Q3 2024 Under Armour Inc Earnings Call

Operator: Good morning, and welcome to the Under Armour Q324 conference call. All participants are in a listen-only mode.

Operator: Should you need assistance during the call, please press star zero to reach an operator. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star one on your touch-tone phone.

Operator: To withdraw your question, please press star two. Please note this event is being recorded. I would now like to turn the conference over to Lance Allega, SVP, Investor Relations, Treasury, and Corporate Development. Please go ahead, sir.

Lance Allega: Thank you. Good morning, and welcome to Under Armour's third quarter fiscal 2024 earnings conference call. Today's event is being recorded for replay. Joining us on today's call are Under Armour President and CEO Stephanie Linaerts and CFO Dave Bergman. Our remarks today will include certain forward-looking statements that reflect Under Armour's management's current view of our business as of February 8, 2024. These statements may include projections for our business in the present and future quarters and fiscal years. Forward-looking statements are not guarantees of future business performance, and our actual results may differ materially from those expressed or implied in the views provided. Statements made are subject to risks and other uncertainties detailed in this morning's press release and documents filed regularly with the SEC, including our annual report on Form 10-K and our quarterly reports on Form 10-Q.

Lance Allega: Today's discussion may also include the use of non-GAAP references. Under Armour believes these measures provide investors with a helpful perspective on underlying business trends. When applicable, these measures are reconciled to the most comparable US GAAP measures, reconciliations of which, along with other pertinent information, can be found in this morning's press release and at about.underarmour.com. With that, I will turn the call over to Stefan.

Stefan: Thank you, Lance, and good morning to everyone joining today's call. Let me begin by saying that, despite a challenging retail environment and consumer buying behavior that was inconsistent from market to market, we are pleased with the results we achieved in our third quarter, with revenue in line with our November outlook and better than expected earnings. As I approach my first year at Under Armour, I am genuinely inspired by the power of the brand and our commitment to the strategies we are undertaking to unlock our full potential. Following our Protect This House 3 plan launched last spring, I am pleased with our progress in driving global demand creation and our focus on evolving and simplifying our approach to connecting with consumers.

Stefan: I also feel good about how our efforts are shaping up to deliver elevated design and products to the athletes we serve in nearly 100 countries around the world, strengthening our ability to drive success across our largest growth opportunities in footwear, sports style, and our women's business. With respect to driving U.S. sales, this remains a multi-year journey, and candidly, we have much more work to do to become a healthier business capable of returning to growth in our largest market. As detailed previously, inconsistency has permeated our U.S. business over the past year, in how we go to market across consumers, customers, and geographies, how our product is created and delivered with a consistent design language, channel segmentation, and how we show up in our owned physical and digital businesses. With a critical mass of work underway and additional analysis that will yield more work and decision points in the months ahead, we are on the right path to addressing these inconsistencies and turning them into strengths. All of this will take time, and it starts with leadership.

Stefan: To drive success, the right talent must be in the right places, with the trust and the freedom necessary to empower execution. Bolstering our leadership was amongst my highest priorities in my first year at the United Nations, and we've made excellent progress. Since last summer, we've added several new experienced officers to lead our product, design, consumer, supply chain, and communications team. Additionally, we named a nine-year company veteran to lead our Americas region and announced the return of a UA veteran to head our EMEA business. We have also streamlined our business to be more responsive, including our marketing function, where we recently consolidated our global and North American teams who will report to a new chief marketing officer, a search that's currently underway. This unification will bring a cleaner, integrated approach to empower faster decision-making to accelerate our ability to connect more deeply with consumers. About two-thirds of my executive leadership team is new compared to last year, and each of these leadership changes is tied directly to the inconsistencies I mentioned earlier.

Stefan: So we are making good progress and hitting challenges head-on. The next steps are activating and empowering these teams to drive our strategic priorities and creating a future flywheel of operational excellence and execution that drives consistency back into our business. During the third quarter, I visited our Asia-Pacific region and met with our team, athletes, and retail and factory partners.

Stefan: Like my EMEA trip, I am encouraged by the energy, passion, and effort we're bringing to our daily business. I also toured many of our North American stores to evaluate the opportunities we have to leverage our full price locations as a premium brand showcase to further build relevance with our consumers. In the near to midterm, as we navigate a dynamic global environment and our new leaders take time to ramp up, we are focused on cost management and profitability as we close out fiscal 24 and assess how to best allocate our investments in the year ahead. This includes efforts to understand where and how we are putting our resources to work to drive the best possible returns and identifying which strategies will be most critical to driving demand creation over the long term, especially in North America. With more strategic deployment of our marketing resources, we continue to see positive momentum. A great example is the Curry brand, driven by the Curry 11 basketball shoe. And we recently launched the Dub Nation Pack, celebrating Stefan's commitment to the Golden State Warriors fans with unique colorways for the XI, the Curry One Retro, and the Spawn Flo-Tro.

Stefan: The Curry brand also dropped exciting collaborations with Bruce Lee in apparel and footwear, including the new Curry Flip Speed. And with the addition of De'Aaron Fox from the Sacramento Kings, we're looking forward to De'Aaron's first signature shoe later this year. In global football, we're leveling up our roster with some of the best up and coming talent at the highest levels of sport. We recently signed Mexican national team player Sebastián Córdova, FC Barcelona's Fermin López, and Real Madrid's Antonio Rudiker.

Stefan: As we look to grow relevance in the world's most popular sport, this marks a significant move to bolster our presence, so we are very excited about the possibilities this brings in the years ahead. In American football, I want to congratulate our hometown Baltimore Ravens for a fantastic season, reaching the AFC Championship game, including UA athlete Kyle Hamilton, who was named a first-team All-Pro and went to the Pro Bowl in just his second year. On the college side of the game, Notre Dame finished the season with a dominant bowl win, powered by Under Armour performance gear on the field and had off-the-field swagger with UA slip speed, heat gear base layer, hoodies, and fleece. An excellent example of our evolving approach to brand activation was last month's UA Next All-American event in Orlando, where the best U.S. high school volleyball and football players engaged in a week of unforgettable experiences in elite-level competition.

Stefan: As a pinnacle grassroots program, this provides the next generation of athletes an opportunity to elevate their physical and mental game. And, of course, they were kitted out in amazing UA gear, like the all-new Slip Speed Mega, a Maximalist running shoe in Fire and Ice colorways, and other products like Unstoppable Pants, Infinite Pro running shoes, and all the accessories necessary to excel at their sport. With a massive social media activation, UA Next All-American Week demonstrates how we maximize the authentic connection to sports culture, showcasing product innovations that make athletes better, and leveraging up-and-coming influencers to generate brand buzz and engagement. We have also made significant strides across social media over the past year and continue to gain traction. During this time, our Instagram followers showed strength across all UA accounts, with a significant uptick in the Curry brand. Likewise, our TikTok followers have also gotten stronger, as has our engagement.

Stefan: This past quarter, our focus was elevating footwear and sports style, and our strategic collaboration with external content creators and influencers meaningfully helped to amplify the impact of our social media content. To drive engagement and demand for the brand, we must deliver elevated design and products. With the appointment of Yassine Saidi as our Chief Product Officer, I am incredibly excited about the evolution in style for our apparel and footwear. Joining us just last week, Yassine brings nearly 20 years of industry experience from several powerhouse brands, with a deep pedigree for developing authentic performance in sportswear apparel and a reputation as a significant influencer in the sneaker market.

Stefan: With our chief product officer and a new head of design in place, along with additional apparel, sneaker, and branding experts, we are making significant progress in getting the right team together to ensure a balanced approach to continuing to deliver industry-leading performance innovations on pitch, field, and court, with an ability to attack the massive sports sale opportunity more effectively. Given our product creation cycle, it will take time for this newly led team to start driving more critical mass into the equation, yet we're not hitting pause until then. We have a lot of newness to be excited about as we head into spring and summer 24, especially in apparel. Over the past few quarters, we've made substantial progress in style consolidation and leaning into premium as we've started to place smaller run capsules and reposition existing products within our Sports Vale offering.

Stefan: Although it's early, we are excited for fresh updates of our key apparel franchises to hit shelves later this spring, including the Unstoppable Air event, a new, baggier, on-trend silhouette of our classic woven pants. Additionally, an expanded line of our soft and versatile Meridian performance apparel is due out this spring, with stylish, flattering products for women, including body suits and tanks that she can wear from the classroom to practice and from the gym to the office. Next is an update to our iconic warm weather base layer with super light heat gear compression shirts and shorts that wick sweat for maximum performance, receiving new and improved sets, colorways, and styles for more versatile occasions.

Stefan: Our retail partners are excited about this evolution, and bookings for this product are strong, especially for our women's products. Speaking of our women's business, we were honored to have received two Women's Health Fitness magazine awards. Our UA SmartForm Evolution Mid Sports Bra received the best sports bra overall, and our Women's UA Reign 6 Training Footwear was also recognized.

Stefan: We are proud of these wins, which help drive more incredible momentum in this business, especially as we expand our Sportsdale offering. Shifting to our ability to harness innovation for our athletes and the planet, I'd highlight our collaboration with Celanese, a global chemical and materials company, in developing a new fiber for performance stretch fabrics called Neolab. This incredibly innovative fiber has the potential to offer our industry a high-performing, more sustainable alternative to elastane or spandex, which has recycling challenges.

Stefan: With the first apparel products due out later this year, we believe neolase fiber could have a transformative impact on Under Armour and the textile industry. Next is footwear, which remains our single most significant growth opportunity. And we know we have a lot of work to do here. During the third quarter, our footwear business was down 7%, in part due to a tougher prior-year growth comparison of 25%, but also due to softer demand, primarily in North America. In the rear view, we recognize that some of the inconsistencies from our past are showing up in our current results.

Stefan: However, we believe these challenges are near-term in nature, and we continue to look forward by evolving our footwear strategies and investments to support our long-term growth expectations. Rounding out our product leadership changes, a search for a new head of footwear is also underway, further emphasizing our commitment to having the right talent to drive the right results in the years ahead. Leveraging our knowledge of knits, expertise in midsoles, and innovative cushioning, we have made good headway in our approach to our running footwear. As a highlight, our Velocity and Infinite running franchises are getting important updates for Spring-Summer 24, with base, pro, and elite styles to cover our good, better, and best segmentation. In this spirit, we are intensely focused on franchises, identifying where we can win and partnering with our wholesale customers to scale our footwear business more effectively. Shifting next to our America's business, and much work remains. During the third quarter, our North American business was down 12%, which was in line with our expectations and reflective of a challenging wholesale environment in the U.S. and softer demand.

Stefan: Here, we remain focused on serving our retail partners and working with them to optimize our assortment and segmentation, ensuring greater overall consistency and profitability. In our North American DTC business, I'd highlight that, underneath flattish results in the quarter, we are encouraged by specific operational gains made during the crucial holiday period. These included exceptional customer service scorecards, elevated talent across our fleet, and significantly improved in-stock levels. Thus, our work to become a better retailer is beginning to shine through. We are also progressing on our new full-price brand house design and are set to test a smaller, easier-to-navigate format with a more premium and curated product positioning. One of the bright spots for our North American DTC business continues to be our UA Rewards Loyalty Program, with encouraging member engagement and spending trends.

Stefan: Our enrollment has hit nearly 3 million members, which is well ahead of the target we set for Fiscal 24. Additionally, our members continue to show a higher premium purchase frequency than non-members in these early months. We drove engagement during the third quarter via our first ever Members Week and eight members-only holiday campaigns, which directly contributed to peak holiday business. We are also working to improve our digital business. Given that our North American e-commerce channel has been tempered during Fiscal 24, as we turn to Fiscal 25, we are exploring plans to reduce our promotional dependence to create a more premium online presence. Simply put, UA.com will become a showcase for our brand. We have done a lot of work to make our website more functional to increase conversion, but we must create a more premium shopping experience to elevate the brand. Closing out North America, we recently appointed Kara Trent to head up our largest region. Kara has been with Under Armour since 2015 and most recently led our EMEA business to consistent double-digit revenue growth during her tenure. She is an exemplary leader and an industry veteran who builds performance-based teams.

To reach an operator after today's presentation, there will be an opportunity to ask questions to ask a question you May press star one on your touched on fund should we draw. Your question. Please press Star two. Please note. These event is being recorded I would now like to turn the conference over to land sell Agi.

VP Investor Relations strategy and corporate development. Please go ahead Sir.

Thank you good morning, and welcome to <unk> third quarter fiscal 2024 earnings Conference call. Today's event is being recorded for replay.

On today's call are under armour, President and CEO is definitely when arch and CFO Dave Bergman.

Our remarks today will include certain forward looking statements that reflect under Armours management's current view of our business as of February eight 2024.

These statements may include projections for our business in the present and future quarters and fiscal years.

Forward looking statements are not guarantees of future business performance and our actual results may differ materially from those expressed or implied in the views provided statements made are subject to risks and other uncertainties detailed in this morning's press release and documents filed regularly with the SEC, including our annual report on Form 10-K, and our quarterly reports on Form 10-Q today.

His discussion May also include the use of non-GAAP references on Ormat believes these measures provide investors with a helpful perspective on underlying business trends when applicable. These measures are reconciled to the most comparable U S. GAAP measures reconciliations of which along with other pertinent information can be found in this morning's press release and at about Dot under armour dot com with that.

Ill turn the call over to Stephanie.

Thank you Lance and good morning to everyone. Joining today's call. Let me begin by saying that despite a challenging retail environment and consumer buying behavior that was inconsistent market to market. We are pleased with the results. We achieved in our third corner with revenue in line with our November outlook and better than expected earnings.

Good morning, and welcome to the under armour Gil create 24 conference call. All participants are in a listen only mode should you need assistance during the call. Please press star zero to reach an operator.

As I approach my first year at under armour I am genuinely inspired by the power of the brand and our commitment to the strategies, we are undertaking to unlock our full potential.

Today's presentation, there will be an opportunity to ask questions to ask a question you May press star one on your touched on fine jewelry at the draw. Your question. Please press star two.

Following our protect this house three planned launch last spring I am pleased with our progress in driving global demand creation, and our focus on evolving and simplifying our approach to connecting with consumers.

Joe Landy: Please note. This event is being recorded I would now like turn the conference over to Joe land sell a guy as VP Investor Relations strategy Reincorporate Lubell Ahmed. Please go ahead Sir.

I also feel good about how our efforts are shaping up to deliver elevated design and products to the athletes, we serve and nearly 100 countries around the world strengthening our ability to drive success across our largest growth opportunities in footwear sports style and our women's business.

Joe Landy: Thank you good morning, and welcome to <unk> third quarter fiscal 2024 earnings Conference call. Today's event is being recorded for replay joining us on today's call are under armour, President and CEO, it's definitely what arch and CFO Dave Bergman.

With respect to driving U S. Sales. This remains a multiyear journey and candidly we have much more work to do to become a healthier business capable of returning to growth in our largest market.

Joe: Our remarks today will include certain forward looking statements that reflect under Armours management's current view of our business as of February eight 2024.

Joe: These statements may include projections for our business in the present and future quarters and fiscal years forward looking statements are not guarantees of future business performance and our actual results may differ materially from those expressed or implied in the views provided statements made are subject to risks and other uncertainties detailed in this morning's press release and documents filed regularly with the SEC, including.

As detailed previously inconsistency has permeated our U S business over the past few years.

And how we go to market across consumers customers and geographies, how our product is created and delivered with a consistent design language channel segmentation and how we show up in our owned physical and digital businesses.

Joe: Our annual report on Form 10-K, and our quarterly reports on Form 10-Q. Today's discussion May also include the use of non-GAAP references and Ormat believes these measures provide investors with helpful perspective on underlying business trends when applicable. These measures are reconciled to the most comparable U S. GAAP measures reconciliations of which along with other pertinent information.

With a critical mass of work underway and additional additional analysis that will yield more work and decision points in the months ahead. We are on the right path to addressing these inconsistency and turning them into strength.

All of this will take time and it starts with leadership.

To drive success, the right talent must be in the right places.

Joe: Can be found in this morning's press release and at about Dot under armour Dot com with that I will turn the call over to Stephanie.

With the trust and the freedom necessary to empower execution.

Bolstering our leadership was amongst my highest priorities in my first year at USA.

Stephanie: Thank you Lance and good morning to everyone. Joining today's call. Let me begin by saying that despite a challenging retail environment and consumer buying behavior that was inconsistent market to market. We are pleased with the results. We achieved in our third quarter with revenue in line with our November outlook and better than expected earnings.

And we've made excellent progress.

Since last summer we've added several new experienced officers to lead our product design consumer supply chain and communications teams. Additionally.

Additionally, we named a nine year company veteran to lead our Americas region and announced the return of the UA veteran to head our EMEA business.

Stephanie: As I approach my first year at under armour I am genuinely inspired by the power of that brand and our commitment to the strategies, we are undertaking to unlock our full potential.

We have also streamlined our business to be more responsive, including our marketing functions, where we recently consolidated our global and North American teams, who will report to a new chief marketing officer at <unk>.

Following our protect this house III plan launched last spring I am pleased with our progress in driving global demand creation, and our focus on evolving and simplifying our approach to connecting with consumers.

<unk> that's currently underway.

This unification will bring a cleaner integrated approach to empower faster decision, making to accelerate our ability to connect more deeply with consumers.

Stephanie: I also feel good about how our efforts are shaping up to deliver elevated design and products to the athletes we serve nearly 100 countries around the world strengthening our ability to drive success across our largest growth opportunities and footwear sports style and our women's business.

About two thirds of my executive leadership team is new compared to last year.

In each of these leadership changes is tied directly to the inconsistency as I mentioned earlier, so we are making good progress and hitting challenges head on that.

Stephanie: With respect to driving U S. Sales. This remains a multiyear journey and candidly we have much more work to do to become a healthier business capable of returning to growth in our largest market.

The next steps are activating and empowering these teams to drive our strategic priorities, creating a future flywheel of operational excellence and execution that drives consistency back into our business.

Stephanie: As detailed previously inconsistency has permeated our U S business over the past day art.

During the third quarter I visited our Asia Pacific region, and that with our team athletes and retailing factory partners.

Stephanie: And how we go to market across consumers customers and geographies, how our product is created and delivered with a consistent design language channel segmentation and how we show up in our owned physical and digital businesses.

Like my EMEA trip I am encouraged by the energy passion and effort, we're bringing to our daily business.

I also toward many of our north American stores to evaluate the opportunities we have to leverage our full price locations as a premium brand showcase to further.

With a critical mass of work underway and additional additional analysis that will yield more work and decision points in the months ahead. We are on the right path to addressing these and consistency and turning them into France.

Build relevance with our consumers.

In the near to midterm as we navigate a dynamic global environment and our new leaders take time to ramp up we are focused on cost management and profitability.

Stephanie: All of this will take time and it starts with leadership.

Stephanie: To drive success, the right talent must be in the right places with the trust and the freedom necessary to empower execution.

As we close out fiscal 'twenty, four and assess how to best to allocate our investments in the year ahead.

Stephanie: Bolstering our leadership was amongst my highest priorities in my first year at USA.

This includes efforts to understand where and how we are putting our resources to work to drive the best possible returns and identifying which strategies will be most critical to driving demand creation over the long term, especially in North America.

Stephanie: And we've made excellent progress.

Stephanie: Since last summer we've added several new experienced officers to lead our product design consumer supply chain and communications teams. Additionally.

Stephanie: Additionally, we named a nine year company veteran to lead our Americas region and announced the return of the UA veteran to head our EMEA business.

With more strategic deployment of our marketing resources, we continue to see positive momentum here a great example is the Korea brand driven by the Korea 11 basketball shoe.

Stephanie: We have also streamlined our business to be more responsive, including our marketing functions, where we recently consolidated our global and North American teams, who will report to a new Chief marketing officer, a search that is currently underway.

And we recently launched the dub nation Tac celebrating Stephens commitment to the Golden State Warriors fans with unique color ways for the 11, the Curry one retro and the spa flow trial. The Curry brand also dropped exciting collaborations with Bruce Lee in apparel and footwear, including the new Cree slip speed and with the addition of <unk> and Fox from.

Stephanie: This unification will bring a cleaner integrated approach to empower faster decision, making to accelerate our ability to connect more deeply with consumers.

Stephanie: About two thirds of my executive leadership team is new compared to last year.

The Sacramento Kings were looking forward to Darren first signature shoe later this year.

Stephanie: In each of these leadership changes is tied directly to the inconsistency as I mentioned earlier, so we are making good progress and hitting challenges head on that.

And global football, we're leveling up our roster with some of the best up and coming talent at the highest levels of sport.

We recently signed Mexican National team players Sebastian Cordova FC Barcelona is firm and Lopez and rail Madrids Antonio route occur.

Stephanie: The next steps are activating and empowering these teams to drive our strategic priorities, creating a future flywheel of operational excellence and execution that drives consistency back into our business.

As we look to grow relevance in the world's most popular sport. This marks a significant move to bolster our presence. So we are very excited about the possibilities that springs in the years ahead.

Stephanie: During the third quarter I visited our Asia Pacific region, and that with our team athletes and retailing factory partners.

And American football I want to congratulate our hometown Baltimore Ravens for a fantastic season, reaching the AFC championship game, including UA athletes, Kyle Hamilton, who was named a first team all pro and to the Pro Bowl and just the second year.

Stephanie: Like Miami, a trip I am encouraged by the energy passion and effort, we're bringing to our daily business.

Stephanie: We also toured many of our North American stores to evaluate the opportunities we have to leverage our full price locations as a premium brand showcase to further.

On the college side of the game Notre Dame and it's this season with a dominant ballwin powered by under armour performance gear on the field and had off the field swagger with you a slip speed Heath care base layer hoodies and please.

Stephanie: Build relevance with our consumers.

Stephanie: In the near to mid term as we navigate a dynamic global environment and our new leaders take time to ramp up we are focused on cost management and profitability.

Adding an excellent example of our evolving approach to brand activation was last month's UA next all American event in Orlando, where the best U S High school volleyball and football players engaged in a week of unforgettable experiences and elite level competition.

Stephanie: As we close out fiscal 'twenty, four and assess how to best to allocate our investments in the year ahead.

Stephanie: This includes efforts to understand where and how we are putting our resources to work to drive the best possible returns and identifying which strategies will be most critical to driving demand creation over the long term, especially in North America.

As a pinnacle grassroots program. This provides the next generation of athletes and opportunity to elevate their physical and mental game.

Stephanie: With more strategic deployment of our marketing resources, we continued to see positive momentum here a great example is the Perry brand driven by the Korea 11 basketball shoe.

And of course, they were kitted out an amazing UA gear like the all new flip speed Mega Ah maximalist, running shoe and fire and ice color ways and other products like unstoppable pants infinite pro running shoes, and all the accessories necessary to excel at their sport.

Stephanie: And we recently launched the dub nation Tac celebrating Stephens commitment to the Golden State Warriors fans with unique color ways for the 11, the Curry one retro and the spawned flow trial. The Curry brand also dropped exciting collaborations with Bruce Lee in apparel and footwear, including the new Cree slip speed and with the addition of Dr and Fox.

With a massive social media activation. The UA next all American week demonstrates how we maximize the authentic connection to sports culture, showcasing product innovations that make athletes better and leveraging up and coming influencers to generate brand buzz and engagement.

Stephanie: The Sacramento Kings were looking forward to Darren first signature shoe later this year.

Stephanie: And global football, we're leveling up our roster with some of the best up and coming talent at the highest levels of sport.

We have also made significant strides across social media over the past year and continue to gain traction.

Stephanie: We recently signed Mexican National team players Sebastian Cordova FC Barcelona is firm and Lopez and real Madrid Antonio route occur.

During this time, our Instagram followers showed strength across all UA accounts with a significant uptick in the Curry brand.

Likewise, our Tictoc followers have also gotten stronger as have our engagement rates. This past quarter, our focus was elevating footwear and sports style and our strategic collaboration with external content creators and Influencers meaningfully helped to amplify the impact of our social media content.

Stephanie: As we look to grow relevance in the world's most popular sport. This marks a significant move to bolster our presence. So we are very excited about the possibilities that springs in the years ahead.

Stephanie: And American football I want to congratulate our hometown Baltimore Ravens for a fantastic season, reaching the AFC championship game, including UA athletes, Kyle Hamilton, who was named a first team all pro and to the Pro Bowl and just the second year.

To drive engagement and demand for the brand we must deliver elevated design in products.

With the appointment of it seems the EDI as our chief product Officer, I am incredibly excited about the evolution and style for apparel and footwear.

Stephanie: On the college side of the game Notre Dame and it's this season with a dominant ballwin powered by under armour performance gear on the field and had off the field swagger with you a slip speed Heath care base layer hoodies and please.

Joining us just last week, you've seen brings nearly 20 years of industry experience from several powerhouse brands with a deep pedigree in developing authentic performance and sportswear apparel and a reputation as a significant influencer in the sneaker market.

Stephanie: Adding an excellent example of our evolving approach to brand activation was last month's UA next all American event in Orlando, where the best U S High school volleyball and football players engaged in a week of unforgettable experiences and elite level competition.

With our chief product officer, and a new head of design in place along with additional apparel sneaker and branding experts, we are making significant progress in getting the right team together to ensure a balanced approach to continuing to deliver industry, leading performance innovations on pitch field in court with an ability.

Stephanie: As a pinnacle grassroots program. This provides the next next generation of athletes and opportunity to elevate their physical and mental game.

Stephanie: And of course, they were kitted out an amazing ewig here like the all new flip speeds Mega maximalist, running shoe and fire and ice color ways and other products like unstoppable pants infinite pro running shoes, and all the accessories necessary to excel at their sport.

<unk> to attack the massive sports tail opportunity more effectively.

Given our product creation cycle. It will take time for this newly led team to start driving more critical mass into the equation yet we're not hitting pause until then we have a lot of newness to be excited about as we head into spring summer twenty-four, especially in apparel.

Stephanie: With a massive social media activation. The UA next all American week demonstrates how we maximize the authentic connection to sports culture, showcasing product innovations that make athletes better and leveraging up and coming influencers to generate brand buzz and engagement.

Over the past few quarters, we've made substantial progress in style consolidation and leaning into premium as we started to play smaller run capsules and reposition existing products within our sports fell offering.

Although early we are excited for fresh updates of our key apparel franchises to hit shelves later this spring, including the unstoppable Air event, a new bad year on trends silhouette of our classic woven path.

Stephanie: We have also made significant strides across social media over the past year and continue to gain traction.

Stephanie: During this time, our Instagram followers showed strength across all UA accounts with a significant uptick in the Curry brand.

Additionally, an expanded line of our soft and versatile meridian performance apparel is due out this spring with stylus flattering products for women, including body suits and tanks that she can wear from the classroom to practice and from the gym to the office.

Stephanie: Likewise, our Tictoc followers have also gotten stronger as have our engagement rates. This past quarter, our focus was elevating footwear and sports style and our strategic collaboration with external content creators and influencers meaningfully help to amplify the impact of our social media content.

Next is an update to our iconic warm weather base layer with Super light heat gear compression shirts, and shorts that wix sweat from maximum performance, receiving new and improved sets color ways and styles for more versatile occasions. Our retail partners are excited about this evolution and bookings for this product are strong, especially our.

Stephanie: To drive engagement and demand for the brand we must deliver elevated design in products.

Stephanie: With the appointment of it seems the E D as our chief product Officer, I am incredibly excited about the evolution and style for apparel and footwear.

Stephanie: Joining us just last week you seen brings nearly 20 years of industry experience from several powerhouse brands with a deep pedigree of developing authentic performance and sportswear apparel and a reputation as a significant influencer in the sneaker market.

Women's products.

Speaking of our women's business. We were honored to have received two women's health Fitness Magazine Awards are you as smart for them evolution mid sports Bra received the best sports Bra overall, and our women's UA range. Six training footwear was also recognized we are proud of these wins, what's helped drive more incredible momentum in this.

Stephanie: With our chief product officer, and a new head of design in place along with additional apparel sneaker and branding experts, we are making significant progress in getting the right team together to ensure a balanced approach to continuing to deliver industry, leading performance innovations on pitch field in court with an ability.

Business, especially as we expand our sports style offerings.

Shifting to our ability to harness innovation for our athletes on the planet I'd highlight our collaboration with Celanese, a global chemical and materials company and developing a new fiber fiber for performance stretch fabrics called Neal asked this incredibly innovative fiber has the potential to offer our industry a high performing.

Stephanie: <unk> to attack the massive sports tell opportunity more effectively.

Stephanie: Given our product creation cycle. It will take time for this newly led team to start driving more critical mass into the equation yet we're not hitting pause until then we have a lot of newness to be excited about as we head into spring summer 'twenty four especially in apparel.

More sustainable alternative to Alaska, our spandex, which has recycling challenges.

With the first apparel products due out later this year, we believe neo less fiber could have a transformative impact on under armour in the textile industry.

Stephanie: Over the past few quarters, we've made substantial progress in style consolidation and leaning into premium as we started to play smaller run capsules and reposition existing products within our sports fell offering.

Next is footwear, which remains our single most significant growth opportunity.

Stephanie: Although early we are excited for fresh updates of our key apparel franchises to hit shelves later this spring, including the unstoppable air that a new bad year on trends silhouette of our classic woven path.

And we know we have a lot of work to do here.

During the third quarter, our footwear business was down 7% in part due to a tougher prior year growth comparison of 25%.

But also due to softer demand primarily in North America.

Stephanie: Additionally, an expanded line of our soft and versatile meridian performance apparel is due out this spring with stylus flattering products for women, including body suits and tanks that she can wear from the classroom to practice and from the gym to the office.

In the rearview, we recognize some of the inconsistency from our past are showing up in our current results. However, we believe these challenges are near term in nature and we continue to look forward by evolving our footwear strategies and investments to support our long term growth expectations.

Stephanie: Next is an update to our iconic warm weather base layer with Super light heat gear compression shirts, and shorts that wix sweat from maximum performance, receiving new and improved sets color ways and styles for more versatile occasions. Our retail partners are excited about this evolution and bookings for this product are strong, especially our.

Rounding out our product leadership changes a search for a new head of footwear is also underway further emphasizing our commitment to having the right talent to drive the right results in the years ahead.

Leveraging our knowledge of nits expertise in missiles and innovative cushioning. We've made good headway in our approach to our running footwear as a highlight our velocity and incident running franchises are getting important updates for spring summer 'twenty, four with bass pro and elite styles to cover our good better best segments.

Stephanie: Women's products.

Stephanie: Speaking of our women's business. We were honored to have received two women's health Fitness Magazine Awards are you as smart form evolution mid sports Bra received the best sports Bra overall, and our women's you a range six training footwear was also recognized we are proud of these wins, what's helped drive more incredible momentum in this.

<unk>.

In this spirit, we are intensely focused on franchises indentified, where we can win and partnering with our wholesale customers to scale, our footwear business more effectively.

Stephanie: Business, especially as we expand our sports style offerings.

Stephanie: Shifting to our ability to harness innovation for our athletes on the planet I'd highlight our collaboration with Celanese, a global chemical and materials company and developing a new fiber fiber for performance stretch fabrics called Neal asked this incredibly innovative fiber has the potential to offer our industry a high performing.

Shifting next to our Americas business and much work remains during the third quarter, our North American business was down 12%, which I will note was in line with our expectations and reflective of the challenging wholesale environment in the U S and softer demand.

Here, we remain focused on serving our retail partners and working with them to optimize our assortment and segmentation, ensuring greater overall consistency and profitability.

Stephanie: More sustainable alternative to our last day in our spandex, which has recycling challenges.

Stephanie: With the first apparel products due out later this year, we believe Neal last fiber could have a transformative impact on under armour in the textile industry.

In our North American DTC business I'd highlight that underneath flattish results in the quarter. We are encouraged by specific operational gains made during the crucial holiday period. These included exceptional customer service scorecards elevated talent across their fleet and significantly improved in stock levels.

Stephanie: Next is footwear, which remains our single most significant growth opportunity.

Stephanie: And we know we have a lot of work to do here.

Stephanie: During the third quarter, our footwear business was down 7% in part due to a tougher prior year growth comparison of 25%.

Thus our work to become a better retailer is beginning to shine through.

We are also progressing on our new full priced brand house design and are set to test a smaller easier to navigate format with a more premium and curated product positioning.

Stephanie: But also due to softer demand primarily in North America.

Stefan: In the rearview, we recognize some of the inconsistency is from our past are showing up in our current results. However, we believe these challenges are near term in nature and we continue to look forward by evolving our footwear strategies and investments to support our long term growth expectations.

One of the bright spots for our North American DTC business continues to be our UA rewards loyalty program with encouraging member engagement and spending trends.

Our enrollment has hit nearly 3 million members, which is well ahead of the target we set for fiscal 'twenty four.

Stefan: Rounding out our product leadership changes a search for a new head of footwear is also underway further emphasizing our commitment to having the right talent to drive the right results in the years ahead.

Our members continue to show a higher premium purchase frequency than non members. In these early months, we drove engagement during the third quarter would be our first ever members week, along with eight members only holiday campaigns, which directly contributed to peak holiday business.

Stefan: Leveraging our knowledge of nits expertise in missiles and innovative cushioning. We've made good headway on our approach to our running footwear as a highlight our velocity and incident running franchises are getting important updates for spring summer 'twenty, four with bass pro and elite styles to cover our good better best segmentation.

We are also working to improve our digital business.

Even that our North American ecommerce channel has been tempered during fiscal 'twenty four as we turn to fiscal 'twenty. Five we are exploring plans to reduce our promotional dependence to create a more premium online presence.

Stefan: In this spirit, we are intensely focused on franchises identifying where we can win and partnering with our wholesale customers to scale, our footwear business more effectively.

Simply put you a dot com will become a showcase for our brand we have done a lot of work to make our website more functional to increase conversion, but we must create a more premium shopping experience to elevate the brand.

Stefan: Shifting next to our Americas business and much work remains.

Stefan: During the third quarter, our North American business was down 12%, which I will note was in line with our expectations and reflective of the challenging wholesale environment in the U S and softer demand.

Closing out North America, we recently appointed care trend to head up our largest region Karen has been with under armour since 2015, and most recently led our EMEA business to consistent double digit revenue growth during her tenure.

Stefan: Here, we remain focused on serving our retail partners and working with them to optimize our assortment and segmentation, ensuring greater overall consistency and profitability.

She is an exemplary leader and an industry veteran who builds performance based teams disciplined segmentation optimized marketing strategies and strong wholesale relationships.

Stefan: In our North American DTC business I'd highlight that underneath flattish results in the quarter. We are encouraged by specific operational gains made during the crucial holiday period. These included exceptional customer service scorecards elevated talent across their fleet and significantly improved in stock levels.

As she steps into this role I am confident that she has the right skill set demeanor and drive necessary to put this business back on a path of topline growth over the long term.

And finally, another leadership appointment as the return of 25 year industry and nine year under armour veteran Kevin Ross, who will serve as carriers replacement in EMEA to lead that business as senior Vice President and managing director.

Stefan: Thus our work to become a better retailer is beginning to shine through.

Stefan: We're also progressing on our new full priced brand house design and are set to test a smaller easier to navigate format with a more premium and curated product positioning.

With deep experience in general management sales team sports and product creation, we look forward to kevin's ability to hit the ground running in one of our most successful markets.

Stefan: One of the bright spots for our North American DTC business continues to be our UA rewards loyalty program with encouraging member engagement and spending trends.

In summary, as we close out the fiscal year, and then a dynamic market environment. We are incredibly focused on managing the business and making the hard but necessary decisions now to set ourselves up for a more promising future.

Stefan: Our enrollment has hit nearly 3 million members, which is well ahead of the target we set for fiscal 'twenty for our.

Stefan: Our members continue to show a higher premium purchase frequency than non members. In these early months, we drove engagement during the third quarter would be our first ever members week, along with eight members only holiday campaigns, which directly contributed to peak holiday business.

In the near term. This is involved in making several leadership changes engineered to address or areas of opportunity in.

In concert, we are committed to prudent cost management, including identifying and optimizing the investments in our business towards the highest returns.

Stefan: We are also working to improve our digital business given that our north American ecommerce channel has been tempered during fiscal 'twenty four as we turn to fiscal 'twenty. Five we are exploring plans to reduce our promotional dependence to create a more premium online presence.

Over the mid to long term, we are confident in our ability to drive global demand creation, and elevate design and product, while ensuring that tri sector of product place and promotion are optimized to put us on a trajectory to reignite growth and deliver improved value to our shareholders.

Stefan: Simply put you a dot com will become a showcase for our brand we have done a lot of work to make our website more functional to increase conversion, but we must create a more premium shopping experience to elevate the brand.

With that I will turn it over to Dave for his comments on the quarter and our outlook.

Thanks, Stephanie and good morning, everyone. Our third quarter revenue was down 6% to $1 5 billion, which align with our outlook.

Stefan: Closing out North America, we recently appointed <unk> to head up our largest region Cara has been with under armour since 2015, and most recently led our EMEA business to consistent double digit revenue growth during her tenure.

On a regional basis, North America revenue declined by 12% coming in at $915 million, which was in line with our expectations.

Wholesale was down meaningfully due to challenges in our full price business, partially offset by growth related to inventory management strategies, which included increased sales to the off price channel.

Stefan: She is an exemplary leader and an industry veteran who builds performance based teams.

Our North American DTC business was down slightly during the quarter.

EMEA revenue was up 7% to $284 million were up 2% on a currency neutral basis. This was driven by strong growth in our DTC business related to improved traffic trends across our retail and e-commerce channels.

Our EMEA wholesale business was also up during the quarter.

APAC revenue was up 7% to $212 million were up 8% on a currency neutral basis, we saw solid sales growth within our retail stores and wholesale was also up during the quarter.

China was a leading contributor to third quarter growth.

And finally, our Latin American business was up 9% to $70 million in the quarter were up 3% on a currency neutral basis.

From a channel perspective wholesale revenue was down 13% to $712 million with decreases in our full price and distributor businesses, partially offset by higher sales to the off price channel.

Direct to consumer revenue increased by 4% to $741 million due to a 5% increase in our owned and operated store revenue and a 2% increase in our E Commerce business.

And licensing revenue decreased 2% in the quarter to $29 million driven by declines in our Japanese and North American licensee businesses.

By product type apparel revenue was down 6% driven primarily by declines in our training and outdoor businesses.

Partially offset by strength in our sidelined and basketball categories.

Footwear was down 7% due to a tough comparison and softer demand primarily in North America.

As a reminder, we had robust growth during the third quarter of fiscal 'twenty three.

<unk> volume of footwear products that were previously delayed due to COVID-19 related factory constraints meaningfully hit the market.

And finally, our accessories business was flat year over year.

Moving down the P&L.

Gross margin was up 100 basis points to 45, 2% during the third quarter, driven by approximately 260 basis points of supply chain benefits.

Due to lower freight costs.

These tail winds were better than our previous expectation and were responsible for most of the overdrive on gross margin.

These benefits were partially offset by 140 basis points of unfavorable pricing due to increased promotional activities in our DTC business.

Our proactive strategy to reduce inventory through our factory houses.

And deeper discounts in our sales to the off price channel.

Along with about 20 basis points of unfavorable foreign currency impacts.

In the third quarter SG&A expenses were flat year over year at $602 million <unk>.

Excluding a $23 million litigation reserve expense adjusted SG&A expenses were down 4% to $579 million.

Next operating income was $70 million and excluding our litigation reserve expense.

Our adjusted operating income was $92 million, which was above our outlook of $65 million to $75 million due to the gross margin overdrive and lower SG&A.

After tax we realized a net income of $114 million or 26 of diluted earnings per share.

Excluding a $50 million benefit from our final earn out on the sale of the my fitness Pal platform.

And a 23 million litigation reserve expense, along with the related tax impacts of each.

Adjusted net income was $84 million or <unk> 19 of adjusted diluted earnings per share.

This came in above our third quarter outlook of 9% to 11.

Due to our adjusted operating income overdrive and favorability on the other expense and tax lines.

Now moving onto the balance sheet.

At the end of the third quarter, our inventory was down 9% to $1 1 billion as we trended toward normalized levels.

This was in line with our outlook.

And as we end the year, we anticipate our inventory to be down at a mid teen percentage rate, which should put us close to $1 billion.

Rounding out the quarter, our cash and cash equivalents were $1 billion and we.

We had no borrowings under our $1 1 billion revolving credit facility.

And finally, we repurchased $25 million of class C common stock during the third quarter.

This concluded our two year $500 million program announced in February of 2022, thus retiring $45 6 million previously outstanding shares.

Next let's turn to our full year outlook.

To start we have tightened our revenue expectation to a 3% to 4% decline for the full year, which is within our previous range of being down 2% to 4%.

This shift within the range represents continued softer wholesale revenue.

Breaking this down further we now expect revenue in North America to be down at a high single digit rate versus the previous expectation of a 5% to 7% decline.

And we now expect our international business to be up at a high single digit rate versus the previous low double digit rate increase.

From a product perspective, we expect our apparel and footwear businesses to both be down at a low single digit percentage rate for the full year.

Billion litigation reserve expense, along with the related tax impacts of each.

Adjusted net income was $84 million or <unk> 19 of adjusted diluted earnings per share.

Next we expect gross margin to be up 120 to 130 basis points.

This came in above our third quarter outlook of 9% to 11.

Versus our previous expectation of a 100 to 125 basis point increase.

Due to our adjusted operating income overdrive and favorability on the other expense and tax lines.

This improvement is related to supply chain benefits and lower than expected full year sales to the off price channel.

Now moving onto the balance sheet.

At the end of the third quarter, our inventory was down 9% to $1 1 billion as we trended toward normalized levels.

Moving down the P&L full year, SG&A should be flat to down slightly which is unchanged from our previous expectations.

This was in line with our outlook and.

And as we end the year, we anticipate our inventory to be down at a mid teen percentage rate, which should put us close to $1 billion.

Dropping this through our reported operating income is expected to reach $287 million to $297 million.

Rounding out the quarter, our cash and cash equivalents were $1 billion and we had no borrowings under our $1 $1 billion revolving credit facility.

Excluding the company's litigation reserve.

Adjusted operating income is expected to reach $310 million to $320 million.

And finally, we repurchased $25 million of class C common stock during the third quarter. This.

Putting it all together our reported diluted earnings per share is expected to be 57 to 59.

This concluded our two year $500 million program announced in February of 2022, thus retiring $45 6 million previously outstanding shares.

Which includes a <unk> 12 after tax benefit from a final earn out on the sale of the my fitness Pal platform and a five point negative impact from our litigation reserve.

Next let's turn to our full year outlook.

Excluding these net positive impacts of seven.

To start we have tightened our revenue expectation to a 3% to 4% decline for the full year, which is within our previous range of being down 2% to 4%.

We expect adjusted diluted earnings per share to be between 50 and 52.

So to close we remain encouraged by our evolving strategies to Turner inconsistency into strength.

This shift within the range represents continued softer wholesale revenue.

At the same time, we are maintaining a cautious view of the market and we will continue to work the levers of our P&L to deliver appropriate financial performance, while positioning the company for long term growth.

Breaking this down further we now expect revenue in North America to be down at a high single digit rate versus the previous expectation of a 5% to 7% decline.

And we now expect our international business to be up at a high single digit rate versus the previous low double digit rate increase.

That means managing our supply chain to maximize gross margin opportunities.

Tightening expenses optimizing investments focusing on cash management, and making prudent capital expenditures in the near to mid term.

From a product perspective, we expect our apparel and footwear businesses to both be down at a low single digit percentage rate for the full year.

Without question. There is much work ahead of us and we look forward to sharing more specific details on our year end call in May where we will provide our initial thoughts on fiscal 'twenty five.

Next we expect gross margin to be up 120 to 130 basis points.

That said, we have confidence in our market sector and that our work will proactively set us up to return to creating value for our shareholders.

Versus our previous expectation of a 100 to 125 basis point increase.

This improvement is related to supply chain benefits and lower than expected full year sales to the off price channel.

With that we finished our prepared remarks, so I'll turn it back to the operator for Q&A.

Moving down the P&L full year, SG&A should be flat to down slightly which is unchanged from our previous expectation.

Operator, our next question comes from Simeon Siegel from BMO capital markets.

Dropping this through our reported operating income is expected to reach $287 million to $297 million.

Hey, everyone. Good morning.

Hey, Simeon how are you.

That's good to hear.

This progress is so.

Excluding the company's litigation reserve.

Just wondering if you could share a little bit more on your broader color on how you're viewing North America landscape. Maybe how are you guys thinking about when you think about the proactive inventory management feel like Youre in a good place and maybe versus competition.

Adjusted operating income is expected to reach $310 million to $320 million.

Putting it altogether our reported diluted earnings per share is expected to be 57 to 59.

Just any color there and then if we can just any thoughts on I'm afraid promotions embedded in the full year guidance. Thank you guys.

Which includes a <unk> 12 after tax benefit from our final earn out on the sale of the my fitness Pal platform and a <unk> <unk> negative impact from our litigation reserve.

Sure. So I'll start and then Dave I'm sure will jump in and good morning, Sidney and thanks for your question as it relates to North America as we highlighted in our prepared remarks that the softness in North America is largely being driven by wholesale.

Excluding these net positive impacts of seven.

We expect adjusted diluted earnings per share to be between 50 and 52.

And as the year went on we saw continued softness on in that channel, including at once and replenishment wholesale orders.

So to close we remain encouraged by our evolving strategies to Turner inconsistency into strength.

A big piece of the puzzle in North America, and then if you really particularly look at the holiday time frame. There was quite a lot of promotional activity that impacted our performance and others as it relates to inventory I'll turn it to Dave in a second but our inventory continues to trend to be in a much better place for us.

At the same time, we are maintaining a cautious view of the market and we will continue to work the levers of our P&L to deliver appropriate financial performance, while positioning the company for long term growth.

That means managing our supply chain to maximize gross margin opportunities tightening expenses optimizing investments focusing on cash management, and making prudent capital expenditures in the near to mid term.

Armor and the industry overall, I'd say, though that doesn't necessarily mean there'll be on you know Ed.

No promotional activity that really ties to demand. So there is not always that one to one correlation I think people think could be the case. So I think we're really really excited about the game plan, we haven't for North America, I'd highlight again carat trend coming back to lead that business.

Without question. There is much work ahead of us and we look forward to sharing more specific details on our year end call in May where we will provide our initial thoughts on fiscal 'twenty five.

That said, we have confidence in our market sector and that our work will proactively set us up to return to creating value for our shareholders.

She has a great track record from her time in EMEA.

And with that we finished our prepared remarks, so I'll turn it back to the operator for Q&A operator.

Terrific lead our terrific relationship with wholesale partners disciplined segmentation, great targeted marketing efforts that have been driving the brand in that part of the world and we know she's going to bring those same skills and leadership on back when she starts her role in about a week here in North America. So.

Operator are you there.

We're excited about the work underway in our efforts around marketing product and distribution, which I'm sure we'll get into in the further in the Q&A, but Dave why don't you weigh in on inventory that specific question, Yes, I mean, I think you covered the inventory pretty well in that.

We are showing people in the queue ready to go.

The market, we think is coming back to normalization at this point.

Thank you Hello.

Our next question comes from Simeon Siegel from BMO capital markets.

Maybe a little bit longer to go but pretty pretty close. However, we are still seeing a fairly promotional environment out there even with the inventory levels at the retailers and a lot better place.

Speaker Change: Hey, Thank you hey, everyone. Good morning. Thanks.

Speaker Change: Hey, Matt how are you.

Operator: They had kept you out here.

So I think the retailers are being fairly cautious and still really trying to keep clean.

Speaker Change: So just wondering if you could share a little bit more on your broader color on how you're viewing North America landscape. Maybe how are you guys thinking about when you think about the proactive inventory management you feel like you're in a good place and maybe versus competition.

After a year or two of obviously, having more than than they wanted. So we do see some of that promotional impact on gross margin continuing a little bit and so.

Lance Allega: Any color there and then if we can just any thoughts on frame promotions embedded in our full year guidance. Thank you guys.

Asked a little bit about freight and promotion relative to our assumptions on the full year outlook or essentially Q4, and I would say that from a freight perspective.

Lance Allega: Sure. So I'll start and then Dave I'm sure will jump in and good morning, Simeon. Thanks for your question as it relates to North America and as we highlighted in our prepared remarks that the softness in North America is largely being driven by wholesale on and as the year went on we saw.

We've seen the rates normalize pretty well at this point.

They had.

Really stopped with the big increase in our fiscal Q4 of last year. So when we think about Q4 of this fiscal year as we finish out the year, we're kind of at a more stabilized freight rate in Q4, so that's not going to be a huge tailwind for us in Q4. However, we are starting to work more deeply with our inventory vendors that have made a lot of progress on some of the <unk>.

Lance Allega: <unk> softness on in that channel on including at one and replenishment wholesale orders that's a big piece of the puzzle in North America, and then if you're willing particularly look at the holiday timeframe. There was quite a lot of promotional activity that impacted our performance and others as it relates to inventory on.

Costing initiatives, there, which we're seeing some of that benefit favorably for Q4 of this year.

And then I did mentioned relative to the promotion levels, we do anticipate it continuing to be.

Lance Allega: Turn it to Dave in a second but our inventory continues to trend to be in in a much better place for under armour and the industry overall, I'd say, though that doesn't necessarily mean they'll be on you know Ed no promotional activity that really ties to demand because theres not always that one to one correlation I think people think.

No more promotional than normal for a while here.

And so we're continuing to expect that in our in our full year forecast as well.

Great. Thanks, a lot guys best of luck for quarter and the rest of year.

Thanks, Thank you.

Thank you. Our next question comes from Jay So UBS.

Stefan: Would be the case, so I think we're really really excited about on the game plan. We have for North America I'd highlight again carat trend coming back to lead that business. He has a great track record from her time in EMEA are on <unk>.

Great. Thank you so much my question, just a little bit on <unk>.

Europe, if you could just maybe touch on that business, how the wholesale channel. There is looking if it's different than sort of the comments that you made about the U S. And then Stephanie I'd love to hear a little bit more about the product innovation pipeline, what you see coming over the next couple of quarters and really into the Olympics perhaps.

Stefan: Perfect lead our terrific relationship with wholesale partners disciplined segmentation, great targeted marketing efforts that have been driving the brand in that part of the world and we know she is going to bring those same skills and leadership on back when she starts her role in them at about a week here in North America. So we're.

Here your view on that thank you.

Yes, sure of course as it relates to EMEA.

In Europe. We are that is continues to be a strong market for us the brand is doing very well there.

That being said we mentioned this in the remarks, we're seeing.

Stefan: We're excited about the work underway in our efforts around marketing product and distribution, which I'm sure we'll get into in the further in the Q&A, but Dave why don't you weigh in on inventory at specific question, yes.

A little bit of cooling there with the consumer, particularly in eastern Europe, and some of our distributor markets.

But again, the European market, particularly in England, and Spain, and France is very strong strong for US, let me touch on product and I'll, let Dave jump in on Europe, as well, but on the product side I mean, we have a lot to be excited about.

Dave: You cover the inventory pretty well in that market. We think is coming back to normalization at this point.

Dave: Maybe a little bit longer to go but pretty close.

Stefan: However, we are still seeing a fairly promotional environment out there even with the inventory levels at the retailers and a lot better place.

What youre seeing Youre seeing just started last week, but we're super excited to have him as our new chief product officer and of course as we've shared with you about five months ago, John Barbados joined US as our new Chief Design Officer, and Theres, just a lot of on a lot of exciting things happening on both the apparel side and the footwear side.

Stefan: So I think the retailers are being fairly cautious and still really trying to keep clean.

Stefan: After a year or two of obviously, having more than they than they wanted so we do see some of that promotional impact on gross margin continuing a little bit and so you asked a little bit about freight and promotion relative to our assumptions on the full year outlook or essentially Q4, and I would say that from a freight perspective.

Let me hit a couple of things that we're excited about on the apparel side, we continue to see a lot of traction with our meridian product for women, where we're really winning with women isn't legs.

Stefan: <unk>.

Sorry, as bottoms, and tops and particularly withdraws, we're having a lot of success there.

Stefan: We've seen the rates normalize pretty well at this point.

Stefan: They had.

I mentioned that we've got some exciting new things coming with our unstoppable franchise.

Stefan: Really stopped with the big increase in our fiscal Q4 of last year. So when we think about Q4 of this fiscal year as we finish out the year, we're kind of at a more stabilized freight rate in Q4, so that's not going to be a huge tailwind for us in Q4. However, we are starting to work more deeply with our inventory vendors that have made a lot of progress on some of the <unk>.

It's really going to be a terrific and our on our core base layer is really has some new upgrades in terms of fit and color ways and we're excited about that on the apparel side on the footwear on the footwear side.

Stefan: Costing initiatives, there, which we're seeing some of that benefit favorably for Q4 of this year.

We have some real traction with Curry.

And the Korea 11, I'm excited about what's happening with our running footwear in particular with our velocity elite and infinite franchises as a quick reminder, the velocity elite running shoe was worn by last year's New York City Marathon winner Sharron <unk> sure. It again this year and came in third.

Stefan: And then I did mentioned relative to the promotion levels, we do anticipate it continuing to be.

Stefan: In a more promotional than normal for a while here.

Stefan: And so we're continuing to expect that in our in our full year forecast as well.

Speaker Change: Great. Thanks, a lot guys best of luck for the corner and are still here.

Place with only a couple of seconds off the top spot, which is remarkable so that that velocity running shoe is is is a real winner at the highest levels of performance and running and then on the Internet too.

Speaker Change: Thanks, Thank you.

Speaker Change: Thank you. Our next question comes from Jay sole UBS.

Jay Sole: Great. Thank you so much my question just limit.

Jay Sole: Europe, if you could just maybe touch on that business, how the wholesale channel. There is looking if it's different than sort of the comments that you made about the U S. And then Stephanie I'd love to hear a little bit more about the product innovation pipeline, what you see coming over the next couple of quarters and really into the Olympics perhaps.

We've really re imagine the hover technology, which is incredible cushioning and so we have a.

Bass pro and elite level with that too really hitting that segmentation of good better and best So we're excited with that about that but we're just getting started again, you're seeing just started last week and we've got an amazing team here, that's put that as a great innovation pipeline, but we're excited to see what you're seeing in partnership.

Jay Sole: Would love to hear your view on that thank you.

Speaker Change: Yes, sure of course as it relates to EMEA.

Speaker Change: In Europe. We are that is continues to be a strong market for us the brand is doing very well there.

With.

The new head of footwear, when he fills that position that search is underway and of course with our design talent. So we're excited with it we're excited with what we've got in the in the product pipeline I will say, it's worth noting that it will take time, though when we think about the product creation cycle in terms of any real massive new.

Speaker Change: Being said we mentioned this in the remarks, we're seeing a little bit of cooling there with the consumer, particularly in eastern Europe, and some of our distributor markets.

Stefan: But again, the European market, particularly in England, and Spain, and France is very strong song for US, Let me touch on product and I'll, let Dave jump in on in Europe, as well, but on the product vitamin we have a lot to be excited about.

I think we're looking at spring and summer twenty-five plus just given the product creation.

<unk> that we're dealing with but Dave do you want to jump in with any additional color on Europe.

Stefan: With the Athene Athene just started last week, but we're super excited to have him as our new Chief product officer and of course as we've shared with you about five months ago, John Barbados joined US as our new Chief Design Officer, and Theres, just a lot of on a lot of exciting things happening on both the apparel side and the footwear side.

I mean, I think the only thing maybe that I would point out is we have a lot of strength moving forward in Europe, which is great to see I think one of the points that is a little bit of pressure is just some of the red Sea shipping disruptions do impact us a little bit there.

And that is part of what went into our outlook tightening is that we see about a one point headwind from the Red Sea impacts and that's primarily related to EMEA.

Stefan: So let me hit a couple of things that we're excited about on the apparel side, we continue to see a lot of traction with our meridian product for women, where we're really winning with women isn't legs, I'm, sorry, as bottoms and tops and particularly withdraws, we're having a lot of success there.

And then obviously, there's some geopolitical challenges in that region as well that we're dealing with so where we.

Working through that and that's really what I'm mentioning that one point headwind thats really talking about fourth quarter and as we see finishing out the year.

Stefan: Mentioned that we've got some exciting new things coming with our unstoppable franchise.

I'd add one more thing on the product side, just really quickly I should've mentioned, because it's getting a lot of traction is with our slipped speed Mega, which we did a soft launch at the UA all.

Stefan: This debt, that's certainly going to be terrific and our on our core base layer is really has some new upgrades in terms of fit and color ways and we're excited about that on the apparel side on the footwear on the footwear side.

All American game, but a soft launch there we have a very cool activation at the Super Bowl. This weekend, but the slip speed Mega is it's a very cool shoe that that I think is really resonating with consumers. So that's another another highlight on the on the footwear front.

Stefan: We have some real traction with Curry.

Stefan: And the Korea 11, I'm excited about what's happening with our running footwear in particular with our velocity elite and infinite franchises as a quick reminder, the velocity elite running shoe was worn by last year's New York City Marathon winner Sharron <unk> sure and again this year and came in third.

Terrific. Thank you so much.

Our next question comes from Johan <unk> BNP Paribas. Please proceed.

Stefan: With only a couple of seconds off the top spot, which is remarkable so that that velocity running shoe is is is a real winner at the highest levels of performance and running and then on the Internet too.

And my question.

I was hoping to drill down on North America wholesale if possible could you possibly quantify it.

Down in North America wholesale was for the quarter or just your expectations for the year.

Stefan: We've really re imagine the hover technology, which is incredible cushioning and so we have a.

<unk> can better understand the dynamics within this channel are you starting to see.

Stefan: Same days pro an elite level with that schuh really hitting that segmentation of good better and best So we're excited with that about that but we're just getting started again you seem just started last week and we've got an amazing team here that has put some great innovation pipeline, but.

Sort of how the conversations with North America retail is regarding restocking of inventories, particularly for the back half of 2024.

And then just Dave on the point on the Red Sea understand Theres some delays, but can you maybe just.

Share with the audience how are you.

How much of your contracted out when you renegotiate your contracts with with the shipping merchants.

Speaker Change: We're excited to see what you seen in partnership with.

Speaker Change: The new head of footwear, but when he fills that position that search is underway and of course with our design talent. So we're excited with it we're excited with what we've got in the in the product pipeline I will say, it's worth noting that there. It will take time, though when we think about the product creation cycle in terms of any real massive new.

Yes, So I guess a couple of things North America wholesale is definitely a pressure point, we've talked about that we've talked about kind of the the softer orders as we saw coming in through fiscal 'twenty. Our fall winter 2003, and also a little bit relative to spring summer 'twenty four.

Speaker Change: Product I think we're looking at spring summer twenty-five plus just given the product creation.

We haven't been quantifying the actual percentage for the channel within our region.

Speaker Change: Cycle that we're dealing with but Dave do you want to jump in with any additional color on Europe.

But definitely as a pressure point.

We're continuing to see an experience where our DTC channels in North America are performing much better than where we are with wholesale I think again the retailers are being very cautious right now, even though the inventory levels at retailer and a much better place.

Dave: I mean, I think the only thing maybe that I would point out is we have a lot of strength.

Dave: Moving forward in Europe, which is great to see I think one of the points that is a little bit of pressure is just some of the red Sea shipping disruptions do impact us a little bit there.

And that's why we're continuing to see some of the promotional levels as well.

Dave: And that is part of what went into our outlook tightening.

When you think about.

Stefan: We see about a one point headwind from the Red Sea impacts and that's primarily related to EMEA.

The Red Sea impacts.

We are seeing some impacts there from shipping disruptions mainly impacting EMEA.

Stefan: And then obviously, there's some geopolitical challenges in that region as well that we're dealing with so we're working through that and that's really what I am mentioning that one point headwind thats really talking about fourth quarter and as we see finishing out the year.

The impact includes.

Increased shipping costs as well not just some delays.

And kind of think about that about 20% or so of our global apparel comes through that area. So it is meaningful to us.

Speaker Change: I'd add one more thing on the product side, just really quickly I should've mentioned, because it's getting a lot of traction is with our slip speed Mega, which we did a soft launch at the UA all.

We're mitigating that through regional air freight adjusted shipping liens differing forward buys.

Stefan: All American game with a soft launch there we have a very cool activation at the Super Bowl. This weekend, but the slip speed Mega is it's a very cool shoe that that I think is really resonating with consumers. So that's another another highlight on the on the footwear front.

Our organization et cetera. So.

And with all that we don't really see any concerns with daily operations of our inventory vendors in that region, but again, we are estimating for Q4 about a one point revenue headwind because of the delays in mainly the impact on the EMEA region and that's considered in our tightening of our outlook for the full year.

Speaker Change: Terrific. Thank you so much.

Speaker Change: Our next question comes around Lohan legislate SKU BNP <unk>. Please proceed.

Very helpful. Thank you very much.

Sure.

Our next question comes from Bob <unk> Guggenheim.

Speaker Change: And my question.

Stefan: I was hoping to drill down on North America wholesale if possible could you possibly quantify it.

Hi, Good morning, Stephanie just I guess, a bigger picture question for you but.

Stefan: Down in North America wholesale was for the quarter or just your expectations for the year.

You've made a significant amount of new hires new leaders since last summer when I looked at the list and think about it.

Speaker Change: Can better understand the dynamics within this channel are you starting to see.

Design officer supply chain product Officer Americas.

Stefan: Sorry to have the conversations with North American retailers are regarding restocking of inventories, particularly for the back half of 2024.

When you think about all these new leaders in the organization.

Stefan: And then just Dave on the point on the Red Sea understand Theres some delays, but can you maybe just.

How should we think about the time it will take for the organization to actually absorb the leadership changes the impact on the culture and the execution eventual change until to the years ahead.

Speaker Change: Share with the audience how are you.

Speaker Change: How much of your contracted out and when you renegotiate your contracts with with the shipping merchants.

Well good morning, Bob and thanks. Thanks for that question. During my first D are my top priority was building out the right team and to build out the right team to address some of the inconsistency and challenges that we've had in the past and Youre right Theres been a lot of change let me just put a little a little more color around it this is.

Dave: Yes, So I guess a couple of things North America wholesale is definitely a pressure point, we've talked about that we've talked about kind of the softer orders as we saw coming in through fiscal 'twenty. Our fall winter 2003, and also a little bit relative to spring summer 'twenty four.

<unk> been in the job for about 11 months coming up on my first year, but since last summer we have filled the following jobs. Let me just tick through them quickly Chief Consumer officer, Jim Dallas season, Marriott Executive a lot of experience in product marketing sales and brand a new Chief Communication Officer, Amanda Miller came from Paypal.

Stefan: We haven't been quantifying the actual percentage for the channel within our region.

Stefan: But definitely as a pressure point.

Stefan: We're continuing to see an experience where our DTC channels in North America are performing much better than where we are with wholesale I think again the retailers are being very cautious right now, even though the inventory levels at retailer and a much better place.

I'll bring Israel PR horsepower, New Chief Design Officer, John Barbados, Great experience with its own company, Ralph Lauren Calvin Klein Comverse.

Stefan: That's why we're continuing to see some of the promotional levels as well.

New Chief supply chain Officer, Sean Curran, a 30 year veteran at the gap, who was most recently the CFO at old Navy, but held various positions at that company over the years, our new Chief product Officer, you seen Sadie who started again last week as I mentioned.

Stefan: When you think about.

Stefan: The Red Sea impacts.

Stefan: We are seeing some impacts there from shipping disruptions mainly impacting EMEA.

Stefan: The impact includes.

Stefan: Increased shipping costs as well not just some delays.

Coming from some powerhouse brands and most recently owning his own company. So he has got that entrepreneurial spirit, our new president of the Americas, just starting carat Trent.

Stefan: And to kind of think about that about 20% or so of our global apparel comes through that area. So it is meaningful to us.

Stefan: We're mitigating that through regional air freight adjusted shipping lanes differing forward buys.

Industry in UA that trend, we talked about on how spectacular she is going to be in her new role.

Mentioned number Kevin Ross will backfill Kara and EMEA.

Stefan: <unk> et cetera. So.

Stefan: And with all of that we don't really see any concerns with daily operations of our inventory vendors in that region, but again, we are estimating for Q4 about a one point revenue headwind because of the delays in mainly the impact on the EMEA region and that's considered in our tightening of our outlook for the full year.

A 25 year veteran of the industry knows UA was with us for nine years, but experienced a tailor made.

Yeti in addition to under armour, we did also I didn't mention this but in my remarks that we did hire new SVP of direct to consumer for the Americas last summer to Josh Statin, who came under.

Speaker Change: Very helpful. Thank you very much.

Stefan: Sure.

Under armour veteran who came back to us and we have an open CMO role and a new head of footwear that I covered in my prepared remarks. So when you put all of that in the blender that is a lot of change in roughly six months whats terrific is again.

Bob: Our next question comes from Bob <unk> Guggenheim.

Bob: Hi, Good morning, Stephanie just I guess, a bigger picture question for you, but you've made a significant amount of new hires new leaders since last summer when I looked at the list and think about it.

Executives, who all have really incredible backgrounds have hit the ground running I'm. So excited to see how well they are working together.

Stefan: Design officer supply chain product officer in Americas.

<unk> seen and <unk> worked together for close to nine years at pillar. So to have the head of North America and the head of product already has deep.

Stefan: When you think about all these new leaders in the organization.

I'm working relationship between the two of them is terrific.

Stefan: How should we think about the time it will take for the organization to actually absorb the leadership changes the impacts on the culture and the execution eventual change in in fill to the years ahead.

When you think about executives like Kevin Ross and Jos Baeten coming back they know Yue.

So this.

This team has hit the ground running but they do need time to settle in and get their teams organized.

Speaker Change: Good morning, Bob and thanks. Thanks for that question. During my first D are my top priority was building out the right team and to build out the right team to address some of the inconsistency and challenges that we've had in the past and Youre right Theres been a lot of change let me just put a little a little more color around it this is <unk>.

I should underscore two we have amazing talent at under armour already that these leaders are joining really deep experience, particularly in terms of the performance apparel performance footwear. So we've got a great team at under armour, we brought these critical new roles and most.

Stefan: <unk> been in the job for about 11 months coming up on my first year, but since last summer we have filled the following jobs. Let me just tick through them quickly Chief Consumer officer, Jim Dallas season, Marriott Executive a lot of experience in product marketing sales and brand a new Chief Communication Officer, Amanda Miller came from Paypal.

Most of them when you think about it on a forward facing part of the business I put supply chain in there too because if we can't get things to the right place at the right time, they won't be delivering to the customer it's got quite a lot of work underway on the supply chain front under Sean's leadership, so it's going to take some time, but.

Stefan: I'll bring us or LPR horsepower, new Chief design Officer, John Varvatos, Great experience with its own company, Ralph Lauren Calvin Klein Comverse.

To get going but I'm confident that we have the right team we have the right strategy and we're firing on all on all cylinders. So I'm I'm excited with I'm excited with the amount of progress we've made on the talent front in less than a year.

Stefan: New Chief supply chain Officer, Sean Curran, a 30 year veteran at the gap, who was most recently the CLO at old Navy, but held various positions at the company over the years, our new Chief product Officer, you seen Lady who started again last week as I mentioned.

Good luck. Thank you.

Thanks, Bob Thank you Bob.

Our next question comes from Sam Poser Williams trading.

Stefan: Coming from some powerhouse brands and most recently owning his own company. So he has got that entrepreneurial spirit, our new president of the Americas, just starting carat Trent.

Thank you very much for taking my questions I've got three and I'll just.

Read them all up one.

Stefan: Industry in UA that trend, we talked about on how spectacular she is going to be in her new role.

When we think forward.

We anticipate that the SG&A is going to go down and then you mentioned the Olympics is that going to be like.

Stefan: Mentioned network, Kevin Ross will backfill Kara and EMEA.

Well pumped up of investment sort of at the end of Q1 into Q2.

Stefan: 25 year veteran of the industry knows UA was with us for nine years, but experienced a tailor made.

Next year.

Two.

Two is what's the base.

Stefan: And Yeti in addition to under armour. We did also I didn't mention this but in my remarks that we did hire new SVP of direct to consumer for the Americas last summer to Josh Statin, who came under.

Like what's the base sales you look at for North America are we close to it.

And then.

On product.

Use of logo, you've got some good stuff going on with some of the unstoppable apparel the fat tire. The porridge 96 that really don't screen with the big UA logo and seem to be doing.

Stefan: Under armour veteran who came back to us and we have an open CMO role and a new head of footwear that I covered in my prepared remarks. So when you put all that in the blender that is a lot of change in roughly six months whats terrific is again. These these executives who all have really incredible background and hit the ground running I'm. So excited.

Generally better than most out there are the non core product and I, just wondered sort of directionally, how you're thinking of logo use.

Stuff like that and maybe opt.

Stefan: To see how well, they're working together interestingly a scene and caring worked together for close to nine years at pillar. So to have the head of North America and the head of product already has a deep.

<unk>.

Yes.

Excluding some of those styles are required or don't make the list that often but appear to have pretty good demand.

Stefan: Working relationship between the two of them is terrific of course, when you think about executives like Kevin Ross and Jos Baeten coming back they know Yue.

Thanks, Sam This is Dave I'll take your first two questions and then maybe I'll hand off to Stephanie on the logo.

Relative to SG&A and going forward.

Stefan: This team has hit the ground running but they do need time to settle in and get their teams organized I.

Obviously this is an area that we continue to focus on.

We worked hard over the past few years to become more agile from a cost structure perspective, but we do have more work to do and we understand the areas of highest returns and we're continuing to validate those and also understand where the best investments need to go.

Stefan: I should underscore two we have amazing talent at under armour already that these leaders are joining.

Stefan: Really deep experience, particularly in terms of performance apparel performance footwear. So we've got a great team at under armour. We brought these critical new roles N.

So this is a continual work in process.

We continue to drive further savings within our hiring or incentive comp tightening up our marketing prioritization spending travel and entertainment et cetera.

Stefan: Most of them when you think about it on a forward facing part of the business I put supply chain in there too because if we can't get things to the right place at the right time, they wont be delivered to the customer it's got quite a lot of work underway on the supply chain front under John's leadership, So it's going to take some time, but.

And we're going to continue that work as we drive into next year. So.

Could we drive SG&A lower potentially and that's our focus is to be able to be as optimized as possible and we're going to keep working at that.

Stefan: To get going but I'm confident that we have the right team we have the right strategy and we're firing on all on all cylinders. So I'm excited with I'm excited with the amount of progress we've made on the talent front in less than a year.

Relative to North America.

Your question is how do we hit kind of base sales level for North America.

I would say that that's kind of a loaded question because theres a lot of decisions within that and we know that we want to be continuing to strive to be more premium we know that we want to.

Speaker Change: Good luck. Thank you.

Speaker Change: Thanks, Bob Thank you Bob.

It makes them right choices as far as backing off on some of the deeper discounts for example on our on our website. So all of that goes into the blender as we think forward and as we get to our May call, we will be getting into much more details on kind of fiscal 'twenty five and beyond.

Speaker Change: Our next question comes from Sam Poser Williams trading.

Jay Sole: Thank you very much for taking my question.

Jay Sole: Got three and I'll, just read them all up one.

And then as far as you mentioned the Olympics relative to SG&A and is that going to be a heavy investment obviously, we're going to activate some things around the Olympics, but it is not a large investment for us so it shouldnt be a big pop in SG&A for us in any way.

Jay Sole: When we think forward.

Jay Sole: We anticipate that the SG&A is going to go down and then you mentioned the Olympics is that going to be like.

Jay Sole: Well.

Jay Sole: Pump off of investment.

Jay Sole: At the end of Q1 into Q2.

Definitely do you want to take the third point under of course and good morning Sam.

Jay Sole: Next year and then.

Jay Sole: Two is what's the base.

Thanks for your questions.

On the logo front I mean, you you highlighted some of our best performing franchises. When you mentioned unstoppable I'd put meridian and they are a base layer and I think our design teams always do a terrific job of finding the most appropriate and elegant and stylish way to place our logo and so we'll continue that.

Jay Sole: What's the base sales you look at it for North America are we close to it and then on <unk>.

Mike: <unk>, it's Mike.

Mike: Use of logo, you've got some good stuff going on with some of the unstoppable apparel the fat tire. The porridge 96 that really don't screen with the big UA logo and seem to be doing.

The the very able hands of you seen and John Barbados as we think about logo logo treatment I think theres, a broader point I'd like to make though around where we're headed with sports style, because I think that that's going to be a really important part of our story in the years to come and let me define sports style again, we.

Mike: Generally better than most out there are the non core product and I, just wondered sort of directionally, how you're thinking of logo use and stuff like that and maybe.

Jay Sole: Optima.

Jay Sole: Sure.

Jay Sole: Excluding some of those styles that are sort of acquired or don't don't make the list that often but appear to have pretty good demand.

We are not trying to be anything other than authentically under armor and performance is in our DNA. It always will be so for US sports style is that intersection of performance and style and they're inextricably linked and on I think what youll see from us and we're thinking about sports style is really more of an evolution versus a revolution.

Jay Sole: Yes, Sam this is Dave I'll take your first two questions and then maybe I'll hand off to Stephanie on the logo.

Dave: Relative to SG&A and going forward.

Dave: Obviously this is an area that we continue to focus on.

Dave: We worked hard over the past few years to become more agile from a cost structure perspective.

And we started with phase, one which is re merchandising and remarketing products to demonstrate kind of that non active use occasion and some of the franchises you mentioned unstoppable and meridian would be great. Examples of where we have an opportunity where we have great, particularly on the apparel side sports style on offerings.

Dave: But we do have more work to do and we understand the areas of highest returns and we're continuing to validate those and also understand where the best investments need to go.

Dave: So this is a continual work in process, we continue to drive further savings within our hiring our incentive comp tightening up our marketing prioritization spending travel and entertainment et cetera and.

But we need to market them differently and we're doing that and then phase two is really when we will see more new product we've already done some limited run capsules.

Dave: And we're going to continue that work as we drive into next year. So.

Dave: Could we drive SG&A lower potentially and Thats, our focus is to be able to be as optimized as possible and we're going to keep working at that.

And some smaller collections or groupings of items, but again its not until spring summer 25, plus where we think we will see more mass in terms of new product given the product product creation cycle, but again throughout all of that.

Dave: Relative to North America.

Dave: I think your question is have we hit kind of base sales level for North America, and I would say that thats kind of a loaded question because theres a lot of decisions within that and we know that we want to be continue to strive to be more premium we know that we want to.

Our talented design teams will figure it will be figuring out the best way to place the under armour logo on for maximum for maximum return. So again, we're excited we're excited about where we're headed with product.

Dave: It makes them right choices as far as backing off on some of the deeper discounts for example on our on our website. So all of that goes into the blender as we think forward and as we get to our May call, we will be getting into much more details on kind of fiscal 'twenty five and beyond.

And including on.

The best use of our logo.

Just one last thing I mean, the one thing about the logo is that like on the gorge in some of these other ones, they're more they're there, but they're more discrete so it makes the shoe more flexible rather than having the big under armour logo on the side of the shoe, which then makes it more active.

Dave: And then as far as you mentioned the Olympics relative to SG&A and is that going to be a heavy investment obviously, we're going to activate some things around the Olympics, but it is not a large investment for us so it shouldnt be a big pop in SG&A for us in any way.

If we get more discrete.

It seems too would make it more style regardless of what the design of the shoe.

Speaker Change: Definitely do you want to take the third point on barrel of course, Ann Good morning, Sam.

Or apparel for that matter.

Ann: Thanks for your questions.

Speaker Change: On the logo front I mean, you you highlighted some of our best performing franchises. When you mentioned unstoppable I'd put meridian and they are a base layer and I think our design teams always do a terrific job of finding the most appropriate and elegant and stylish way to place our logo and so we'll continue that.

Yeah again, I think it depends on what's what's the particular item and what's its use and so we'll continue to.

Always be evolving and looking at the best ways to like I think like all World class brands on the best way to on.

To use our logo, but you gave an example, with a couple of items, where it was more.

Speaker Change: The very able hands of you seen and John Barbados as we think about logo logo treatment I think theres, a broader point I'd like to make though around where we're headed with sports style, because I think that that's going to be a really important part of our story in the years to come and let me define sports style again.

Less smaller, but I think we'll continue to evolve and work on that.

Thank you very much.

Thanks Sam.

Our next question comes from Jim Duffy with Stifel.

Dave: We are not trying to be anything other than authentically under armor and performance is in our DNA. It always will be so for US sports style is that intersection of performance and style and they're inextricably linked and on I think what youll see from us and we're thinking about sports style is really more of an evolution versus a revolution.

Thank you good morning.

Good morning, Jim prepared.

Yeah.

Good morning, everyone.

Prepared remarks.

For fairly deliberate about your subdued expectations for the North American marketplace. The timing for inflection can you give us some perspective on what Youre hearing in your discussions with wholesale partners what are their forward thoughts on consumer spending behavior, what's the messaging on subdued orders, despite what seems to be pretty well.

Dave: And we started with phase, one which is re merchandising and remarketing products to demonstrate kind of that non active use occasion and some of the franchises you mentioned unstoppable meridian would be great. Examples of where we have an opportunity where we have great, particularly on the apparel side sports style on offerings.

Channel inventories what are they asking of under armour at this point and then I have a question on D C.

Yeah, I'll start and then I'll kick it over to Dave to add his perspective, and when we talked about the pressure that we're seeing in North America. This year on and as we think about heading into fiscal year 'twenty five.

Dave: But we need to market them differently and we're doing that and then phase two is really when we'll see more new product we've already done some limited run capsules.

Dave: And some smaller collections or groupings of items, but again its not until spring summer 25, plus where we think we'll see more mass in terms of new product given the product creation cycle, but again throughout all of that.

I think we can see some anticipated continued bumping us when we think about the fall winter twenty-three order book that of course has an impact on the order book coming up I should note. We're in the middle of it right now so we're not going to comment on fiscal year 'twenty five in any detail today, but I think it's fair to say for the first part of the year.

Dave: Our talented design team will figure it will be figuring out the best way to place the under armour logo on for maximum for maximum return. So again, we're excited we're excited about where we're headed with product and including on the best use of our logo.

See some continued lumpiness, Dave can jump in on that.

But I think what we're working very very closely with our wholesale partners to make sure that we have the right assortment.

We are continuing to work with our wholesale partners as we deliver more better and best products to make sure that we get those better and best products on their shelves and so there are wholesale partners are incredibly important to us on when I think about our strategy on that side of the house. It really is all about getting more shelf space and.

Dave: Just one last thing I mean, the one thing about the logo is is that like on the gorge in some of these other ones, they're more they're there, but they're more discrete so it makes the shoe more flexible rather than having the big under armour logo on the side of the shoe, which then makes it more active.

Dave: We get more discrete.

Our product in our existing partners, but then opening new doors of distribution too on the wholesale side and that ties to having.

Dave: It seems too would make it more style regardless of what the design of the shoe.

Dave: Or apparel for that matter.

New product offerings. So that is an important part of our business I think again with in particularly in North America with Kara coming back to lead our charge. There. She has tremendous relationships with wholesale partners I think that's gonna just further bolster our success in this area but.

Speaker Change: Yeah again, I think it depends on what's what's the particular item and what's its use and so we'll continue to.

Dave: Always be evolving and looking at the best way to like I think like look like all World class brands on the best way to on to use our logo, but you gave an example, with a couple of items, where it was more.

I know you had a question on DTC, but let me, let Dave jump in on wholesale if he wants to add any other.

Yes, I mean, I think we've talked as Stephanie mentioned around kind of the environment and the continued discounting which is a little bit of a headwind I would say the other thing is we're kind of finishing out the year moving into next year. As again, we are looking to try and push harder into more premium distribution. We've got some good early reads on mall penetration and new doors.

Dave: Less smaller, but I think we will continue to evolve and work on that.

Speaker Change: Thank you very much.

Speaker Change: Thanks Sam.

Speaker Change: Our next question comes from Jim Duffy with Stifel.

Jim Duffy: Thank you good morning.

There which is good.

Jim Duffy: Good morning, Jim prepared.

And then also we're going to continue to edit and improve our segmentation as well as we move into next year.

Jim Duffy: Okay.

Jim Duffy: Good morning, everyone.

Speaker Change: Prepared remarks.

Jim Duffy: Comments are fairly deliberate about your subdued expectations for the North American marketplace. The timing for inflection can you give us some perspective on what Youre hearing in your discussions with wholesale partners what are their forward thoughts on consumer spending behavior, what's the messaging on subdued orders, despite what seems to be pretty well.

But again it is a little bit bumpy out there still and it's still a pretty promotional environment.

Thank you Bill just quickly on the DTC you spoke to your intent to be less promotional in North America do you see that seem to suggest you're planning for declines in fiscal 'twenty five lapping more promotional comparison fiscal 'twenty four is that a fair.

Jim Duffy: Channel inventories what are they asking of under armour at this point and then I have a question on D C.

Fair assessment.

Yeah, So Jim we're not going to get into details on fiscal 'twenty, five yet, but I will say as it relates to our own DTC channels, Let me start with our website in our shop App.

Speaker Change: Yeah, I'll start and then I'll kick it over to Dave to add his perspective, and when we talked about the pressure that we're seeing in North America. This year on and as we think about heading into fiscal year 'twenty five.

We've made a lot of progress on the functional side of the of that channel things like improving mobile speed better better search algorithms upgrading product description pages et cetera. So there's been a lot of great work done on improving conversion and having a more functional website chop up at the same time and I think this is.

Dave: I think we can see some anticipated continued bumping us when we think about the fall Winter 2003 order book that of course has an impact on the order book coming up I should note. We're in the middle of it right now so we're not going to comment on fiscal year 'twenty five in any detail today, but I think it's fair to say for the first part of the year.

Where you are headed we do have plans to reduce our dependence on on promotions, we need for UA dot com and our shop app to be the most premium expression of our company. It's our largest storefront. When you think about it. So we are going to reduce our dependency on promotions could that have some reduction in revenue.

Dave: See some continued lumpiness, Dave can jump in on that.

Dave: But I think what we're working very very closely with our wholesale partners to make sure that we have the right assortment.

Speaker Change: We are continuing to work with our wholesale partners as we deliver more better and best products to make sure that we get those better and best products on their shelves and so there are wholesale partners are incredibly important to us.

Yes, it could but at the same time, it will lift asps that will drive profitability and it will lead to a much better or more premium ex experience for our customers. So that's one piece of the D. T C.

Speaker Change: When I think about our strategy on that side of the house. It really is all about getting more shelf space and that our product in our existing partners, but then opening new doors of distribution too on the wholesale side and that ties to having.

Panel the other part is our stores physical stores.

Mentioned this in my prepared remarks, but we have.

Speaker Change: New product offerings. So that is an important part of our business I think again with in particularly in North America with Kara coming back to lead our charge. There. She has tremendous relationships with wholesale partners I think that's going to just further bolster our success in this area but.

A great effort underway to re imagine the under armour brand health of the future a smaller store format curated with more premium offerings and easier to shop experience are going to be piloting our new concept. Later this year with a goal to rollout more full priced brand houses in the years ahead, we know.

Speaker Change: I know you had a question on DTC, but let me, let Dave jump in on wholesale if he wants to add any other any other yes.

Our ratio of factory to full price brand houses is not where we want it. So there's a lot of effort underway to think about our physical space as well and we all know that the two those two are inextricably linked to meaning the physical and the digital so we've got a lot of great work underway on the direct to consumer front.

Dave: We've talked as Stephanie mentioned around kind of the environment and the continued discounting which is a little bit of a headwind I would say the other thing is we're kind of finishing out the year moving into next year. As again, we are looking to try and push harder into more premium distribution. We've got some good early reads on more penetration and new doors, there which is good.

As it relates to the future.

Thank you.

Dave: And then also we're going to continue to edit and improve our segmentation as well as we move into next year.

Yeah.

Thanks, Jim Thanks, Jim Thank you Jim.

Our next question comes from tone May kick Wedbush. Please proceed.

Dave: But again it is a little bit bumpy out there still and it's still a pretty promotional environment.

On me there.

Speaker Change: Thank you and just quickly on the DTC you spoke to your intent to be less promotional in North America do you see that seem to suggest you're planning for declines in fiscal 'twenty five lapping more promotional comparison fiscal 'twenty four is that a fair.

Okay.

John Your line is open you May proceed.

Your next question.

Please hold while call for questions.

We can go to the next person on the list operator.

Speaker Change: Fair assessment.

Our next question comes from Paul <unk> with Citi.

Speaker Change: Yes, so Jim we're not going to get into details on fiscal 'twenty, five yet, but I will say as it relates to our own DTC channels, Let me start with our website in our shop App.

Hi, there. This is Kelly on for Paul Thanks for taking our question I just wanted to dig in a little bit more on the gross margin it looks like youre guiding up 200 basis points or so in the fourth quarter and you mentioned some costing initiatives. Just wondering if you could elaborate on that and if there is any sort of raw material deflation that is.

Speaker Change: We've made a lot of progress on the functional side of the of that channel things like improving mobile speed better better search algorithms upgrading product description pages et cetera. So there's been a lot of great work done on improving conversion and having a more functional website chop up at the same time and I think this is.

Benefiting you guys.

And whether that can continue into F. 'twenty five and then on the freight side well, it's no longer going to be a benefit or is there any chance with some of the red sea pressures that freight could become a headwind to the gross margin in the next 12 months based on what Youre seeing today. Thanks.

Speaker Change: Where you are headed we do have plans to reduce our dependence on on promotions, we need for UA dot com and our shop app to be the most premium expression of our company. It's our largest storefront. When you think about it. So we are going to reduce our dependency on promotions could that have some reduction in revenue.

Yes, Kelly this is Dave.

Relative to Q4, there are definitely a few puts and takes that we're seeing there.

Speaker Change: Yes, it could but at the same time, it will lift asps that will drive profitability and it will lead to a much better or more premium ex experience for our customers. So that's one piece of the DTC.

We do expect some continued supply chain benefits in Q4.

And thats, but thats shifting a little bit more towards the product costing initiatives that we're working on with our vendors that were starting to see those benefits in this Q4, and then looking to see full year benefits next year.

Speaker Change: Panel the other part is our stores physical stores.

Speaker Change: Mentioned this in my prepared remarks, but we have.

The freight component, obviously, we saw pretty substantial.

Speaker Change: A great effort underway to re imagine the under armour brand health of the future a smaller store format curated with more premium offerings and easier to shop experience are going to be piloting our new concept. Later this year with a goal to rollout more full priced brand houses in the years ahead, we know.

<unk> in Q1, Q2, and Q3 of this year, but again those are kind of normalized for Q4, so not as much of the increase year over year for Q4 now to your point relative to the Red Sea. We are seeing some increased shipping costs.

But we're probably in the neighborhood of $1 million or 2 million Bucks Theyre not something that is significant at this point. So we're managing through that and Thats all considered in our in our tightened outlook as well.

Speaker Change: That our ratio of factory to full price brand houses is not where we want it. So there's a lot of effort underway to think about our physical space as well and we all know that the two those two are inextricably linked to meaning the physical and the digital so we've got a lot of great work underway on the direct to consumer front.

And then a couple of the things that are going to be a little bit of headwinds for Q4, we do believe that the promotional environment is going to continue a little bit longer. So that's assumed in our Q4 is a headwind and potentially a little bit of FX pressure. So those are kind of the main puts and takes as we think about Q2 four.

Speaker Change: As it relates to the future.

Speaker Change: Thank you.

Speaker Change: Thanks, Jim Thanks, Jim Thank you Jim.

Speaker Change: Our next question comes from cone <unk> Wedbush. Please proceed.

Got it and just lastly for me anyway to quantify or could you quantify for us the percentage of your off price sales this year, particularly within North America and how that's.

Trending relative to historical.

Speaker Change: Tom either.

Speaker Change: Okay.

Yes.

Tom: John Your line is open you May proceed.

We worked really hard over the last few years to really good our inventory management into a good spot and manage the off price channel and what we feel is a pretty healthy range and so we were targeting in the 3% to 4% of global mix of third party liquidations, and that's generally where we're running.

Tom: Our next question.

Speaker Change: Please hold while all of your questions.

Speaker Change: We can go to the next person on the list operator.

In fact, as we finish out this year this fiscal year, we'll probably be at the lower end of that 3% to 4% total mix.

Speaker Change: Our next question comes from Paul <unk> with Citi.

Speaker Change: Hi, there. This is Kelly on for Paul Thanks for taking our question I just wanted to dig in a little bit more on the gross margin it looks like youre guiding up 200 basis points or so in the fourth quarter and you mentioned some costing initiatives just wondering if you could elaborate on that.

Relative to North America, it's not that different but we don't really get into.

The mix per per region per se.

Thank you.

Youre welcome.

Kelly: If there is any sort of raw material deflation that is.

Thank you.

Thank you.

Kelly: Benefiting you guys.

Armstrong.

<unk> <unk> with Morgan Stanley.

Kelly: Whether that can continue into F. 'twenty five and then on the freight side well, it's no longer going to be a benefit or is there any chance with some of the red sea pressures that breakup become.

This is our last question.

Alex I'm, just gonna, let everyone know that it can be a last question. So I appreciate that but go ahead Alex.

No problem. Thanks, a lot for taking this one so Stephanie you noted a lot of leadership changes I just wanted to drill down on kind of how you think about when they can start to have an impact on the P&L from.

Speaker Change: <unk> to the gross margin in the next 12 months based on what Youre seeing today. Thanks.

Speaker Change: Yes, Kelly this is Dave.

Dave: Relative to Q4, there are definitely a few puts and takes that we're seeing there.

From a timeline perspective, and then also in the meantime, as understanding that can't be done immediately what are the kpis in your view that you're watching that we should be watching for signs of some of these initiatives flowing through.

Dave: We do expect some continued supply chain benefits in Q4.

Dave: But thats shifting a little bit more towards the product costing initiatives that we're working on with our vendors that were going to starting to see those benefits. In this Q4, and then looking to see full year benefits next year.

Sure of course well.

These leaders have hit the ground running so I think they are impacting the business right away like I don't want to tick through each one of them again, but they for.

Dave: The freight component, obviously, we saw pretty substantial.

For example, I'll use John Barbados as just as an example, he has been here five months of Dewani started looking at things like Fat finished trim color. So we're seeing on the leaders have an impact on day, one but it will it will take time in terms of the bigger broader impact across the business in terms of the kpis that we're.

Dave: Tailwind in Q1, Q2, and Q3 of this year, but again those are kind of normalized for Q4, so not as much of the increase year over year for Q4 now to your point relative to the Red Sea. We are seeing some increased shipping costs.

Dave: But we're probably in the neighborhood of $1 million or 2 million Bucks Theyre not something that is significant at this point so we're managing through that.

Looking at I mean, it depends on the area, but let me hit on something that we're really focused on.

Dave: And that's all considered in our in our tightened outlook as well.

In terms of the consumer and marketing Kpis we are.

Dave: And then a couple of the things that are going to be a little bit of headwinds for Q4, we do believe that the kind of promotional environment is going to continue a little bit longer. So that's assumed in our Q4 is a headwind and potentially a little bit of FX pressure. So those are kind of the main puts and takes as we think about Q4.

Constant keeping an eye on our loyalty our UA rewards sign ups and equally important activations I mean, the loyalty program will be the backbone of our consumer strategy. It's all about customer acquisition and all of our customer activation and I mentioned some of the good progress we're having there in terms of not only sign ups, but increase.

Speaker Change: Got it and just lastly from me any way to quantify or could you quantify for us the percentage of your off price sales this year, particularly within North America and how that's.

<unk> spend from our loyalty members and then on the marketing front Theres, all sorts of leading and lagging indicators that we'll be looking at and I'm sure over the course of our time with you sharing updates on things like.

Speaker Change: Trending relative to historical.

Search demand I mentioned in my prepared remarks, some of the progress we are having with social media.

Dave: Yes.

Dave: We've worked really hard over the last few years to really get our inventory management into a good spot and manage the off price channel and what we feel is a pretty healthy range and so we were targeting in the 3% to 4% of global mix of third party liquidations, and that's generally where we're running.

Really changed our marketing approach to be more product focused more digital social always on that's where the consumer is and so we're always looking at the metrics on that critical marketing channel NPS scores increased earned media.

Dave: In fact, as we finish out this year this fiscal year, we'll probably be at the lower end of that 3% to 4% total mix.

Then we'll be looking at more lagging indicators as we move forward increased full price sales faster sell through of our key franchises.

Dave: Relative to North America, it's not that different but we don't really get into.

As we open more doors further doors of distribution getting into more specialty retail.

Dave: The mix per per region per se.

Speaker Change: Thank you.

We're seeing things like more UA.

Speaker Change: Youre welcome.

Sold on the aftermarket so theres a lot of consumer metrics, both leading and lagging kpis that we'll be looking at then we have made a lot of good progress over the past couple of years in supply chain, but this is where we still have more work to do so we're focused on Dave touched on this our cost of goods sold a SKU rationalization better.

Speaker Change: Thank you alright, thanks, Thank you.

Speaker Change: Strong.

Dave: Alex <unk> with Morgan Stanley.

Dave: Yes.

Dave: Okay.

Speaker Change: Our last question so Alex I'm, just going to everybody know this can be a last question. So I appreciate it but go ahead Alex.

Alex: Yes, no problem. Thanks, a lot for taking this one so Stephanie you noted a lot of leadership changes I just want to drill down on kind of how you think about when they can start to have an impact on the P&L from.

Our segmentation that will lead to ASP expansion will be sharing more with you on our priority investments and the results. There. So there is a whole host of kpis and metrics across the business that we will be focused on and tracking and sharing with you is early indicators of how we're making progress along the way.

Alex: From a timeline perspective, and then also in the meantime, as understanding that can't be done immediately what are the kpis in your view that you're watching that we should be watching for signs of some of these initiatives flowing through.

Although I'll end, where I started with which is my excitement about the team. We've built here we have brought in some stat fantastic executives to join our already fantastic team at under armour, So I couldnt be more excited and more thrilled with the team we're building here and.

Stephanie: Sure of course well.

Stephanie: These leaders have hit the ground running so I think they are impacting the business right away like I don't want to tick through each one of them again, but for.

Our future we've got a lot of great stuff underway. So thanks for your question.

Stephanie: For example, I'll use John Barbados as just as an example, he has been here five months of Dewani started looking at things like fit finish trim color. So we're seeing on the leaders have an impact on day, one but it will it will take time in terms of bigger broader impact across the business in terms of the kpis that we're.

Our teams on the field teams on the field that's right.

Great. Good luck. Thank you.

Thank you.

Thank you for attending today's call for under armour third quarter of fiscal 2004.

Now concludes today's call have a great day.

Stephanie: To be looking at I mean, it depends on the area, but let me hit on something that we're really focused on.

Stephanie: In terms of the consumer and marketing Kpis we are.

Alex: Constantly keeping an eye on our loyalty our UA rewards sign ups and equally important activations I mean, the loyalty program will be the backbone of our consumer strategy. It's all about customer acquisition and all of our customer activation and I mentioned some of the good progress we are having there in terms of not only sign ups, but increase.

Alex: <unk> spend from our loyalty members and then on the marketing front Theres, all sorts of leading and lagging indicators that we'll be looking at and I'm sure over the course of our time with you sharing updates on things like.

Alex: Search demand I mentioned in my prepared remarks, some of the progress we are having with social media.

Alex: Really changed our marketing approach to be more product focused more digital social always on that's where the consumer is and so we're always looking at the metrics on that critical marketing channel NPS scores increased earned media.

Alex: Then we'll be looking at more lagging indicators as we move forward increased full price sales faster sell through of our key franchises.

Alex: As we open more doors further doors of distribution getting into more specialty retail.

Alex: Dosing things like more UA.

Alex: Sold on the aftermarket so theres a lot of consumer metrics, both leading and lagging kpis that we'll be looking at then we have made a lot of good progress over the past couple of years on supply chain, but this is where we still have more work to do so we're focused on Dave touched on this our cost of goods sold SKU rationalization better.

Alex: Our segmentation that will lead to ASP expansion will be sharing more with you on our priority investments and the results. There. So there is a whole host of kpis and metrics across the business that we will be focused on and tracking and sharing with you is early indicators of how we're making progress along the way.

Alex: Although I'll end, where I started with which is my excitement about the team. We've built here we have brought in some stat fantastic executives to join our already fantastic team at under armour, So I couldnt be more excited and more thrilled with the team we're building here and.

Alex: Our future we've got a lot of great stuff underway. So thanks for your question.

Alex: Our teams on the field teams on the field that's right.

Speaker Change: Great. Good luck. Thank you.

Speaker Change: Thank you.

Speaker Change: Thank you for attending today's call for under armour third quarter of fiscal 2004.

Speaker Change: Now concludes today's call have a great day.

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