Under Armour 3Q26 Immediate Call Postmortem
Kevin talked about the one-off items as “frustrating”. Shareholders are way past that word when talking about this company. Can only hope that this “kitchen sink” (unadjusted) sets Under Armour up to have no issues as the business gets better – unlike all the other “kitchen sinks” we have seen all the way down. “The most destructive phase of this reset is behind us” – Dave as one of his last comments as CFO.
Will admit that Kevin’s voice sounded serious when he mentioned North America is beginning to turn the corner and this quarter marked the bottom of the reset. But he has fooled me many many time before. E-commerce conversion is up and factory house performance is improving. Focus in wholesale remains building the right partnerships. Encouraged by how fall order book is shaping up. Feel like we have heard this story before but not with the positive KPI’s from DTC. Wonder if Lance (IR) saw how that helped VF Corp (where he used to work) last week so made sure to include that commentary.
Unleashing Intentionality – Kevin’s new buzz phrase. Made further management changes to make everything more efficient, cohesive, and faster. Talked up leadership in answer to first Q&A question about “confidence”.
They are done with the 25% SKU reduction plan they launched in FY25. 30 fabrics are driving 80% of their volume. Under Armour has five products in the NPD top 10, nine in the top 25 – bears really need to reconcile this fact with their view the “brand is dead” and after YEARS of challenges at the company.
Kevin called out performance in products he always seems to mention: baselayer, Icon fleece, etc. The women’s Meridian franchise is “gaining traction”. Sell through of newer franchise improving year over year. Full price realization trending higher.
More “elevated” products coming in spring/summer 26. Icon mentioned once again along with an “improved” women’s Vanish Elite. Of course, Kevin just had to mention the StealthForm hat and No Weigh backpack yet again – really wish he could start calling out some other “new” innovation consistently like how the NEOLAST technology mentioned last quarter was noticeably not mentioned this quarter (although maybe it was “captured” in the generic baselayer commentary). I get the need to be consistent with platforms like Icon and Vanish but would be nice to hear more about why product is different.
Assert 11 performs well and delivered higher ASP vs Assert 10 as predicted. Am somewhat amazed by that comment as it almost immediately went on sale right after launch but maybe the level of discount was not as bad as the prior iteration. Kevin called out the HB-LOW as “off the charts” price to value and the “gateway” to court shoes and sportswear. While it is a cool looking shoe, most of us probably thought Curry was likely a better gateway that never seemed to get utilized (albeit super expensive).
JD Sports and Sports Direct are getting behind the brand and relationship has never been stronger. Kevin thinks they are the #1 “underground” brand in France. The region is getting more promotional though, particularly in the UK. “A lot of people are just buying business”.
“Not interested in being a fashion company.” – it is somewhat refreshing to hear an athletic apparel company explicitly say this. Pay attention Lululemon.
*These are our unabridged quick thoughts and notes from the call. We get them out as soon as possible after the call ends. Management has given some topics to dig deeper into and will circle back afterwards with much more in depth work on what was mentioned. You can find that work (and more on Under Armour and other retail/consumer research) at our website here: M Squared Capital
Originally posted on X and Substack.