Under Armour Bets on Full Price Over Volume in Brand Reset

Quick Facts

Under Armour’s full-year fiscal 2025 revenue fell to $5 billion, with North America sales down 8% to $2.9 billion.
Gross margin expanded 180 basis points to 47.9%, driven by less discounting and lower freight costs.
The company completed a 25% SKU reduction and cut site-wide promotional days by 50% as part of a broader brand overhaul.

Under Armour is trading revenue for margin. The athletic apparel brand posted its seventh straight quarter of year-over-year revenue declines in Q3 fiscal 2026, but Wall Street responded positively after results beat analyst expectations of a 10% drop.

CEO Kevin Plank is engineering a deliberate pullback from discounting. The company cut site-wide promotional days by 50% in fiscal 2025 and is reducing the depth of markdowns at its factory house outlet stores, where some products now carry full price year-round.

The shift is showing up in the numbers. Under Armour’s DTC channel flipped its promotional mix from two-thirds discounted to two-thirds full-price, driving higher average order values. Full-price sales on its e-commerce platform climbed to 50% from 33%. Average unit retail posted double-digit growth.

E-commerce revenue dropped 27% as a result of those planned reductions. The company is treating the volume loss as acceptable collateral damage in the push toward premium positioning.

‘We will sell so much more of so many less products at a much higher full retail price, and this mission is well underway,’ Plank told analysts.

The gross margin story backs that claim. For fiscal 2025, gross margin reached 47.9%, up 180 basis points from the prior year. That beat the company’s original outlook. Lower supply-chain costs and reduced DTC discounting drove most of the improvement.

CFO Reza Taleghani told analysts the inventory shift is qualitative, not just quantitative. ‘This is not just lower inventory, but better inventory with improved quality driven by tighter buys, a more focused assortment and stronger alignment with demand,’ he said.

Under Armour has cut 25% of its SKUs over the past two years. That reduction is now complete. The company plans further rationalization, targeting both styles and the raw materials that support them.

Plank is pointing to specific products as proof the strategy works. The Bouncy Tee, a cotton-blend performance T-shirt, is selling at full price and exceeded sales expectations. The company’s Tech T-shirt, by contrast, has been discounted too frequently and represents the type of product Plank wants to eliminate or reposition.

‘In the recent past, Under Armour has made a lot of good products, some better products, and nowhere near enough best-level products,’ Plank said. ‘We just need to focus on our better and best.’

The loyalty program is becoming a central tool. UA Rewards has grown to nearly 5 million members who now account for 60% of North American DTC revenue.

The restructuring is expensive. Under Armour has incurred $266 million in total transformation costs to date, including $116 million in cash charges and $150 million in non-cash charges. Total program costs are expected to reach approximately $305 million.

Plank acknowledged the pace needs to improve. ‘We are not improving our bottom line fast enough. Execution must tighten, and we are holding ourselves accountable for accelerating progress,’ he said.

North America remains the most difficult market. Quarterly sales in the region fell 7% and annual sales dropped 8% to $2.9 billion. Full-year revenue landed at $5 billion, down 4% from fiscal 2024.

The open question is whether consumers will follow. Under Armour built its customer base on accessible pricing and outlet availability. Retraining those shoppers to pay full price for fewer, more expensive products is the core challenge Plank must solve before the restructuring costs run out.