The following Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") is intended to help readers understand our results of operations and financial condition, and is provided as a supplement to, and should be read in conjunction with, our Condensed Consolidated Financial Statements and the accompanying Notes to our Condensed Consolidated Financial Statements under Part I, Item 1 of this Quarterly Report on Form 10-Q and the information contained in our Annual Report on Form 10-K for Fiscal 2026, filed with the Securities and Exchange Commission ("SEC") on May 19, 2026, under the captions "Business" and "Risk Factors."
This Quarterly Report on Form 10-Q, including this MD&A, contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, Section 21E of the U.S. Securities Exchange Act of 1934, as amended ("the Exchange Act"), and Section 27A of the U.S. Securities Act of 1933, as amended ("the Securities Act"), and is subject to the safe harbors created by those sections. All statements other than statements of historical facts are statements that could be deemed forward-looking statements. See "Forward-Looking Statements."
Unless otherwise noted: (i) all dollar and percentage comparisons made herein refer to the three months ended June 30, 2026, compared to the three months ended June 30, 2025; and (ii) all tabular data is presented in thousands, except share and per share data.
FORWARD-LOOKING STATEMENTS
Some of the statements contained in this Quarterly Report on Form 10-Q, including this MD&A, constitute forward-looking statements. Forward-looking statements relate to expectations, beliefs, projections, future plans and strategies, anticipated events or trends and similar expressions concerning matters that are not historical facts, such as statements regarding our share repurchase program, our future financial condition or results of operations, our prospects and strategies for future growth, potential restructuring efforts, including the scope of these restructuring efforts and the amount of potential charges and costs, the timing of these measures and the anticipated benefits of our restructuring plans, expectations regarding promotional activities, freight, product cost pressures and foreign currency impacts, the impact of global economic conditions including changes in global trade policy and inflation on our results of operations, our liquidity and use of capital resources, expectations related to tariffs, the development and introduction of new products, the implementation of our marketing and branding strategies, the future benefits and opportunities from significant investments and the impact of litigation or other proceedings. In many cases, you can identify forward-looking statements by terms such as "may," "will," "could," "should," "expects," "plans,"
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"anticipates," "believes," "estimates," "predicts," "outlook," "potential" or the negative of these terms or other comparable terminology.
The forward-looking statements contained in this Quarterly Report on Form 10-Q reflect our current views about future events and are subject to risks, uncertainties, assumptions and changes in circumstances that may cause events or our actual activities or results to differ significantly from those expressed in any forward-looking statement. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future events, results, actions, levels of activity, performance or achievements. Readers are cautioned not to place undue reliance on these forward-looking statements. A number of important factors could cause actual results to differ materially from those indicated by these forward-looking statements, including, but not limited to, those factors described in "Risk Factors" and MD&A herein and in our Annual Report on Form 10-K for Fiscal 2026. These factors include without limitation:
•changes in general economic or market conditions, including increasing inflation and potential impacts of changes and uncertainties related to government fiscal, monetary, tax and trade policies, that could affect overall consumer spending or our industry;
•the impact of global events beyond our control, including military conflicts, public health events, and the effects of changes in the global trade environment, such as the imposition of new tariffs and countermeasures thereto, on our profitability;
•increased competition causing us to lose market share or reduce the prices of our products or to increase our marketing efforts significantly;
•fluctuations in the costs of raw materials and commodities we use in our products and our supply chain (including labor);
•our ability to successfully execute our long-term strategies;
•our ability to effectively drive operational efficiency in our business;
•changes to the financial health of our customers;
•our ability to effectively develop and launch new, innovative products and engage our consumers;
•our ability to accurately forecast consumer shopping and engagement preferences and consumer demand for our products and manage our inventory in response to changing demands;
•our ability to successfully execute any restructuring plans and realize their expected benefits;
•loss of key customers, suppliers or manufacturers;
•our ability to further expand our business globally and to drive brand awareness and consumer acceptance of our products in other countries;
•our ability to manage the increasingly complex operations of our global business;
•our ability to effectively market and maintain a positive brand image;
•our ability to successfully manage or realize expected results from significant transactions and investments;
•our ability to attract key talent and retain the services of our senior management and other key employees;
•our ability to effectively meet regulatory requirements and stakeholder expectations regarding sustainability and social matters;
•the availability, integration and effective operation of information systems and other technology, as well as any potential interruption of such systems or technology;
•any disruptions, delays or deficiencies in the design, implementation or application of our global operating and financial reporting information technology system;
•our ability to access capital and financing required to manage our business on terms acceptable to us;
•our ability to accurately anticipate and respond to seasonal or quarterly fluctuations in our operating results;
•risks related to foreign currency exchange rate fluctuations;
•our ability to comply with existing trade and other regulations;
•risks related to data security or privacy breaches; and
•our potential exposure to and the financial impact of litigation and other proceedings.
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The forward-looking statements contained in this Quarterly Report on Form 10-Q reflect our views and assumptions only as of the date of this Quarterly Report on Form 10-Q. We undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events.
OVERVIEW
We are a leading developer, marketer and distributor of branded performance apparel, footwear and accessories for men, women and youth. Our products are engineered with performance-driven materials and technologies, spanning a wide range of designs and styles for use in diverse climates. Our products are worn by athletes at all levels, from youth to professional, across multiple sports worldwide as well as by consumers who embrace active and performance-oriented lifestyles.
We are focused on driving sustainable long-term growth and profitability through increased demand for our core product categories, continued expansion of our direct-to-consumer capabilities and strategic development of our wholesale network. Our strategic priorities are focused on elevating brand positioning, simplifying and scaling our operating model, accelerating innovation and enhancing global go-to-market execution. Execution of these priorities depends, in part, on our ability to deliver against strategic initiatives across key areas of the business, including North America, our largest market. Our digital strategy is designed to enhance consumer engagement, strengthen brand loyalty and enable omnichannel experiences across multiple digital touchpoints.
Quarterly Results
During the three months ended June 30, 2026, challenging market conditions persisted, particularly in North America and Asia-Pacific, as consumer demand softened and promotional activity increased across the marketplace. These conditions, together with our continued efforts to optimize product assortments and improve marketplace quality, contributed to lower revenue across both our wholesale and direct-to-consumer channels.
Financial results for the three months ended June 30, 2026 as compared to the three months ended June 30, 2025 include:
•Total net revenues decreased 3.2%.
•Within our distribution channels, wholesale revenue decreased 1.6% and direct-to-consumer revenue decreased 5.8%.
•Within our product categories, apparel revenue decreased 1.7%, footwear revenue decreased 7.7%, and accessories revenue decreased 4.4%.
•Net revenue decreased 9.0% in North America, increased 12.1% in EMEA, decreased 6.6% in Asia-Pacific and increased 7.7% in Latin America.
•Gross margin increased 590 basis points to 54.1%.
•Selling, general and administrative expenses increased 2.4%.
2025 Restructuring Plan
During Fiscal 2025, our Board of Directors approved a restructuring plan (the "2025 restructuring plan"), designed to strengthen and support our financial and operational efficiencies. On May 11, 2026, our Board of Directors approved an increase of up to $50 million of additional charges. The 2025 restructuring plan now is expected to include up to $305 million of pre-tax restructuring and related charges, consisting of:
•Up to $139 million in cash charges, including approximately $46 million in employee severance and benefits costs and $93 million related to various transformational initiatives; and
•Up to $166 million in non-cash charges, including approximately $7 million in employee severance and benefits costs, and $159 million in contract terminations, facility, software, and other asset-related charges and impairments.
As of June 30, 2026, we have recorded $266.3 million of restructuring and related charges under the 2025 restructuring plan. The 2025 restructuring plan is expected to be substantially complete by December 31, 2026.
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Restructuring and related charges are excluded from our segment profitability measures. We report restructuring and related charges within Corporate Other, which is designed to provide increased transparency and comparability of operating segments' performance.
The restructuring and related charges for the three months ended June 30, 2026 include $6.6 million relating to North America, $0.5 million relating to Asia-Pacific, $0.2 million relating to Latin America, and a net benefit of $1.5 million relating to EMEA.
The restructuring and related charges for the three months ended June 30, 2025 include $18.9 million relating to North America, $1.5 million relating to Asia-Pacific and $0.7 million relating to EMEA.
The following table summarizes the costs recorded during the periods indicated in connection with the 2025 restructuring plan:
Three Months Ended June 30, Estimated Restructuring and Related Charges
2026 2025 Remaining to be incurred Total to be incurred
Costs recorded in cost of goods sold:
Inventory-related costs $ — $ —
Total costs recorded in cost of goods sold $ — $ — $ — $ 13,193
Costs recorded in restructuring charges:
Employee-related costs $ 5,438 $ 4,649
Facility-related costs (1,600) 6,311
Other restructuring costs 170 1,868
Total costs recorded in restructuring charges $ 4,008 $ 12,828 $ 30,037 $ 219,733
Costs recorded in selling, general and administrative expenses:
Employee-related costs $ (417) $ —
Other transformation initiatives 2,060 8,259
Total costs recorded in selling, general and administrative expenses $ 1,643 $ 8,259 $ 8,643 $ 72,074
Total restructuring and related charges $ 5,651 $ 21,087 $ 38,680 $ 305,000
Restructuring charges and recoveries require us to make certain judgments and estimates regarding the amount and timing as to when these charges or recoveries occur. The estimated liability could change subsequent to its recognition, requiring adjustments to the expense and the liability recorded. On a quarterly basis, we conduct an evaluation of the related liabilities and expenses and revise our assumptions and estimates as appropriate, as new or updated information becomes available.
Macroeconomic Factors and Other Global Events
We are actively monitoring developments in the global trade environment, including recent changes in global trade policy, and related effects on consumer discretionary spending. We continue to assess the implications for our business and are actively implementing mitigation strategies. Following the U.S. Supreme Court ruling issued on February 20, 2026, which invalidated certain tariffs previously imposed under the International Emergency Economic Powers Act ("IEEPA"), new tariffs at different rates under alternative legislative powers took effect for 150 days. Subsequent to the quarter end, on July 24, 2026, new tariff rates were imposed under Section 301 of the Trade Act of 1974 ("Section 301 tariffs"). These currently enacted tariff rates continue to increase our product costs and negatively impact our gross margin. In addition, the U.S. Trade Representative has indicated that additional Section 301 tariffs may be implemented in the coming months following investigations covering a broad range of countries, including major sourcing markets. The timing, rates, country coverage, product coverage and interaction with other tariffs remain uncertain. The volatility in global trade policy and potential for a continued elevated tariff environment creates uncertainty regarding the potential impact on our Fiscal 2027 results of operations, including revenue, gross profit and operating income.
The U.S. Supreme Court ruling did not address refunds, creating uncertainty regarding the potential recovery of tariffs previously paid under IEEPA. In April 2026, the IEEPA refund process was launched and we started evaluating and, where appropriate, pursuing potential reimbursement of certain IEEPA tariffs previously paid.
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During the three months ended June 30, 2026, we started receiving tariff refunds. As a result, we recognized a net benefit of approximately $70 million in cost of goods sold related to the recovery of tariff costs previously recognized during Fiscal 2026. Additional tariff recoveries recognized during the quarter primarily offset tariff costs associated with inventory sold during the current period and therefore did not result in an incremental net benefit to cost of goods sold. We also reduced the carrying value of inventory on hand by approximately $8 million to reflect estimated tariff refunds attributable to unsold inventory.
During the three months ended June 30, 2026, we received total cash refunds of approximately $101 million. As of June 30, 2026, approximately $13 million of expected future tariff refunds was included within prepaid expenses and other current assets on the Condensed Consolidated Balance Sheets. Subsequent to the quarter end, the remaining cash refunds were received.
Other macroeconomic factors, such as inflationary pressures, geopolitical instability and military conflicts and fluctuations in foreign currency exchange rates, have and may continue to impact our business. We continue to monitor these factors and the potential impacts they may have on our financial results, including product input costs, freight costs and consumer discretionary spending and therefore consumer demand for our products. We also continue to monitor the broader impacts of conflicts around the world on the economy, including their effect on inflationary pressures and the price of oil globally. For example, geopolitical instability and ongoing conflicts in the Middle East have and may continue to cause volatility in global energy and transportation markets, including higher fuel prices, resulting in increased shipping and logistics costs and increased raw material and commodity costs.
See "Risk Factors—Economic and Industry Risks—Our financial results and ability to grow our business may be negatively impacted by global events beyond our control"; "—Our business depends on consumer purchases of discretionary items, which can be negatively impacted during an economic downturn or periods of inflation. This could materially impact our sales, profitability, results of operations and financial condition"; "—Fluctuations in the cost of raw materials and commodities we use in our products and costs related to our supply chain could negatively affect our operating results"; "—Financial Risks—Our financial results could be adversely impacted by currency exchange rate fluctuations"; and —Legal, Regulatory and Compliance Risks—Our business is subject to a wide array of laws and regulations, and our failure to comply with these requirements could lead to investigations or actions by government regulators, increase expense or reputational damage" included in Part I, Item 1A of our Annual Report on Form 10-K for Fiscal 2026.
RESULTS OF OPERATIONS
The following tables set forth key components of our results of operations for the periods indicated, both in dollars and as a percentage of net revenues:
Three Months Ended June 30,
2026 2025
Net revenues $ 1,097,927 100.0 % $ 1,134,068 100.0 %
Cost of goods sold 504,095 45.9 % 587,572 51.8 %
Gross profit 593,832 54.1 % 546,496 48.2 %
Selling, general and administrative expenses 543,085 49.5 % 530,345 46.8 %
Restructuring charges 4,008 0.4 % 12,828 1.1 %
Income (loss) from operations 46,739 4.3 % 3,323 0.3 %
Interest income (expense), net (10,645) (1.0) % (4,051) (0.4) %
Other income (expense), net (7,013) (0.6) % (4,695) (0.4) %
Income (loss) before income taxes 29,081 2.6 % (5,423) (0.5) %
Income tax expense (benefit) 28,314 2.6 % (2,658) (0.2) %
Income (loss) from equity method investments (222) — % 153 — %
Net income (loss) $ 545 — % $ (2,612) (0.2) %
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Revenues
Net revenues consist of net sales and license revenues. Net sales consist of sales from apparel, footwear and accessories products. Our license revenues primarily consist of fees paid to us by licensees in exchange for the use of our trademarks on their products. The following tables summarize net revenues by product category and distribution channel for the periods indicated:
Three Months Ended June 30,
2026 2025 Change ($) Change (%)
Net Revenues by Product Category:
Apparel $ 734,035 $ 746,592 $ (12,557) (1.7) %
Footwear 245,262 265,855 (20,593) (7.7) %
Accessories 95,694 100,078 (4,384) (4.4) %
Net sales 1,074,991 1,112,525 (37,534) (3.4) %
License revenues 24,806 24,362 444 1.8 %
Corporate Other (1) (1,870) (2,819) 949 33.7 %
Total net revenues $ 1,097,927 $ 1,134,068 $ (36,141) (3.2) %
Net Revenues by Distribution Channel:
Wholesale $ 638,468 $ 649,050 $ (10,582) (1.6) %
Direct-to-consumer 436,523 463,475 (26,952) (5.8) %
Net sales 1,074,991 1,112,525 (37,534) (3.4) %
License revenues 24,806 24,362 444 1.8 %
Corporate Other (1) (1,870) (2,819) 949 33.7 %
Total net revenues $ 1,097,927 $ 1,134,068 $ (36,141) (3.2) %
(1) Corporate Other primarily includes foreign currency hedge gains and losses related to revenues generated by entities within our operating segments but managed through our central foreign exchange risk management program.
Net Sales
Net sales decreased by $37.5 million, or 3.4%, to $1,075.0 million during the three months ended June 30, 2026, from $1,112.5 million during the three months ended June 30, 2025. Apparel decreased primarily due to unfavorable channel mix and lower average selling prices, partially offset by the impact of foreign exchange rates. Footwear decreased primarily due to lower average selling prices and lower unit sales. Accessories decreased primarily due to lower unit sales. From a channel perspective, the decrease in net sales was due to a decrease in both direct-to-consumer and wholesale.
License Revenues
License revenues increased by $0.4 million or 1.8%, to $24.8 million during the three months ended June 30, 2026, from $24.4 million during the three months ended June 30, 2025. This was due to higher revenues from our international licensing partners, partially offset by lower revenues from our licensing partners in North America.
Gross Profit
Cost of goods sold consists primarily of product costs, tariffs, inbound freight and duty costs, outbound freight costs, handling costs to make products floor-ready to customer specifications, royalty payments to endorsers based on a predetermined percentage of sales of selected products and write downs for inventory obsolescence. In general, as a percentage of net revenues, we expect cost of goods sold associated with our apparel and accessories to be lower than that of our footwear. No cost of goods sold is associated with our license revenues.
We include outbound freight costs associated with shipping goods to customers as cost of goods sold; however, we include the majority of outbound handling costs as a component of selling, general and administrative expenses. As a result, our gross profit may not be comparable to that of other companies that include outbound handling costs in their cost of goods sold. Outbound handling costs include costs associated with preparing goods to ship to customers and certain costs to operate our distribution facilities. These costs were $18.4 million for the three months ended June 30, 2026 (three months ended June 30, 2025: $19.5 million).
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Gross profit increased by $47.3 million to $593.8 million during the three months ended June 30, 2026, as compared to $546.5 million during the three months ended June 30, 2025. Gross profit as a percentage of net revenues, or gross margin, increased to 54.1% from 48.2%. This increase in gross margin of approximately 590 basis points was primarily driven by favorable impacts of 690 basis points from supply chain, including 640 basis points due to the recovery of certain U.S. tariffs that were incurred in the prior year. This was partially offset by unfavorable impacts of 50 basis points from changes in foreign currency, 30 basis points from unfavorable regional, channel and product mix and 20 basis points from unfavorable pricing.
Selling, General and Administrative Expenses
Our selling, general and administrative expenses consist of costs related to marketing and advertising, selling, product innovation and supply chain, and corporate services. We consolidate our selling, general and administrative expenses into two primary categories: "marketing and advertising" and "other." The marketing and advertising category consists primarily of sports and brand marketing, media and retail presentation. Sports and brand marketing includes professional, club and collegiate sponsorship agreements, individual athlete and influencer agreements, and providing and selling products directly to teams and individual athletes. Media includes digital, broadcast, and print media outlets, including social and mobile media. Retail presentation includes sales displays and concept shops and amortization expense specific to our in-store fixture programs. Our marketing and advertising costs are an important driver of our growth. The other category is the sum of our selling, product innovation and supply chain, and corporate services categories.
Three Months Ended June 30,
2026 2025 Change ($) Change (%)
Selling, general and administrative expenses $ 543,085 $ 530,345 $ 12,740 2.4 %
Selling, general and administrative expenses increased by $12.7 million, or 2.4%, during the three months ended June 30, 2026. Within selling, general and administrative expenses:
•Marketing and advertising costs increased $19.4 million or 17.5%. This was primarily due to an increase in marketing activities during the period. As a percentage of net revenues, marketing and advertising costs increased to 11.9% from 9.8%.
•Other costs decreased $6.7 million or 1.6%, primarily due to lower salaried and non-salaried compensation expenses and lower consulting expenses, partially offset by higher incentive compensation expense. As a percentage of net revenues, other costs increased to 37.6% from 37.0%.
As a percentage of net revenues, selling, general and administrative expenses increased to 49.5% during the three months ended June 30, 2026 as compared to 46.8% during the three months ended June 30, 2025.
Restructuring Charges
Restructuring charges within our operating expenses primarily consist of employee severance and benefit costs, contract termination costs, facility, software and other asset-related charges and impairments and various transformational initiatives. Refer to Note 11 to the Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q for additional details.
Three Months Ended June 30,
2026 2025 Change ($) Change (%)
Restructuring charges $ 4,008 $ 12,828 $ (8,820) (68.8) %
Restructuring charges decreased by $8.8 million or 68.8% during the three months ended June 30, 2026. This was primarily due to lower facility-related costs and lower other restructuring costs, partially offset by higher employee-related costs.
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Interest Income (Expense), net
Interest income (expense), net includes interest income earned on our cash and cash equivalents and restricted investments, amortization of deferred financing costs, bank fees, capitalized interest for long-term property and equipment projects and interest expense under the credit and other long-term debt facilities. Refer to Note 7 to the Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q for additional details.
Three Months Ended June 30,
2026 2025 Change ($) Change (%)
Interest income (expense), net $ (10,645) $ (4,051) $ (6,594) (162.8) %
Interest expense, net increased by $6.6 million during the three months ended June 30, 2026. This was primarily due to an increase in interest expense resulting from the issuance of the Senior Notes due 2030 in June 2025 and borrowings on our revolving credit facility, partially offset by interest income earned on the restricted investments held to satisfy and discharge the Senior Notes due 2026.
Other Income (Expense), net
Other income (expense), net generally consists of unrealized and realized gains and losses on our foreign currency derivative financial instruments, and unrealized and realized gains and losses on adjustments that arise from fluctuations in foreign currency exchange rates relating to transactions generated by our international subsidiaries. Other income (expense), net also includes certain operating and variable lease costs and associated sublease income relating to lease assets held for sublet purposes and other non-operational facilities.
Three Months Ended June 30,
2026 2025 Change ($) Change (%)
Other income (expense), net $ (7,013) $ (4,695) $ (2,318) (49.4) %
Other expense, net increased by $2.3 million or 49.4% during the three months ended June 30, 2026. This was primarily due to higher facility-related expenses for non-operational facilities, including our former global headquarters and former distribution facility in Rialto, California, and net losses from foreign currency hedges.
Income Tax Expense (Benefit)
Three Months Ended June 30,
2026 2025 Change ($) Change (%)
Income tax expense (benefit) $ 28,314 $ (2,658) $ 30,972 1165.2 %
Income tax expense increased by $31.0 million during the three months ended June 30, 2026. Our effective tax rate for the three months ended June 30, 2026 was 97.4% as compared to 49.0% for the three months ended June 30, 2025. The increase in our effective tax rate was primarily driven by the impact of forecasted current year losses in the United States and Cyprus and associated valuation allowances along with the impact of discrete items as a percentage of the pre-tax results in each period, partially offset by a reduction of forecasted global minimum taxes.
SEGMENT RESULTS OF OPERATIONS
Our operating segments are based on how our Chief Operating Decision Maker ("CODM") makes decisions about allocating resources and assessing performance. Our segments are defined by geographic regions, including North America, EMEA, Asia-Pacific and Latin America.
We exclude certain corporate items from our segment profitability measures. We report these items within Corporate Other, which is designed to provide increased transparency and comparability of our operating segments' performance. Corporate Other consists primarily of (i) general and administrative expenses not allocated to an operating segment, including expenses associated with centrally managed departments such as global marketing, global information technology, global supply chain and innovation, and other corporate support functions; (ii) restructuring and restructuring related charges, if any; and (iii) certain foreign currency hedge gains and losses.
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Net Revenues
Three Months Ended June 30,
2026 2025 Change ($) Change (%)
North America $ 609,777 $ 670,319 $ (60,542) (9.0) %
EMEA 278,680 248,607 30,073 12.1 %
Asia-Pacific 152,586 163,386 (10,800) (6.6) %
Latin America 58,754 54,575 4,179 7.7 %
Corporate Other (1) (1,870) (2,819) 949 33.7 %
Total net revenues $ 1,097,927 $ 1,134,068 $ (36,141) (3.2) %
(1) Corporate Other primarily includes foreign currency hedge gains and losses related to revenues generated by entities within our operating segments but managed through our central foreign exchange risk management program.
North America
Net revenues in our North America region decreased by $60.5 million, or 9.0% during the three months ended June 30, 2026. This was driven by a decrease in both our wholesale and direct-to-consumer channels. Within our direct-to-consumer channel, net revenues decreased in e-commerce and owned and operated retail stores.
EMEA
Net revenues in our EMEA region increased by $30.1 million, or 12.1% during the three months ended June 30, 2026. This was driven by an increase in our wholesale channel, partially offset by a decrease in our direct-to-consumer channel. Within our direct-to-consumer channel, net revenues decreased in e-commerce and were flat in owned and operated retail stores. Net revenues in our EMEA region were also positively impacted by changes in foreign exchange rates.
Asia-Pacific
Net revenues in our Asia-Pacific region decreased by $10.8 million, or 6.6% during the three months ended June 30, 2026. This was driven by a decrease in both our direct-to-consumer and wholesale channels, partially offset by an increase in license revenues. Within our direct-to-consumer channel, net revenues decreased in both ecommerce and owned and operated retail stores. Net revenues in our Asia-Pacific region were also positively impacted by changes in foreign exchange rates.
Latin America
Net revenues in our Latin America region increased by $4.2 million, or 7.7% during the three months ended June 30, 2026. This was driven by an increase in both our wholesale and direct-to-consumer channels. Within our direct-to-consumer channel, net revenues increased in owned and operated retail stores, partially offset by a decrease in e-commerce. Net revenues in our Latin America region were also positively impacted by changes in foreign exchange rates.
Corporate Other
Net revenues in Corporate Other increased by $0.9 million during the three months ended June 30, 2026. This was primarily driven by net foreign currency hedge gains related to revenues generated by entities within our operating segments.
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Operating Income (Loss)
Three Months Ended June 30,
2026 2025 Change ($) Change (%)
North America $ 170,941 $ 121,437 $ 49,504 40.8 %
EMEA 28,176 39,643 (11,467) (28.9) %
Asia-Pacific 12,526 14,703 (2,177) (14.8) %
Latin America 8,964 6,606 2,358 35.7 %
Corporate Other (1) (173,868) (179,066) 5,198 2.9 %
Total operating income (loss) $ 46,739 $ 3,323 $ 43,416 1,306.5 %
(1) Corporate Other primarily includes foreign currency hedge gains and losses related to revenues generated by entities within our operating segments but managed through our central foreign exchange risk management program. Corporate Other also includes expenses related to our central supporting functions.
North America
Operating income in our North America region increased by $49.5 million, or 40.8% during the three months ended June 30, 2026. This was primarily due to an increase in gross profit, lower facility-related expenses and lower non-salaried compensation expenses and lower consulting expenses, partially offset by an increase in marketing and advertising costs. The increase in gross profit was driven by tariff refunds recorded during the three months ended June 30, 2026, partially offset by lower net revenues, as discussed above.
EMEA
Operating income in our EMEA region decreased by $11.5 million, or 28.9% during the three months ended June 30, 2026. This was primarily due to higher marketing and advertising costs and higher facility-related expenses, partially offset by an increase in gross profit, driven by higher net revenues, as discussed above.
Asia-Pacific
Operating income in our Asia-Pacific region decreased by $2.2 million, or 14.8% during the three months ended June 30, 2026. This was primarily due to a decrease in gross profit, driven by lower net revenues as discussed above, partially offset by lower selling and distribution expenses.
Latin America
Operating income in our Latin America region increased by $2.4 million, or 35.7% during the three months ended June 30, 2026. This was primarily due to an increase in gross profit, driven by higher net revenues as discussed above, partially offset by higher marketing and advertising costs and higher selling and distribution expenses.
Corporate Other
Operating loss in Corporate Other decreased by $5.2 million, or 2.9% during the three months ended June 30, 2026. This was primarily driven by net foreign currency hedge gains, as discussed above, lower restructuring charges under the 2025 restructuring plan, lower marketing and advertising costs and lower salaried compensation expense. These were partially offset by higher incentive compensation expense.
LIQUIDITY AND CAPITAL RESOURCES
Our cash requirements have principally been for working capital and capital expenditures. We fund our working capital, primarily inventory, and capital investments from cash flows from operating activities, cash and cash equivalents on hand, and borrowings available under our credit and long-term debt facilities. Our working capital requirements generally reflect the seasonality in our business as we historically recognize the majority of our net revenues in the last two quarters of the calendar year. Our capital investments have generally included expanding our in-store fixture and branded concept shop program, improvements and expansion of our distribution and corporate facilities, leasehold improvements to our Brand and Factory House stores and improvements in information technology systems. Our inventory strategy is focused on continuing to meet consumer demand while improving our long-term inventory efficiency through implementation of enhanced systems and processes to improve inventory management. These systems and processes are designed to improve forecasting and supply
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planning capabilities. In addition, we strive to improve inventory performance through disciplined product purchasing, reduced production lead times and enhanced planning and execution of selling excess inventory through our Factory House stores and other liquidation channels.
As of June 30, 2026, we had approximately $396 million of cash and cash equivalents. We believe our cash and cash equivalents on hand, cash from operations, our ability to reduce our expenditures as needed, borrowings available to us under our amended credit agreement, our ability to access the capital markets, and other financing alternatives are adequate to meet our liquidity needs and capital expenditure requirements for at least the next twelve months.
In addition, from time to time, based on prevailing market conditions, our liquidity requirements, contractual restrictions and other factors, and subject to compliance with applicable laws and regulations, we may seek to utilize cash on hand, borrowings or raise capital to retire, repurchase or redeem our debt securities, repay debt, repurchase shares of our common stock or otherwise enter into similar transactions to support our capital structure and business or utilize excess cash flow on a strategic basis. For example, as further described below, in May 2024, our Board of Directors authorized a share repurchase program pursuant to which we are authorized to repurchase a total of $500 million of our Class C Common Stock through May 2027. As of June 30, 2026, we have repurchased a total of $115 million Class C Common Stock under this program. Additionally, in June 2025, we issued $400 million in aggregate principal amount of Senior Notes due 2030 (as defined below) and, during August 2025, we used the net proceeds from this offering, together with borrowings under our amended credit agreement and cash on hand, to satisfy and discharge the Senior Notes due 2026 (as defined below). In connection with the satisfaction and discharge, we deposited with Wilmington Trust, National Association as trustee, all amounts necessary to satisfy and discharge our obligations under the Senior Notes due 2026 through maturity. On June 15, 2026, the deposited funds were used to settle all remaining principal and interest payments to holders of the Senior Notes due 2026.
If there are unexpected material impacts to our business in future periods from significant global events, such as an economic recession, changes in global trade policy or increased tariffs, that have a significant adverse effect on our profitability, including increased costs to create and sell our products, we may consider additional alternatives to preserve our liquidity. These alternatives may include further reducing our expenditures, changing our investment strategies, reducing compensation costs, and limiting certain marketing and capital expenditures. In addition, we may seek alternative sources of liquidity, including but not limited to, accessing capital markets, sale-leaseback transactions or other sales of assets or other alternative financing measures. However, instability in, or tightening of the capital markets, could adversely affect our ability to access the capital markets on terms acceptable to us or at all. Although we believe we have adequate sources of liquidity over the long term, a prolonged or more severe economic recession, inflationary pressure, or a slow recovery could adversely affect our business and liquidity and could require us to take certain of the liquidity preserving actions described above.
Refer to our "Risk Factors" section included in Part I, Item 1A of our Annual Report on Form 10-K for Fiscal 2026.
Share Repurchase Program
On May 15, 2024, our Board of Directors authorized us to repurchase up to $500 million (exclusive of fees and commissions) of outstanding shares of our Class C Common Stock through May 31, 2027. The Class C Common Stock may be repurchased from time to time at prevailing prices in the open market, through plans designed to comply with Rule 10b5-1 under the Securities Exchange Act of 1934, as amended, via private purchases through forward, derivative, accelerated share repurchase transactions or otherwise, subject to applicable regulatory restrictions on volume, pricing and timing. The timing and amount of any repurchases will depend on market conditions, our financial condition, results of operations, liquidity and other factors.
No shares were repurchased, under the above authorization, during the three months ended June 30, 2026 or the three months ended June 30, 2025. As of the date of this Quarterly Report on Form 10-Q, we have repurchased a total of $115 million or 18.0 million outstanding shares of our Class C Common Stock, leaving approximately $385 million remaining under our current share repurchase program.
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Cash Flows
The following table presents the major components of our cash flows provided by and used in operating, investing and financing activities for the periods presented:
Three Months Ended June 30,
2026 2025 Change ($)
Net cash provided by (used in):
Operating activities $ 109,137 $ 48,852 $ 60,285
Investing activities 585,400 (35,362) 620,762
Financing activities (607,064) 387,303 (994,367)
Effect of exchange rate changes on cash, cash equivalents and restricted cash (634) 9,314 (9,948)
Net increase (decrease) in cash, cash equivalents and restricted cash $ 86,839 $ 410,107 $ (323,268)
Operating Activities
Cash flows provided by operating activities increased by $60.3 million, driven by increases from changes in working capital of $45.8 million and net income before the impact of non-cash items of $14.5 million.
The changes in working capital were due to the following working capital inflows:
•$87.9 million from changes in accrued expenses and other liabilities;
•$29.7 million from changes in accounts payable;
•$7.8 million from changes in income taxes payable and receivable, net; and
•$3.0 million from changes in inventories.
These inflows were partially offset by the following outflows:
•$54.6 million from changes in other non-current assets;
•$14.4 million from changes in accounts receivable;
•$11.1 million from changes in customer refund liabilities; and
•$2.5 million from changes in prepaid expenses and other current assets.
Investing Activities
Cash flows provided by investing activities increased by $620.8 million primarily due to proceeds from restricted investments held to satisfy and discharge our $600 million Senior Notes due 2026 upon maturity. Additionally, total capital expenditures during the three months ended June 30, 2026 were $14.6 million, or approximately 1% of net revenues, representing a $20.8 million decrease from $35.4 million during the three months ended June 30, 2025.
Financing Activities
Cash flows from financing activities decreased by $994.4 million. During the three months ended June 30, 2026, we settled our $600 million Senior Notes due 2026 using proceeds from restricted investments, as discussed above. Additionally, during the three months ended June 30, 2026, we borrowed $25 million and repaid $25 million under the revolving credit facility. During the three months ended June 30, 2025, we issued $400 million of Senior Notes due 2030 (as defined below).
Capital Resources
Credit Facility
In March 2019, we entered into an amended and restated credit agreement by and among us, as borrower, JPMorgan Chase Bank, N.A., as administrative agent, and the other lenders and arrangers party thereto (the "credit agreement"). Subsequent to the quarter end, in August 2026, we entered into the ninth amendment to the credit agreement (the credit agreement as amended, the "amended credit agreement" or the "revolving credit facility"). The amended credit agreement provides for an aggregate $1.1 billion of revolving credit commitments that has a term that ends on June 16, 2030, with permitted extensions under certain circumstances and subject to a springing
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maturity of 91 days prior to June 16, 2030 if, on such date, the Senior Notes due 2030 (as defined below) have not been refinanced.
During the three months ended June 30, 2026, we borrowed $25 million and made repayments of $25 million under the revolving credit facility. As of June 30, 2026, $200 million remained outstanding at a weighted average interest rate of 4.92%.
At our request and a lender's consent, commitments under the amended credit agreement may be increased by up to an amount equal to (x) the greater of (i) $400.0 million and (ii) 100% of consolidated EBITDA plus (y) an unlimited amount so long as, after giving effect to the relevant increase, the secured leverage ratio (calculated as set forth in the amended credit agreement) does not exceed 2.50 to 1.00 in aggregate, subject to certain conditions as set forth in the amended credit agreement. Incremental borrowings are uncommitted and the availability thereof will depend on market conditions at the time we seek to incur such borrowings.
Up to $50.0 million of the facility may be used for the issuance of letters of credit. As of June 30, 2026, $45.5 million of letters of credit were outstanding (March 31, 2026: $45.5 million).
Our obligations under the amended credit agreement are guaranteed by certain domestic significant subsidiaries of Under Armour, Inc., subject to customary exceptions (the "subsidiary guarantors") and primarily secured by a first-priority security interest in substantially all of the assets of Under Armour, Inc. and the subsidiary guarantors, excluding real property, capital stock in and debt of subsidiaries of Under Armour, Inc. holding certain real property and other customary exceptions. The amended credit agreement provides for the permanent fall away of guarantees and collateral upon our achievement of investment grade rating from two rating agencies.
Pursuant to the ninth amendment, Under Armour Europe B.V., Under Armour Asia Limited, and Under Armour Global Limited have joined the revolving credit facility as foreign subsidiary borrowers, but have not guaranteed the obligations of the other borrowers or provided any collateral to secure the obligations under the revolving credit facility. However, pursuant to the amended credit agreement, we have guaranteed the obligations of such foreign subsidiary borrowers under the revolving credit facility.
The amended credit agreement contains negative covenants that, subject to significant exceptions, limit our ability to, among other things: incur additional secured and unsecured indebtedness; pledge assets as security; make investments, loans, advances, guarantees and acquisitions (including investments in and loans to non-guarantor subsidiaries); undergo fundamental changes; sell assets outside the ordinary course of business; enter into transactions with affiliates; and make restricted payments.
Prior to entering into the ninth amendment, we were required to maintain a ratio of consolidated EBITDA to consolidated interest expense of not less than 3.50 to 1.00 (the "interest coverage covenant") and we were not permitted to allow the ratio of consolidated total indebtedness to consolidated EBITDA to be greater than 3.25 to 1.00, or, at our election during a fiscal quarter in which a permitted acquisition with a cash purchase price exceeding $100.0 million is consummated, 3.75 to 1.00 (the "leverage covenant"). We were in compliance with the applicable covenants as of June 30, 2026. Pursuant to the ninth amendment, the interest coverage covenant was changed to require us to maintain a ratio of consolidated EBITDA to consolidated interest expense of not less than 3.00 to 1.00 and the leverage covenant was changed to not permit us to allow the ratio of consolidated total indebtedness to consolidated EBITDA to be greater than 3.75 to 1.00, or, at our election during a fiscal quarter in which a permitted acquisition with a cash purchase price exceeding $100.0 million is consummated, 4.25 to 1.00, as described in more detail in the amended credit agreement.
In addition, the amended credit agreement contains events of default that are customary for a facility of this nature, and includes a cross default provision whereby an event of default under other material indebtedness, as defined in the amended credit agreement, will be considered an event of default under the amended credit agreement.
Borrowings under the amended credit agreement bear interest at a rate per annum equal to, at our option, either (a) an alternate base rate (for borrowings in U.S. dollars), (b) a term rate (for borrowings in U.S. dollars, Euro or Japanese Yen) or (c) a "risk free" rate (for borrowings in U.S. dollars or Pounds Sterling), plus in each case an applicable margin. The applicable margin for loans will be adjusted by reference to a grid (the "pricing grid") based on the leverage ratio of consolidated total indebtedness to consolidated EBITDA and ranges between 1.00% to 1.75% (or, in the case of alternate base loans 0.00% to 0.75%). We will also pay a commitment fee determined in accordance with the pricing grid on the average daily unused amount of the revolving credit facility and certain fees with respect to letters of credit. As of June 30, 2026, the commitment fee was 22.5 basis points.
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3.25% Senior Notes
In June 2016, we issued $600.0 million in aggregate principal amount of 3.25% senior unsecured notes due June 15, 2026 (the "Senior Notes due 2026"). The Senior Notes due 2026 bear interest at a fixed rate of 3.25% per annum, payable semi-annually on June 15 and December 15 beginning on December 15, 2016.
In August 2025, using the net proceeds from the Senior Notes due 2030 (as defined below), together with borrowings under the amended credit agreement and cash on hand, we satisfied and discharged the Senior Notes due 2026 by irrevocably depositing funds in an amount sufficient to satisfy all remaining principal and interest payments. These funds were deposited with Wilmington Trust, National Association as trustee under the indenture dated as of June 13, 2016, as supplemented by First Supplemental Indenture dated as of June 13, 2016 (the "Indenture"). As a result of the satisfaction and discharge, we were released from the remaining obligations under the Senior Notes due 2026 and the Indenture, except those obligations in the Indenture that expressly survive the satisfaction and discharge.
The satisfaction and discharge represented an in-substance defeasance (as defined under ASC Topic 405 "Liabilities"). Therefore, the Senior Notes due 2026 and the related trust assets remained on our Consolidated Balance Sheets as of March 31, 2026. On June 15, 2026, the deposited funds were used to settle all remaining principal and interest payments to holders of the Senior Notes due 2026.
7.25% Senior Notes
In June 2025, we issued $400.0 million in aggregate principal amount of 7.25% senior unsecured notes due July 15, 2030 (the "Senior Notes due 2030"). The Senior Notes due 2030 are guaranteed on a senior unsecured basis by our subsidiary guarantors that provide guarantees under the amended credit agreement. The Senior Notes due 2030 bear interest at a fixed rate of 7.25% per annum, payable semi-annually in arrears on January 15 and July 15 beginning on January 15, 2026. We may redeem some or all of the Senior Notes due 2030 at any time, or from time to time, at the redemption prices described in the indenture governing the Senior Notes due 2030.
The indenture governing the Senior Notes due 2030 contains negative covenants that limit us and certain of our subsidiaries' ability to engage in certain transactions, including our ability to create or incur certain liens and engage in sale leaseback transactions, and are subject to material exceptions described in the indenture governing the Senior Notes due 2030. Our debt securities further include provisions which may require us to repurchase our debt securities at a premium upon certain change of control events.
CRITICAL ACCOUNTING ESTIMATES AND ASSUMPTIONS
Our Condensed Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP"). To prepare these financial statements, we must make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, as well as the disclosures of contingent assets and liabilities. Our estimates are often based on judgments, probabilities and assumptions that management believes to be reasonable, but that are inherently uncertain and unpredictable. It is also possible that other professionals, applying reasonable judgment to the same facts and circumstances, could develop and support a range of alternative estimated amounts. Actual results could be significantly different from these estimates.
As the impacts of major global events, including recent and potential changes in global trade policy, continue to evolve, estimates and assumptions about future events and their effects cannot be determined with certainty and therefore require increased judgment. The extent to which the evolving events impact our financial statements will depend on a number of factors including, but not limited to, any new information that may emerge concerning the severity of these major events and the actions that governments around the world may take in response. While we believe we have made appropriate accounting estimates and assumptions based on the facts and circumstances available as of this reporting date, we may experience further impacts based on long-term effects on our customers and the countries in which we operate. For a summary of our significant accounting policies, refer to Note 2 of our Consolidated Financial Statements, included in Part II, Item 8 of our Annual Report on Form 10-K for Fiscal 2026.
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