the marketing line to protect the profit line feels responsible. It is the opposite. You are defending this quarter's P&L by starving next year's top line, and then next year's lower revenue justifies the next cut. The pattern we see again and again with brands that get stuck is exactly this: the spend cut never looks reckless on its own, it looks prudent, and twelve months later the revenue line has validated the fear that caused the cut.

When I talk to founders running a brand losing momentum, the hardest conversation is convincing them not to cut the one line that creates future demand. One we worked through had pulled paid spend back to protect EBITDA and watched new-customer revenue fall faster than the savings. The fix was not more spend for its own sake, it was committing to the brand instead of bleeding it slowly. Under Armour is making the slow-bleed choice in public.

Gross margin held, the cost base did not

Margin is where the teardown gets nuanced. Gross margin slipped to 45.5% in FY2026 from 47.9% the year before, a 240 bps decline, and roughly 155 bps of that was higher tariffs. The rest came from unfavorable pricing, higher product costs, and channel and regional mix, partly offset by foreign exchange. Tariff-driven margin pressure is largely outside management's control, so on its own a 45.5% gross margin is not the alarming part.

The alarming part is the gap between gross margin and operating margin. Gross margin stayed in the mid-40s across the whole period while operating margin fell from +4.5% in FY2023 to -3.3% in FY2026. That tells you the problem is below the gross-profit line. Pricing did not break the P&L. The cost base did. The company kept its product economics roughly intact and still could not cover its operating structure on a shrinking revenue base.

There is a second read in that 45.5% number. It is a mass-market, wholesale-driven gross margin. For contrast, premium-DTC peers in the same broad activewear and footwear space run far higher: Canada Goose lands near 70% and On Holding near 60%. The difference is pricing power. Those brands can charge a premium and hold it; Under Armour cannot. So when a tariff shock or a cost spike hits, Under Armour has no margin cushion to absorb it, and the damage flows straight to operating income. A brand without pricing power is a brand that lives or dies on cost discipline, and cost discipline is exactly what the operating line says is failing.

The channel problem, still wholesale-heavy and the pivot unfinished

For a teardown framed around DTC, the channel mix is the quiet headline. In FY2026, wholesale was still about 57% of revenue, roughly $2.8B, down 5%, while direct-to-consumer was about 43%, roughly $2.1B, down 2%. Within DTC, owned and operated stores grew 1% but eCommerce fell 7%, so the digital channel, the one most operators assume is the future, is the one shrinking fastest. North America, about 58% of revenue, fell 8%, while international grew 4%.

Compare that to the FY2024 split and the story is how little has changed. Wholesale was $3,243.2M and DTC $2,335.2M in FY2024, with a roughly $123M licensing line making up the rest; strip licensing out, as the FY2026 wholesale-vs-DTC split does, and FY2024 was about 58% wholesale to 42% DTC. By FY2026 that had barely moved to 57/43, and both channels shrank in near-proportion. The DTC share has not meaningfully advanced. The wholesale-to-DTC pivot that healthier peers completed years ago is, at Under Armour, still unfinished. That matters because channel mix is control. A wholesale-dependent brand hands pricing, shelf placement, and discount timing to its retail partners. It owns less of its own demand and less of its own customer data, which makes the marketing doom loop above even harder to break, because you cannot retarget and retain customers you never owned in the first place.

Channel	FY2024 ($M)	FY2026 ($M)	Share of revenue (FY2026)
Wholesale	3,243.2	2,832.9	~57%
Direct-to-consumer	2,335.2	2,137.1	~43%

Balance sheet, clean inventory but melting cash and fresh debt

The balance sheet is where Under Armour earns some genuine credit, and then spends it. Start with the good news, because there is real good news here. Inventory is clean. It is down to $914.8M from a $1,185.7M FY2023 peak, a 23% reduction, and inventory days fell to about 123 from 133. Most turnaround stories carry a glut that the company eventually has to torch through markdowns, which craters gross margin on the way out. Under Armour did the opposite. It worked inventory down without a discount spiral, which is part of why gross margin held in the mid-40s rather than collapsing. That is operational discipline, and it is the line on this balance sheet I would point to as a model.

Now the bad news. Cash collapsed 64%, from $858.7M in FY2024 to $309.2M in FY2026. To shore up liquidity as cash burned, the company doubled long-term debt to $1,190.4M from $595.1M, with FY2026 financing activities bringing in $560.6M net. Debt-to-equity rose to 0.84 and the current ratio sat at 1.62. Free cash flow was -$162.2M, operating cash flow of -$75.1M minus $87.1M of capex, and operating cash flow has now been negative in three of the last four years. The reset is real, but it is being funded with the balance sheet, not by the operations. That is the question hanging over fiscal 2027: how many more years of negative operating cash flow can a brand fund on borrowed liquidity before the runway math gets tight.

Metric	FY2023	FY2024	FY2025	FY2026
Inventory	1,185.7	958.5	945.8	914.8
Inventory days	133	114	128	123
Cash & equivalents	710.9	858.7	501.4	309.2
Long-term debt	674.5	675.8	595.1	1,190.4
Operating cash flow	-39.9	354.0	-59.3	-75.1
Capex	158.1	150.3	168.7	87.1
Free cash flow	-198.0	203.6	-228.0	-162.2

What an operator should steal from this teardown

You do not run a public sportswear company, but the diligence habits transfer directly to a $5M to $150M ecom brand. Here is what to take.

Separate non-cash charges from operating truth before you judge any brand, including your own. Under Armour's $496M loss is mostly a tax allowance and restructuring; the real number to underwrite is the -$163M operating line. When you read your own statements, or a competitor's, climb up to operating income before you form an opinion.

Never starve marketing to defend margin in a declining brand. The cut always looks prudent in isolation. Three years later it reads as the cause, not the response. If the brand is worth keeping, commit to demand creation. If it is not, that is a different and more honest decision than bleeding it slowly.

Protect inventory discipline like Under Armour did. Working a glut down 23% without a discount spiral is genuinely hard, and it is why their gross margin held. The pattern we see in brands that survive a slowdown is clean inventory management; the ones that do not survive are the ones that markdown their way through a glut and never recover the margin.

Watch the channel mix, because mix is control. A wholesale-dependent brand owns less of its pricing, its discount timing, and its customer data. The more of your revenue runs through channels you control, the more levers you have when demand softens.

Under Armour's $496M loss is a head fake. The real story is three years of falling revenue met by three years of falling marketing, a cost base that broke the operating line while gross margin held, and a turnaround funded by the balance sheet instead of by operations. The brand kept its inventory honest and its margin intact, and still could not stop cutting the one line that creates tomorrow's revenue. That is the doom loop, and it is the lesson.

For more on reading financials the way a buyer would, see our interim CFO services overview, the sibling Allbirds DTC teardown, and the apparel financial benchmark operators use to compare their own numbers against the public names.

Sources and methodology

The primary source for this teardown is SEC EDGAR, Under Armour, Inc., CIK 0001336917, tickers UAA and UA on the NYSE. Under Armour files a domestic Form 10-K under U.S. GAAP, with a fiscal year ending March 31, so FY2026 is the year ended March 31, 2026. All figures are in USD.

Income statement, balance sheet, and cash flow figures for FY2023 through FY2026 were pulled from SEC EDGAR 10-K XBRL filings. The key us-gaap tags used were RevenueFromContractWithCustomerExcludingAssessedTax, GrossProfit, OperatingIncomeLoss, NetIncomeLoss, MarketingExpense, SellingGeneralAndAdministrativeExpense, InventoryNet, CashAndCashEquivalentsAtCarryingValue, LongTermDebtNoncurrent, IncomeTaxExpenseBenefit, NetCashProvidedByUsedInOperatingActivities, and PaymentsToAcquirePropertyPlantAndEquipment. Accession numbers: FY2026 10-K 0001336917-26-000073 (filed 2026-05-19), FY2025 10-K 0001336917-25-000078, and FY2024 10-K 0001336917-24-000073 (the channel-split source).

Several metrics were derived by us from the as-reported figures, not pulled directly: gross, operating, and net margin percentages (line item divided by revenue), marketing as a percentage of revenue, inventory days (inventory divided by COGS, times 365), free cash flow (operating cash flow minus capex), and the year-over-year and peak-to-trough decline percentages. All inputs are as-reported SEC XBRL; only the ratios are computed.

The FY2026 channel, regional, and category splits, along with the tariff, tax, and restructuring bridge, were taken from the Under Armour Q4 and Full-Year Fiscal 2026 results press release and corroborating trade coverage, and reconcile against the SEC XBRL totals: FY2026 revenue of $4,966.4M and the $495.6M net loss both match. Specific bridge items include the roughly $247M tax valuation allowance, about $128M of restructuring, adjusted net income of about $50M, the 240 bps gross-margin decline with about 155 bps from tariffs, and the $47.6M, or 8.6%, marketing cut to 10.1% of revenue. The FY2024 channel split is exact from the 10-K (wholesale $3,243.2M, DTC $2,335.2M); the FY2026 channel dollars are derived from the press-release percentages applied to total revenue and should be replaced with the exact FY2026 10-K line items once the channel table is confirmed.

The peer gross-margin comparison (Canada Goose near 70%, On Holding near 60%) is drawn from sibling public-company teardowns in our own research library and is used only to illustrate that Under Armour's 45.5% reflects a mass and wholesale model without premium pricing power. Storeleads confirmed Under Armour runs Salesforce Commerce Cloud (Demandware) enterprise DTC infrastructure rather than Shopify; no Storeleads sales estimate was used, as the platform tier did not return store-detail figures.

Frequently asked questions

is under armour actually losing money or is the net loss just accounting?

Both are partly true. The $496M GAAP net loss is mostly non-cash: a ~$247M tax valuation allowance plus ~$128M of restructuring, and adjusted net income was about +$50M. But operating income was -$163.1M, so the operating business genuinely lost money before any of that. The headline overstates the damage, the adjusted number understates it.

why did under armour post a $496 million loss in fiscal 2026?

The single biggest driver was a non-cash $247M valuation allowance against U.S. deferred tax assets, which swung income tax expense by about $297.6M and pushed the effective tax rate to -146.9%. Add ~$128M of restructuring and a -$163.1M operating loss, and you get to -$495.6M.

are under armour's gross margins structurally broken or just tariff-pressured?

Mostly pressured, not broken. Gross margin fell 240 bps to 45.5%, and about 155 bps of that was higher tariffs, with the rest from pricing, product cost, and mix. The deeper issue is that 45.5% is a mass/wholesale margin. Premium-DTC peers run 60-70%, so Under Armour has no pricing-power cushion to absorb shocks.

is under armour cutting marketing spend to protect profit, and what does that mean?

Yes. Marketing fell from $620M in FY2023 to $502M in FY2026, down 19%, including an 8.6% cut in FY2026 alone. For a brand losing heat, cutting demand creation to defend a margin line is a doom loop: you protect this quarter's P&L by starving next year's revenue. It is the central risk in the turnaround.

how does under armour's inventory compare year over year, clean or discount-driven?

Clean. Inventory is down to $914.8M from a $1,185.7M FY2023 peak, a 23% reduction, with inventory days falling to about 123 from 133. They worked the glut down without firing margin into a discount spiral. It is the healthiest line on the balance sheet.

does under armour have enough cash and liquidity to fund its turnaround?

It has runway, but it bought it with debt. Cash fell 64% to $309.2M, and the company doubled long-term debt to $1,190.4M to shore up liquidity, lifting debt-to-equity to 0.84 with a current ratio of 1.62. Operating cash flow has been negative in three of the last four years, so the business is not self-funding the reset.

how much of under armour's revenue is wholesale vs direct-to-consumer?

In FY2026, wholesale was about 57% of revenue (~$2.8B) and direct-to-consumer about 43% (~$2.1B). Within DTC, owned stores grew 1% but eCommerce fell 7%. The mix has barely moved in years, so the wholesale-to-DTC pivot that defines healthier peers is still unfinished.

what can a smaller ecom brand learn from under armour's financials?

Three things. Separate non-cash charges from operating truth before you judge any brand, including your own. Never starve marketing to defend margin in a declining brand. And protect inventory discipline the way Under Armour did, because clean inventory is the one thing keeping its balance sheet honest.