Under Armour cut its annual sales outlook Friday after North American revenue dropped 9%, offering another sign that consumers are becoming more selective about spending on athletic clothing and footwear as inflation and economic uncertainty pressure household budgets. 

North American revenue fell to $609.8 million in the quarter ended June 30. Companywide revenue declined 3% to $1.10 billion, while international sales rose 5%, leaving weakness in Under Armour’s largest market as the central problem facing the brand. 

For consumers, the slowdown could mean more competition, promotions and pressure on brands to prove their products are worth the price.

Under Armour now expects full-year revenue to decline by a mid-single-digit percentage, worse than its previous forecast for only a slight decrease. The company said persistent inflation and broader economic uncertainty are making consumers more cautious about discretionary purchases. 

Chief Executive Kevin Plank is simultaneously trying to move Under Armour away from competing primarily through discounts. The company has been reducing its product assortment by roughly 25% and concentrating investment on training, running and team sports, with newer footwear aimed partly at younger consumers. 

That creates a difficult balancing act. Under Armour wants to rebuild the brand around fewer, more desirable products and protect pricing, but weakening U.S. demand can force retailers and manufacturers to use promotions to move merchandise.

The company’s gross margin nevertheless improved to 54.1%, helped in part by approximately $70 million in tariff refunds incorporated into its outlook. Under Armour maintained its adjusted operating-income forecast despite lowering its revenue expectations. 

The consumer signal extends beyond Under Armour. Other apparel companies have also reported softer U.S. discretionary spending as shoppers prioritize necessities and become more demanding about price, quality and value.

For Under Armour, the challenge is especially important because North America remains its largest market. A 9% decline there means the company’s turnaround increasingly depends on convincing cautious shoppers to pay for new products without relying heavily on markdowns.

For consumers, that competition can work in their favor. If athletic brands struggle to generate traffic, shoppers could see more promotions and better deals even as companies try to preserve premium pricing on their newest products.

JBizNews Desk | Baltimore, Maryland

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