Revenue and Sales Performance - In Fiscal 2025, net revenues from apparel, footwear, and accessories represented 67%, 23%, and 8% of total revenues, respectively, with licensing arrangements contributing 2%[22]. - North America accounted for approximately 60% of total net revenues, with 5,164.3 million compared to 537.6 million, or 9.4%, to 5.70 billion in Fiscal 2024[196]. - Net sales decreased by 5.07 billion during Fiscal 2025, primarily due to lower unit sales in apparel and footwear[198]. - License revenues decreased by 94.6 million during Fiscal 2025, mainly due to lower revenues from North American licensing partners[199]. Operational and Strategic Initiatives - The company aims to enhance consumer engagement through a digital strategy that strengthens brand connectivity[19]. - The company is focused on expanding its wholesale distribution and increasing direct-to-consumer sales channels for long-term growth[19]. - The company has a license agreement with partners in Japan and Australia to expand its market presence in those regions[46]. - The company is investing significantly in enhancing digital shopping capabilities and consumer loyalty programs to adapt to evolving consumer preferences[101]. - The company plans to enhance its digital strategy to improve consumer engagement and brand connectivity[185]. - The company has invested in expanding its network of Brand and Factory House stores and enhancing its digital strategy, which requires substantial cash investments[116]. Financial Performance and Challenges - Net income for Fiscal 2025 was a loss of 232.04 million in Fiscal 2024[195]. - Gross profit decreased by 2.5 billion during Fiscal 2025, while gross margin increased to 47.9% from 46.1%[202]. - Selling, general and administrative expenses increased by 2.60 billion during Fiscal 2025, representing 50.4% of net revenues[205][206]. - The company incurred restructuring charges of 140 million and 58.0 million during Fiscal 2025, primarily due to employee-related and facility-related charges[208]. - Interest expense, net increased by 6.1 million during Fiscal 2025, primarily due to a decrease in interest income[210]. - Other expense, net increased by 13.4 million during Fiscal 2025, primarily due to an earn-out recorded in connection with the sale of MyFitnessPal[214]. - Income tax expense decreased by 2.9 million during Fiscal 2025, with an effective tax rate of 1.4%[215]. Market and Competitive Landscape - The competitive landscape includes major brands like NIKE, adidas, and PUMA, with the company focusing on brand image and product quality to differentiate itself[59]. - The company operates in a highly competitive market, with competitors having greater resources and brand recognition, which may lead to a loss of market share[88]. - The company faces intense competition for employees and regularly collects feedback to improve the teammate experience[71]. - The company faces significant pricing pressure due to intense competition, which may negatively impact margins and profitability[91]. Supply Chain and Manufacturing - The top five suppliers provided approximately 38% of the fabric used in apparel and accessories, primarily sourced from Taiwan, China, Malaysia, and Vietnam[51]. - In Fiscal 2025, 67% of apparel and accessories products were manufactured in Jordan, Vietnam, Cambodia, and Indonesia[52]. - The company generated approximately 69% of its apparel and accessories products from ten manufacturers in Fiscal 2025, with nine manufacturers producing nearly all of its footwear products[109]. - The company relies on third-party suppliers for raw materials, and disruptions in supply could adversely affect its ability to meet consumer demand and result in lower revenues[110]. - Labor disruptions at ports or suppliers could create significant risks for the company's operations, leading to canceled orders and increased expenses[114]. - The company evaluates all manufacturers for quality systems, social compliance, and financial strength before selection and on an ongoing basis[53]. Human Capital and Organizational Structure - As of March 31, 2025, the company had approximately 14,400 teammates worldwide, with about 6,500 being full-time employees[64]. - The total rewards strategy aims to provide competitive pay and benefits, with approximately 64% of the workforce located in the United States[69]. - The company has a human capital management strategy focused on creating an engaging workplace and retaining talent through development opportunities[63]. - The leadership team includes experienced executives, with Kevin Plank serving as President and CEO since April 2024[72]. - The company has experienced significant changes in its executive management team, which could disrupt business operations and customer relationships[125]. Risks and Regulatory Compliance - Global events, including public health emergencies, can disrupt operations and negatively affect financial results[94]. - Fluctuations in the cost of raw materials and transportation can adversely affect profit margins and financial condition[93]. - Economic downturns or inflation can materially impact consumer discretionary spending, affecting sales and growth expectations[82]. - The company may not be able to mitigate cost increases from tariffs and trade restrictions, which could adversely impact financial results[87]. - Compliance with evolving regulatory standards and data privacy laws could result in significant costs and impact profitability[138]. - The company is exposed to currency exchange rate fluctuations, which could materially impact financial results[134]. - The company has identified a material weakness in its internal control over financial reporting as of March 31, 2025, which could lead to material misstatements in financial statements and a decline in stock price[149]. - The company is actively engaged in remediation efforts to address the identified material weakness, but there is no guarantee of success in promptly resolving it[151]. - The company has significant ongoing legal proceedings that could adversely affect its business, reputation, financial condition, and stock price[147]. Cybersecurity and Technology - The company has implemented a cybersecurity program aligned with its enterprise risk management program to mitigate data security threats[156]. - The company engages independent third parties for regular penetration testing and cybersecurity audits to enhance its information security[157]. - The company maintains cyber liability insurance to help cover financial losses from cybersecurity incidents, although it may not cover all types of incidents[156]. - The company depends heavily on information technology for its operations, and any failure or interruption could harm its business effectiveness[121]. Real Estate and Facilities - The company leases approximately 3.5 million square feet of distribution facilities across Maryland, Tennessee, and California, with plans to exit the Rialto, California facility by March 2026[165]. - The company operates 441 Brand and Factory House retail stores across various countries, with lease termination dates extending through 2038[166]. - The company has moved its principal executive and administrative offices to a newly owned complex in Baltimore, Maryland, while evaluating options for its previous office space[164].
Under Armour(UAA) - 2025 Q4 - Annual Report