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.

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 after today's presentation. There will be an opportunity to ask a question to ask a question you May press star.

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Joe Landy: One on your touched on fine jewelry at the draw. Your question. Please press Star two. Please note. This event is being recorded I would now like I said during the conference overt Joe land sell Adi as VP Investor Relations <unk> corporate Labelle Ahmed. Please go ahead Sir.

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. This event is being recorded for replay. Joining us on today's call are Under Armour President and CEO Stephanie Lenhart and CFO Dave Bergman. Our remarks today will include certain forward-looking statements that reflect Under Armour 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. However, 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.

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 when arch and CFO Dave Bergman.

Labelle Ahmed: 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.

Labelle Ahmed: 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.

Labelle Ahmed: <unk> 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 on Irma 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 Ken.

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 Stephanie.

Labelle Ahmed: And be found this morning's press release and at about Dot under armour Dot com with that I'll turn the call over to Stephanie.

Stephanie Lenhart: 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. 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.

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.

Stephanie: 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.

Stephanie: 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.

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.

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

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.

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

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 own physical and digital businesses.

Stephanie: 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.

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.

Stephanie Lenhart: Bolstering our leadership was amongst my highest priorities in my first year at UN, 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. Additionally, 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.

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

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.

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.

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 at <unk>.

Stephanie: <unk> that's currently underway.

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.

Stephanie: And 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 Lenhart: 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.

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.

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

Stephanie Lenhart: 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 11, the Curry One Retro, and the Spawn Flo-Tro.

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

Stephanie: 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.

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.

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.

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

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 spa flow trial.

Stephanie Lenhart: The Curry brand also dropped exciting collaborations with Bruce Lee in apparel and footwear, including the new Curry Slip 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.

Stephanie: The current brand also dropped exciting collaborations with Bruce Lee in apparel, and footwear, including the new <unk> slip speed and with the addition of <unk> and Fox from the Sacramento Kings were looking forward to Darren first signature shoe later this year.

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

Stephanie: We recently signed Mexican National team players Sebastian Cordova.

Stephanie: Barcelona is firm and Lopez and real Madrid Antonio route occur.

Stephanie Lenhart: 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. Adding an excellent example of our evolving approach to brand activations 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.

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 the 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.

Stephanie: 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: 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 Lenhart: As a pinnacle grassroots program, this provides the next generation of athletes an opportunity to elevate their physical and mental gains. 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.

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 slip 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: 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: 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 <unk> brand.

Stephanie: Likewise, our tictoc followers have also gotten stronger.

Stephanie: As have our engagement rates.

Stephanie Lenhart: 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.

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

Stephanie: 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: 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 Lenhart: 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.

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 innovation on pitch field in court with.

Stephanie: And then ability 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.

Stephanie Lenhart: We have a lot of newness to be excited about as we head into spring 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 style offering. 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 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.

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 style offering.

Stephanie: 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: 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: 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 wins.

Stephanie: <unk> 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 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.

Stephanie Lenhart: 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.

Stephanie: We are proud of these wins will help drive more incredible momentum in this business, especially as we expand our sports style offerings.

Stephanie: Shifting to our ability to harness innovation for our athletes on the planet I would 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 Lenhart: 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.

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

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

Stephanie: Next is footwear.

Stephanie: 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%, but also due to softer demand primarily in North America.

Stephanie: 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.

Stephanie Lenhart: 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.

Stephanie: 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.

Stephanie: 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.

Stephanie Lenhart: In the rear view, we recognize some of the inconsistencies 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. 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.

Stephanie: <unk>.

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

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

Stephanie: 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.

Stephanie Lenhart: 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 our franchises, identifying where we can win, and partnering with our wholesale customers to scale our footwear business more effectively. Moving next to our America's business, 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 a challenging wholesale environment in the U.S. and softer demand.

Stephanie: 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: 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: Our work to become a better retailer is beginning to shine through.

Stephanie: 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 Lenhart: 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 the 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 SOC levels.

Stephanie: 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 are and Roland has hit nearly 3 million members, which is well ahead of the target we set for fiscal 'twenty four or.

Stephanie: 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 weak along with eight members only holiday campaigns, which directly contributed to peak holiday business.

Stephanie Lenhart: 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. Our enrollment has hit nearly 3 million members, which is well ahead of the target we set for Fiscal 24.

Stephanie: 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.

Stephanie: <unk> 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.

Stephanie Lenhart: Our members continue to show higher premium purchase frequency than non-members in these early months. We drove engagement during the third quarter via our first ever Members Week, along with 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.

Stephanie: Closing out North America, we recently appointed carat trend 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.

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

Stephanie: 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.

Stephanie: 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 with deep experience in General management sales team sports and product creation, we look forward to kevin's ability to her.

Stephanie Lenhart: 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, discipline segmentation, optimized marketing strategies, and strong wholesale relationships. 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 top-line growth over the long term. And finally, another leadership appointment is the return of 25-year industry veteran and 9-year Under Armour veteran Kevin Roth, who will serve as Carrot's replacement in EMEA to lead that business as Senior Vice President and Managing Director.

Stephanie: The ground running in one of our most successful markets.

Stephanie: 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 in the near term. This is involved in making several leadership changes engineered to address our areas of op.

Stephanie: <unk>.

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

Stephanie: 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.

Stephanie Lenhart: 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. In summary, as we close out the fiscal year amid 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. In the near term, this has involved making several leadership changes engineered to address our areas of opportunity. In concert, we are committed to prudent cost management, including identifying and optimizing the investments in our business toward the highest return.

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

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

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

David E. Bergman: 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.

David E. Bergman: Our North American DTC business was down slightly during the quarter.

Stephanie Lenhart: 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 the trisecta of product, place, and promotion are optimized to put us on a trajectory to reignite growth and deliver improved value to our shareholders. With that, I will turn it over to Dave for his comments on the quarter and our outlook. Thanks, Stephanie. And good morning, everyone.

David E. Bergman: 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.

David E. Bergman: Our EMEA wholesale business was also up during the quarter.

David E. Bergman: 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.

David E. Bergman: Our third-quarter revenue was down 6% to $1.5 billion, which aligned with our outlook. 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. Our North American DTC business was down slightly during the quarter. AMIA revenue was up 7% to $284 million, or up 2% on a currency-neutral basis.

David E. Bergman: China was a leading contributor to third quarter growth.

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

David E. Bergman: 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.

David E. Bergman: 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.

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

David E. Bergman: 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, or 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.

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

David E. Bergman: Partially offset by strength in our sidelined and basketball categories.

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

David E. Bergman: As a reminder, we had robust growth during the third quarter of fiscal 'twenty three as a significant volume of footwear products that were previously delayed due to COVID-19 related factory constraints meaningfully hit the market.

David E. Bergman: And finally, our Latin American business was up 9% to $70 million in the quarter, or 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 channels. Direct 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 business.

David E. Bergman: And finally, our accessories business was flat year over year.

David E. Bergman: Moving down the P&L.

David E. Bergman: Gross margin was up 100 basis points to 45, 2% during the third quarter driven by approximately 260 basis points of supply chain benefits, mainly due to lower freight costs.

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

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

David E. Bergman: Our proactive strategy to reduce inventory through our factory houses.

David E. Bergman: And deeper discounts in our sales to the off price channel.

David E. Bergman: Along with about 20 basis points of unfavorable foreign currency impacts.

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

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

David E. Bergman: By product type, apparel revenue was down 6%, driven primarily by declines in our train and outdoor businesses, partially offset by strength in our Sideline and Basketball Category. Footwear revenue was down 7% due to a tough comparison and softer demand, primarily in North America.

David E. Bergman: Next operating income was $70 million and excluding our litigation reserve expense.

David E. Bergman: 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.

David E. Bergman: As a reminder, we had robust growth during the third quarter of fiscal 23, as a significant volume of footwear products that were previously delayed due to COVID-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, mainly due to lower freight costs. These tailwinds were better than our previous expectations and were responsible for most of the overdrive on gross margins. However, 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 through the OffPrice channel, along with about 20 basis points of unfavorable foreign currency impact. In the third quarter, SG&A expenses were flat year over year at $602 million. Excluding a $23 million litigation reserve expense, adjusted SG&A expenses were down 4% to $579 million.

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

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

David E. Bergman: A 23 million litigation reserve expense, along with the related tax impacts of each adjusted.

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

David E. Bergman: This came in above our third quarter outlook of 9% to 11.

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

David E. Bergman: Now moving onto the balance sheet.

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

David E. Bergman: This was in line with our outlook and.

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

David E. Bergman: Rounding out the quarter.

David E. Bergman: Our cash and cash equivalents were $1 billion and we had no borrowings under our $1 1 billion revolving credit facility.

David E. Bergman: And finally, we repurchased $25 million of class a common stock during the third quarter.

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

David E. Bergman: Next, Operating Income with $70 million, and excluding our litigation reserve expense. Our adjusted operating income was $92 million, which was above our outlook of $65 to $75 million due to the gross margin overdrive and lower SG&A. After tax, we realized a net income of $114 million, or $0.26 of diluted earnings per share, excluding a $50 million benefit from our final earn-out on the sale of the MyFitnessPal platform and a $23 million litigation reserve expense along with the related tax impacts of each. Adjusted net income was $84 million, or $0.19 of adjusted diluted earnings per share.

Speaker Change: Next let's turn to our full year outlook.

Speaker Change: 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%.

Speaker Change: This shift within the range represents continued softer wholesale revenue.

Speaker Change: 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.

Speaker Change: And we now expect our international business to be up at a high single digit rate.

Speaker Change: The previous low double digit rate increase.

David E. Bergman: This came in above our third-quarter outlook of $0.09 to $0.11 due to our adjusted operating income overdrive and favorability on the other expense and tax lines. Now, moving on to the bounds. At the end of the third quarter, our inventory was down 9% to 1.1 billion as we trended toward normalized levels.

Speaker Change: 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.

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

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

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

David E. Bergman: 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 had no borrowings under our $1.1 billion revolving credit facility.

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

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

David E. Bergman: 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 out. To start, we have tightened our revenue expectation to a 3-4% decline for the full year, which is within our previous range of being down 2-4%. The shift within the range represents continued soft wholesale revenue.

David E. Bergman: Excluding the company's litigation reserve.

David E. Bergman: Adjusted operating income is expected to reach $310 million to $320 million.

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

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

David E. Bergman: Excluding these net positive impacts of seven <unk>.

David E. Bergman: We expect adjusted diluted earnings per share to be between 50 and 52.

David E. Bergman: 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 percent 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.

David E. Bergman: So to close we remain encouraged by our evolving strategies to Turner inconsistency into strengths.

David E. Bergman: 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.

David E. Bergman: That means managing our supply chain to maximize gross margin opportunities.

David E. Bergman: We expect gross margin to be up 120 to 130 basis points, 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. Moving down to P&L, full-year SG&A should be flat to down slightly, which is unchanged from our previous expectation. Dropping this through, our reported operating income is expected to reach $287 to $297 million; excluding the company's litigation reserve, adjusted operating income is expected to reach $310 to $320 million. Putting it all together, our reported diluted earnings per share is expected to be $0.57 to $0.59, which includes a $0.12 after-tax benefit from our final earn-out on the sale of the MyFitnessPal platform and a $0.05 negative impact from our litigation reserve. Excluding these net positive impacts of 7 cents, we expect adjusted diluted earnings per share to be between 50 and 52 cents.

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

Speaker Change: 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.

David E. Bergman: That said, we have confidence in our market sector.

David E. Bergman: Our work will proactively set us up to return to creating value for our shareholders.

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

Speaker Change: Operator are you there.

Speaker Change: We are showing that people in the queue ready to go.

Speaker Change: <unk>.

Speaker Change: Thank you Hello.

Speaker Change: Our next question comes from Simeon Siegel from BMO capital markets.

Simeon Avram Siegel: Hey, everyone. Good morning, Thanks, Hey, Matt how are you.

David E. Bergman: Yes.

Simeon Avram Siegel: Nice progress guys. So.

Simeon Avram Siegel: 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.

David E. Bergman: So to close, we remain encouraged by our evolving strategies to turn our inconsistencies into strengths. 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.

Simeon Avram Siegel: Any color there and then if we can just any thoughts on free.

Simeon Avram Siegel: Promotions embedded in the full year guidance. Thank you guys.

Speaker Change: 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 as we highlighted in our prepared remarks that the softness in North America is largely being driven by wholesale and as the year went on we saw.

Speaker Change: <unk> softness on in that channel, including at once and replenishment wholesale orders, that's 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 all.

Operator: 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 25. 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. And with that, we've finished our prepared remarks, so I'll turn it back to the operator for Q&A. Operator?

Speaker Change: 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 there'll be.

Operator: Operator, are you there? We are showing people in the queue, ready to go. Thank you. Hello.

Simeon Avram Siegel: 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.

Simeon Avram Siegel: Our next question comes from Simeon Siegel from BMO Capital Markets. Hey, thanks everyone. Good morning. Hey Simeon, how are you?

Simeon Avram Siegel: We're really really excited about 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.

Stephanie Lenhart: It's good to hear from you, nice progress guys. So, I mean, just wondering if you could share a little bit more on your broader perspective on how you're viewing North America's landscape. Maybe, how are you guys thinking about when you think about proactive inventory management, feel like you're in a good place and maybe versus competition, just any color there. And then, if we can just, any thoughts on freight and promotions embedded in the full year guidance? Thank you guys. Sure. So I'll start and then Dave and I'm sure we'll jump in. And good morning, Simeon, thanks for your question.

Simeon Avram Siegel: 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 <unk>.

Simeon Avram Siegel: Back when she starts her role in about a week here in North America. So 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.

Stephanie Lenhart: As it relates to North America, as we highlighted in our prepared remarks, the softness in North America is largely being driven by wholesale. And as the year went on, we saw continued softness in that channel, including at once and replenishment wholesale orders. That's a big piece of the puzzle in North America.

David E. Bergman: <unk> in that.

David E. Bergman: Market, we think is coming back to normalization at this point.

Stephanie Lenhart: And then, if you really look at the holiday timeframe, 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 Under Armour and the industry overall. I'd say, though, that that doesn't necessarily mean there'll be, you know, no promotional activity that really ties to demand. So there's not always that one to one correlation. I think people think that could be the case.

David E. Bergman: Maybe a little bit longer to go but 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.

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

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

Stephanie Lenhart: So I think, you know, we're really, really excited about the game plan we have for North America. I'd highlight again, Kara Trent coming back to lead that business. She has a great track record from her time in EMEA, a terrific leader, terrific relationship with wholesale partners, discipline 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 back when she starts her role in about a week here in North America. So we're excited about the work underway and our efforts around marketing, product, and distribution, which I'm sure we'll get into further in the Q&A. But Dave, why don't you weigh in on inventory? That specific question.

David E. Bergman: 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.

David E. Bergman: We've seen the rates normalize pretty well at this point.

Simeon Avram Siegel: They had.

Simeon Avram Siegel: 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>.

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

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

David E. Bergman: Yeah, I mean, I think you covered the inventory pretty well in that the market we think is coming back to normal at this point. 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 in a much better place. So I think the retailers are being fairly cautious and still really trying to keep clean after a year or two of obviously having more than they wanted. So, you know, 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, basically, Q4. And I would say that from a freight perspective, you know, we've seen the rates normalize pretty well at this point, and they really stopped with the big increase in our fiscal Q4 of last year.

Simeon Avram Siegel: No more promotional than normal for a while here.

Simeon Avram Siegel: 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 quarter and year.

Speaker Change: Thanks, Thank you.

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

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

Jay: 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.

Speaker Change: Here 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.

Speaker Change: That being said we.

Speaker Change: Mentioned this in the remarks, we're seeing.

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

David E. Bergman: 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 and have made a lot of progress on some of the costing initiatives there, which we're seeing some of that benefit favorably for Q4 of this year. And then I did mention relative to the promotion levels, we do anticipate it continuing to be, you know, 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 the quarter. NRC year.

Speaker Change: 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 in Europe, as well, but on the products vitamin we have a lot to be excited about.

Speaker Change: 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.

Speaker Change: 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 is in legs.

Simeon Avram Siegel: Thanks. Thank you. Thank you. Our next question comes from Jay Sole, UBS. Great. Thank you so much.

Jay Sole: My question, just a little bit on Europe, if you could 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. I would love to hear your view on that. Thank you. Yeah, sure, of course.

Speaker Change: Im sorry, as bottoms, and tops and particularly withdraws, we're having a lot of success there.

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

Speaker Change: It's really 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.

Stephanie Lenhart: As it relates to EMEA in Europe, that continues to be a strong market for us. The brand is doing very well there. That being said, as we mentioned in the remarks, we're seeing a little bit of cooling among consumers, particularly in Eastern Europe and some of our distributor markets. But again, the European market, particularly in England, Spain, and France, is very strong, very good for us. Let me touch on products, and I'll let Dave jump in on Europe as well.

Speaker Change: We have some real traction with Curry.

Speaker Change: And the <unk> 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.

Speaker Change: 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.

Stephanie Lenhart: But on the product side, I mean, we have a lot to be excited about. You know, Yassin Yassin just started last week, but we're super excited to have him as our new Chief Product Officer. And, of course, as we shared with you about five months ago, John Varvatos joined us as our new Chief Design Officer.

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

Speaker Change: And <unk> 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 youre seeing just started last week and we've got an amazing team here, that's put that as a great innovation pipeline, but.

Stephanie Lenhart: And there's just a lot of exciting things happening on both the apparel side and the footwear side. So let me hit a couple 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 is in legs, or sorry, bottoms and tops, and particularly with bras.

Speaker Change: We're excited to see what youre seeing in partnership with.

Speaker Change: 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 there. It will take time, though when we think about the product creation cycle in terms of any real massive new <unk>.

Stephanie Lenhart: We're having a lot of success there. I mentioned that we've got some exciting new things coming with our Unstoppable franchise that's really going to be terrific. And our core base layer 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 side, we have some real traction with Curry and the Curry 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, Sharon Licati. She wore it again this year and came in third place with only a couple seconds off the top spot, which is remarkable.

Speaker Change: I think we're looking at spring and summer 25, plus just given the product creation.

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

David E. Bergman: 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.

Speaker Change: 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.

Speaker Change: 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.

Stephanie Lenhart: So that Velocity running shoe is a real winner at the highest levels of performance and running. And then on the Infinite shoe, we've really reimagined the hover technology, which is incredible cushioning. And so we have a base pro and elite level with that shoot, really hitting that segmentation of good, better, and best. So we're excited about that. But we're just getting started again. Yassin just started last week, and we've got an amazing team here that's building that into a great innovation pipeline. But we're excited to see what Yassin does in partnership with the new head of footwear when he fills that position. That search is underway.

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

Speaker Change: 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.

Speaker Change: Terrific. Thank you so much.

Speaker Change: Our next question comes from Johan <unk> BNP.

Johan: Please proceed.

Stephanie Lenhart: And, of course, with our design talent. So we're excited with what we've got in the product pipeline. I will say it's worth noting that it will take time. When we think about the product creation cycle in terms of any real mass of new products, I think we're looking at spring, summer 25 plus, just given, you know, the product creation cycle that we're dealing with. But Dave, do you want to jump in with any additional color on Europe?

Johan: So my question.

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

Johan: North America wholesale was for the quarter or just your expectation for the year the audience can better.

Johan: Better understand the dynamics within this channel are you starting to see are you starting to have conversations with north American retailers are 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.

David E. Bergman: I mean, I think the only thing maybe that I would point out is, you know, we have a lot of strength moving forward in Europe, which is great to see. I think one of the points that are under a little bit of pressure is just, you know, 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. And then, obviously, there are some geopolitical challenges in that region as well that we're dealing with.

Johan: Share with the audience.

Johan: How much of your contracted out when you renegotiate your contracts with with the shipping market.

Speaker Change: 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: We haven't been quantifying the actual percentage for the channel within a region.

David E. Bergman: So we're working through that, and that's really when I'm mentioning that one-point headwind that's really talking about the fourth quarter as we see it finishing out the year. You know, I'd add one more thing on the product side, just really quickly, I should have mentioned because it's getting a lot of traction, is our Slip Speed Mega, which we did a soft launch at the UA, All-American game. We did a soft launch there. We have a very cool activation at the Super Bowl this weekend, but the Slip Speed Mega is a very cool shoe that I think is really responding with consumers. So that's another highlight on the footwear front. Terrific. Thank you so much.

Speaker Change: But definitely as a pressure point.

Speaker Change: And 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 that retailers are being very cautious right now, even though the inventory levels at retailer and a much better place.

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

Speaker Change: When you think about.

Speaker Change: The Red Sea impacts.

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

Speaker Change: The impact includes.

Speaker Change: Increased shipping costs as well not just some delays.

Jay Sole: Our next question comes from Laurent Vasilescu of BNP Paribas. Please proceed. My question, I was hoping to drill down on North America wholesale; if possible, could you possibly quantify how down North America wholesale was for the quarter or just your expectations for the year, so the audience can better understand the dynamics within this channel? Are you starting to see, are you starting to have a conversation with North American retailers regarding restocking of inventories, particularly for the back half of 2024? And then just, Dave, at that point in the Red Sea, I understand there are some delays, but can you maybe just share with the audience how much you're contracted out for, and when you renegotiate your contracts with the shipping merchant? Yeah, so I guess a couple things.

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

Speaker Change: Prioritization et cetera. So.

Speaker Change: 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.

Speaker Change: Very helpful. Thank you very much.

Speaker Change: Sure.

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

Speaker Change: Hi.

Speaker Change: Stephanie.

Bob Guggenheim: 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.

Jay Sole: You know, North America wholesale is definitely a pressure point. We've talked about that. We talked about kind of the softer orders, as we saw coming in through, you know, fiscal 20 or fall, winter 23, and also a little bit relative to spring, summer 24. We haven't been quantifying the actual percentage for the channel within a region, but it definitely is a pressure point.

Bob Guggenheim: Chief Design officer supply chain product Officer Americas.

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

Bob Guggenheim: 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 until to the years ahead.

Speaker Change: Well good morning, Bob and thanks. Thanks for that question during my <unk> or 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.

Laurent Vasilescu: And 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, retailers are being very cautious right now, even though the inventory levels at retail are in a much better place. And that's why we're continuing to see some promotional levels as well. When you think about the Red Sea impacts, you know, we are seeing some impacts there from shipping disruptions, mainly impacting EMEA. You know, the impact includes some increased shipping costs as well, not just some delays.

Speaker Change: I've 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.

Speaker Change: New Chief Communication Officer, Amanda Miller came from Paypal, bringing Israel PR horsepower, New Chief Design Officer, John Barbados, Great experience with its own company, Ralph Lauren Calvin Klein Congress, a new chief supply chain Officer, Sean Curran, a 30 year veteran at the gap who was most recently the CLO.

David E. Bergman: And, you know, to kind of think about that, about 20% or so of our global apparel comes through that area, so it is meaningful to us. You know, we're mitigating that through regional air freight, adjusted shipping lanes, you know, differing forward buys, PO prioritization, et cetera. So, and with all that, we don't really see any concerns with the 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 and mainly the impact on the EMEA region. And that's considered in our tightening of our outlook for the full year. Very helpful. Thank you very much. Our next question comes from Bob Gerbo, Guggenheim. Hi, good morning.

Speaker Change: 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.

Speaker Change: Coming from some powerhouse brands and most recently owning his own company. So he has got that entrepreneurial spirit.

Speaker Change: A new president of the Americas, just starting carat Trent.

Speaker Change: Industry in UA that trend, we talked about on the house spectacular she is going to be in her new role.

Speaker Change: <unk> mentioned number Kevin Ross will backfill Kara and EMEA.

Robert Drbul: Stephanie, just, I guess, a bigger picture question for you. But, you know, you've made a significant number of new hires, new leaders since last summer. When I look at the list and think about it, you know, Chief Design Officer, Supply Chain Product Officer in Americas. Um, you know, when you think about all these new leaders in the organization, how should we think about the time it will take for the organization to actually absorb the leadership changes, the impacts on the culture, the execution, you know, eventual change in the field in the years ahead? Well, good morning, Bob, and thanks for that question.

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

Speaker Change: 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.

Speaker Change: 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.

Speaker Change: His executives, who all have really incredible background and hit the ground running I'm. So excited to see how well theyre working together.

Speaker Change: <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.

Stephanie Lenhart: You know, during my first year, my top priority was building out the right team and building the right team to address some of the inconsistencies and challenges that we've had in the past. And you're right; there's been a lot of change. Let me just give you a little more color around that.

Speaker Change: Working relationship between the two of them is terrific.

Speaker Change: For us when you think about executives by Kevin Ross and Jos Baeten coming back they know Yue.

Speaker Change: So this.

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

Stephanie Lenhart: This is, I've been in the job for about 11 months, coming up on my first year. But since last summer, we've filled the following positions. Let me just tick through them quickly.

Speaker Change: 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 rolls in.

Stephanie Lenhart: Chief Consumer Officer, Jim Dowse, you know, a seasoned Marriott executive with a lot of experience in product, marketing, sales, and brand. And a new Chief Communication Officer, Amanda Miller, came from PayPal, bringing us real PR horsepower. New Chief Design Officer, John Barbados, has great experience with his own company, Ralph Lauren, Calvin Klein, and Converse. A new Chief Supply Chain Officer, Sean Curran, a 30-year veteran of the Gap, who was most recently the COO at Old Navy, but held various positions at that company over the years. A new Chief Product Officer, Yasin Saidi, who started again last week, as I mentioned, coming from some powerhouse brands and most recently owning his own company, so he's got that entrepreneurial spirit. And a new President of the Americas, just starting, Cara Trent, an industry and UA veteran. We talked about how spectacular she's going to be in her new role. I mentioned that Kevin Ross will back Phil Cara and EMEA.

Speaker Change: Most of them when you think about it on a forward facing part of the business I put supply chain in there too because 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 Sean's leadership, so it's going to take some time, but on.

Speaker Change: 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.

Speaker Change: Good luck. Thank you.

Speaker Change: Thanks, Bob Thank you Bob.

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

Samuel Marc Poser: Thank you very much for taking my question I've got three and I'll just.

Samuel Marc Poser: Bring them all up one.

Speaker Change: When we think forward.

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

Stephanie Lenhart: A 25-year veteran of the industry, knows UA, was with us for nine years, but has experience at TaylorMade and Yeti, in addition to Under Armour. We did also, I didn't mention this, but in my remarks, we did hire a new SVP of Direct-to-Consumer for the Americas last summer, too, Josh Denton, an 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.

Samuel Marc Poser: Well pumped up of investment sort of at the end of Q1 into Q2.

Samuel Marc Poser: Next year.

Samuel Marc Poser: Then.

Samuel Marc Poser: Two is what's the base.

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

Samuel Marc Poser: Product, it's like you.

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

Stephanie Lenhart: What's terrific is, again, these executives, who all have really incredible backgrounds, have hit the ground running. I'm so excited to see how well they're working together. You know, interestingly, Yasin and Cara worked together for close to nine years at Puma.

Samuel Marc Poser: Generally better than most out there of the non core product and I, just wondered sort of Directionally. How you are thinking up logo use.

Samuel Marc Poser: Stuff like that and maybe.

Samuel Marc Poser: Excluding some of those styles.

Stephanie Lenhart: So to have the head of North America and the head of product already have a deep working relationship between the two of them is terrific. Of course, when you think about executives like Kevin Ross and Josh Denton coming back, they know UA. So this team has hit the ground running, but they do need time to settle in, get their teams organized. You know, I should emphasize, too, we have amazing talent at Under Armour already that these leaders are joining, really deep experience, particularly in terms of performance apparel and performance footwear. So we've got a great team at Under Armour. We've brought in these critical new roles. You know, most of them, when you think about it, are a forward-facing part of the business.

Samuel Marc Poser: Quiet or don't make the list that often but appear to have pretty good demand.

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

David E. Bergman: Relative to SG&A and going forward.

David E. Bergman: Obviously this is an area that we continue to focus on.

Samuel Marc Poser: 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.

Samuel Marc Poser: So this is a continual work in process.

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

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

Stephanie Lenhart: 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 delivered to the customer. We've got quite a lot of work underway on the supply chain front under Sean's leadership. So it's going to take some time to get going, but I'm confident that we have the right team, we have the right strategy, and we're firing on all cylinders. So I'm excited with the amount of progress we've made on the talent front in less than a year. Good luck!

Samuel Marc Poser: 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.

Samuel Marc Poser: Relative to North America.

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

Samuel Marc Poser: 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.

Samuel Marc Poser: 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.

Robert Drbul: Thank you, Bob. Our next question comes from Sam Poser, William Tracy. Thank you very much for taking my question. I've got three, and I'm just going to read them all out.

Speaker Change: 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.

Samuel Marc Poser: One, when we think forward, do we anticipate that SG&A is going to go down, and then you mentioned the Olympics, is that going to be like... use of logo? You've got some good stuff going on with some of the unstoppable apparel, the fat tire, the Forge 96, that really don't scream with the big UA logo and seem to be doing, you know, generally better than most out there of the non And I just wondered, sort of directionally, how you're thinking of logo use and stuff like that and maybe optimize, you know, uh, exploiting some of those styles that are sort of quiet or don't don't make the list that often but appear to have pretty good demand. Thanks. Yeah, Sam, this is Dave.

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

Speaker Change: Thanks for your questions.

Stephanie: 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.

Stephanie: 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.

David E. Bergman: I'll take your first two questions, and then maybe I'll hand off to Stephanie on the logo. You know, relative to SG&A and going forward, you know, obviously, this is an area that we continue to focus on. You know, 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. We understand the areas of highest returns, and we're continuing to validate those and also understand where the best investments need to go. 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 we're going to continue that work as we drive into next year. So could we drive SG&A lower?

Stephanie: 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.

Stephanie: 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, but.

David E. Bergman: 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. Relative to North America, you know, I think your question is, have we hit some kind of base sales level in North America? And I would say that that's kind of a loaded question, because there are 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 make some right choices as far as backing off of some of the deeper discounts, for example, on our website. So all of that goes into the blender as we think forward, and, you know, as we get to our May call, we'll be getting into much more detail on fiscal 25 and beyond.

Speaker Change: 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.

Speaker Change: 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.

Speaker Change: 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.

Speaker Change: And including an AD.

Speaker Change: The best use of our logo.

Speaker Change: 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.

David E. Bergman: 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 do some things around the Olympics, but it is not, you know, a large investment for us, so it shouldn't be a big pop in SG&A for us in any way. Stephanie, do you want to take the third point on both? Sure, of course. And good morning,

Speaker Change: More discrete.

Speaker Change: It seems too would make it more stock.

Speaker Change: Regardless of what the design of the shoe.

Speaker Change: Or apparel for that matter.

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.

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

Stephanie Lenhart: Thanks for your questions. On the logo front, I mean, you highlighted some of our best-performing franchises when you mentioned Unstoppable. I'd put Meridian in there, Basslayer.

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

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

Speaker Change: Thank you very much.

Speaker Change: Thanks Sam.

Stephanie Lenhart: 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's in the very capable hands of Yacine and John Barbados as we think about logo treatment. But I think there's 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.

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

James Vincent Duffy: Thank you good morning.

James Vincent Duffy: Good morning, Jim prepared.

James Vincent Duffy: Okay.

James Vincent Duffy: Good morning, everyone.

James Vincent Duffy: Prepared remarks.

James Vincent Duffy: Sure 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.

James Vincent Duffy: Channel inventories what are they asking of under armour at this point and then I have a question on DTC.

Stephanie Lenhart: Again, we are not trying to be anything other than authentically Under Armour, 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 I think what you'll see from us, and we're thinking about sports style as really more of an evolution versus a revolution. And we started with phase one, which is re-merchandising and re-marketing 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 offerings, but we need to market them differently, and we're doing that. And then phase two is really when we'll see more new products. We've already done some limited-run capsules and some smaller collections or groupings of items.

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.

David E. Bergman: 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.

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

David E. Bergman: 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.

Stephanie Lenhart: But again, it's 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, our talented design teams will be figuring out the best way to place the Under Armour logo for maximum return. So again, we're excited. We're excited about where we're headed with the product and including the best use of our logo. Just one last thing. I mean, the thing about the logo is that, like on the Forge and some of these other ones, they're more, they're there, but they're more discreet. So it makes the shoe more flexible rather than having the big Under Armour logo, like on the side of the shoe, which then makes it more active. Having it more discreet seems to would make it more stylish regardless of what the design of the shoe is or the apparel for that.

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.

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 I.

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 info.

David E. Bergman: 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 new doors, there which is good.

Stephanie Lenhart: Yeah, again, I think it depends on what's the particular item and what's its use. And so we'll continue to always be evolving and looking at the best way to, I think, like, all world class brands, the best way to use our logo. But you gave an example of a couple items where it was more, less smaller, but I think we'll continue to evolve and work on that. Thank you very much.

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

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

James Vincent Duffy: 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 without being more promotional comparison fiscal 'twenty four is that a fair.

Samuel Marc Poser: Thanks, everyone. Thanks, Sam. Our next question comes from Gene Duffy with Stifel. Thank you. Good morning. Good morning, Jim. Good morning, everyone.

Speaker Change: Fair assessment.

Bill: 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.

James Vincent Duffy: Your prepared remarks and comments are fairly deliberate about your subdued expectations for the North American marketplace and the timing for inflection. Can you give us some perspective on what you're 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-managed channel inventories? And what are they asking of Under Armour at this point? And then I have a question about D2C.

Bill: 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 chap app at the same time and I think this is.

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.

Stephanie Lenhart: Yeah, I'll start and then I'll kick it over to Dave to add his perspective. And we talked about the pressure that we're seeing in North America this year. And as we think about heading into fiscal year 25, I think we can see some anticipated continued bumpiness when we think about the fall and winter 23 order book, which 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 25 in any detail today, but I think it's fair to say that for the first part of the year, we'll see some continued bumpiness. Dave can jump in on that.

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

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

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

Stephanie Lenhart: But I think 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 our wholesale partners are incredibly important to us. When I think about our strategy on that side of the house, it really is all about getting more shelf space and better products in our existing partners, but then opening new doors of distribution too on the wholesale side. And that ties in with having new product offerings. So that is an important part of our business. I think, again, particularly in North America, with Kara coming back to lead our charge there. She has tremendous relationships with wholesale partners, and I think that's going to just further bolster our success in this area. But I know you had a question on DTC, but let me let Dave jump in on wholesale if he wants to add any other information. Yeah.

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.

Speaker Change: 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.

Speaker Change: As it relates to the future.

Speaker Change: Thank you.

Speaker Change: Yeah.

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

Speaker Change: Our next question comes from tone, Nick <unk> Wedbush. Please proceed.

Nick: Tommy there.

Speaker Change: Okay.

Nick: John Your line is open you May proceed.

Nick: Our next question.

Speaker Change: Please hold while call for questions.

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

David E. Bergman: I mean, I think we've talked, as Stephanie mentioned, about the environment and the continued discounting, which is a little bit of a headwind. I would say the other thing is that as we finish out the year and move into next year, 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 there, which is good. And then also, we're going to continue to edit and improve our segmentation as well as we move into next year. But again, it is a little bit bumpy out there still, and it's still a pretty promotional environment. Thank you.

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.

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

Kelly: Benefiting you guys.

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.

James Vincent Duffy: And just quickly on the DTC, you spoke to your intent to be less promotional in North America DTC. That seems to suggest you're planning for declines in fiscal 25, lapping more promotional comparisons with fiscal 24. Is that a fair assessment?

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.

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

James Vincent Duffy: Yeah, Jim, we're not going to get into details on Fiscal 25 yet, but as it relates to our own DTC channels, let me start with our website and our shop app. We've made a lot of progress on the functional side of that channel, things like improving mobile speed, better search algorithms, upgrading product description pages, etc. So there's been a lot of great work done on improving conversion and having a more functional website and shop app. But at the same time, and I think this is where you're headed, we do have plans to reduce our dependence on promotions. We need UA.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 effect on revenue? Yes, it could could.

David E. Bergman: We do expect some continued supply chain benefits in Q4.

David E. Bergman: And thats, 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.

David E. Bergman: Starting to see those benefits in this Q4, and then looking to see full year benefits next year.

David E. Bergman: The freight component, obviously, we saw pretty substantial.

David E. Bergman: <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.

David E. Bergman: 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.

David E. Bergman: 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 Q Q4.

Stephanie Lenhart: But at the same time, it will lift ASPs, it will drive profitability, and it will lead to a much better, more premium experience for our customers. So that's one piece of the DTC channel. The other part is our stores, our physical stores. I mentioned this in my prepared remarks, but we have a great effort underway to reimagine the Under Armour brand house of the future, a smaller store format, curated with more premium offerings and an easier shopping experience. We're going to be piloting our new concept later this year with a goal to roll out more full price brand houses in the years ahead. We know 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 those two are inextricably linked, meaning the physical and the digital.

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.

David E. Bergman: Trending relative to historical.

David E. Bergman: Yes.

David E. Bergman: We 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.

Stephanie Lenhart: So we've got a lot of great work underway on the direct-to-consumer front as it relates to the future. Thank you. Thanks, Jim. Thanks, Jim. Thank you, Jim. Our next question comes from Tone Nikic, Wedbush, please proceed. Tommy there.

David E. Bergman: 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.

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

David E. Bergman: The mix per per region per se.

Operator: Your line is open, you may proceed. Our next question... Please hold while full for questions.

Speaker Change: Thank you.

Speaker Change: Youre welcome.

Speaker Change: Thank you.

Speaker Change: Next question comes from Alan.

Operator: We can go to the next person on the list, Operator. Our next question comes from Paul Lejuez with Citi. Hi there, this is Kellyanne on behalf of Paul.

Alan: Alex <unk> with Morgan Stanley.

Speaker Change: Yes.

Speaker Change: Our last question.

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

Alan: 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 a.

Kellyanne: Thanks for taking our question. I just wanted to dig in a little bit more on the gross margin. It looks like you're guiding it up, you know, 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's any sort of raw materials deflation that is benefiting you guys and whether that can continue into F-25. And then on the freight side, while it's no longer going to be a benefit, 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 you're seeing today? Thank you. Yeah, Kelly, this is Dave.

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.

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 they for.

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 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.

David E. Bergman: You know, relative to Q4, there are definitely a few puts and takes that we're seeing there. We do expect some continued supply chain benefits in Q4. And that's, but that's shifting a little bit more towards the product costing initiatives that we're working on with our vendors that we're going to start to see those benefits in this Q4, and then looking to see full year benefits next year. The freight component, obviously, we saw pretty substantial tailwinds in Q1, Q2, and Q3 of this year. But again, those have kind of normalized for Q4. So there is not as much of an increase year over year for Q4. Now, to your point, you know, relative to the Red Sea, we are seeing some increased shipping costs, but we're probably in the neighborhood of, you know, a million or two million bucks. They're not something that is significant at this point.

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

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

Alan: Constant like 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.

Alan: Spend from our loyalty members and then on the marketing front. There is 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.

Kellyanne: So we're managing through that, and that's all considered in our tightened outlook as well. And then, you know, a couple of 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 for a little bit longer. So that's assumed in our Q4 as 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. I got it.

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

Alan: 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.

David E. Bergman: And just lastly for 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, you know, trending relative to historical. Yeah, 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 in what we feel is a pretty healthy range. And so, you know, we were targeting the 3% to 4% global mix of third-party liquidations, and that's generally where we're running. 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. So, relative to North America, it's not that different, but we don't really get into the mix per region, per se.

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

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

Alan: Thing things like more UA.

Stephanie Lenhart: 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.

Dave Bergman: 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.

Kellyanne: Thank you. You're welcome. Thank you. Our next question comes from Alex Stratton with Morgan Valley. This will be our last question. So Alex, I'm just going to let everyone know this could be our last question. So I appreciate it. But go ahead, Alex.

Alex Stratton: Yeah, 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 a timeline perspective. And then also, in the meantime, as we understand 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? Sure, of course. Well, you know, these leaders have hit the ground running, so I think they're impacting the business right away. I don't want to go through each one of them again, but, for example, I'll use John Barbados as just an example.

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.

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

Alan: Our teams on the field our teams on the field that's right.

Speaker Change: Great. Good luck. Thank you.

Speaker Change: Thank you.

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

Stephanie Lenhart: He's been here five months, but on day one, he started looking at things like fit, finish, trim, color. So we're seeing the leaders have an impact on day one, but it will take time in terms of bigger, broader impact across the business. In terms of the KPIs that we're going to be looking at, I mean, it depends on the area, but let me hit on some that we're really focused on. In terms of the consumer and marketing KPIs, we are constantly keeping an eye on our loyalty, our UA rewards, signups, 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 about customer activation, and I mentioned some of the good progress we're making there in terms of not only signups but increased spend from our loyalty members.

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

Stephanie Lenhart: Okay.

Alan: Okay.

Alan: [music].

Stephanie Lenhart: And then on the marketing front, there's 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 search demand. I mentioned in my prepared remark some of the progress we're having with social media. We've 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, MPS scores, increased earned media.

Alan: Okay.

Stephanie Lenhart: [music].

Stephanie Lenhart: Yeah.

Stephanie Lenhart: Yes.

Stephanie Lenhart: Yeah.

Stephanie Lenhart: Yes.

Stephanie Lenhart: Yes.

Stephanie Lenhart: Okay.

Stephanie Lenhart: Okay.

Stephanie Lenhart: Okay.

Stephanie Lenhart: Okay.

Stephanie Lenhart: Then we'll be looking at more lagging indicators as we move forward, increased full-price sales, faster sell-through of our key franchises. As we open more doors, further doors of distribution, getting into more specialty retail, seeing things like more UA sold on the aftermarket. So there are a lot of consumer metrics, both leading and lagging KPIs, that we'll be looking at.

Stephanie Lenhart: Okay.

Stephanie Lenhart: [music].

Alan: Yes.

Stephanie Lenhart: Okay.

Stephanie Lenhart: Yes.

Stephanie Lenhart: Okay.

Stephanie Lenhart: Okay.

Stephanie Lenhart: Okay.

Stephanie Lenhart: Okay.

Stephanie Lenhart: Okay.

Stephanie Lenhart: Okay.

Stephanie Lenhart: Okay.

Stephanie Lenhart: Yeah.

Stephanie Lenhart: Yes.

Stephanie Lenhart: We have made a lot of good progress over the past couple of years on the 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, skew rationalization, and better segmentation that will lead to ASP expansion. We'll be sharing more with you about our priority investments and the results there. So there's a whole host of KPIs and metrics across the business that we will be focused on and tracking and sharing with you as early indicators of how we're making progress along the way. I'll end where I started, which is my excitement about the team we've built here.

Stephanie Lenhart: Okay.

Stephanie Lenhart: Okay.

Stephanie Lenhart: Okay.

Stephanie Lenhart: [music].

Stephanie Lenhart: Yes.

Stephanie Lenhart: Yes.

Stephanie Lenhart: [music].

Stephanie Lenhart: Okay.

Stephanie Lenhart: [music].

Stephanie Lenhart: Okay.

Stephanie Lenhart: We have brought in some fantastic executives to join our already fantastic team at Under Armour, so I couldn't be more excited and more thrilled with the team we're building here and our future. We've got a lot of great stuff underway. So thanks for your question, teams on the field. For teams on the field, that's right. Great. Good luck.

Stephanie Lenhart: Okay.

Stephanie Lenhart: Yes.

Stephanie Lenhart: Okay.

Stephanie Lenhart: Okay.

Stephanie Lenhart: Okay.

Stephanie Lenhart: Yes.

Stephanie Lenhart: Yeah.

Speaker Change: Thank you.

Stephanie Lenhart: [music].

Stephanie Lenhart: Okay.

Stephanie Lenhart: Okay.

Stephanie Lenhart: Yes.

Stephanie Lenhart: Okay.

Stephanie Lenhart: Yeah.

Operator: Thank you. Thank you for attending today's call for Under Armour's third quarter of fiscal 2024. This now concludes today's call. Have a great day! Subs by www.zeoranger.co.uk, The Ultimate Parody Site! www.underarmour.com. Subscribe to our channel for more of the romance and drama from Becca's season of The Bachelorette! Subs by www.zeoranger.co.uk All participants are in a listen-only mode.

Operator: Okay.

Operator: Okay.

Operator: Okay.

Operator: Thanks.

Operator: [music].

Operator: Okay.

Operator: [music].

Operator: Yes.

Operator: Okay.

Operator: Okay.

Operator: [music].

Operator: Yes.

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 touchtone phone.

Operator: Okay.

Operator: [music].

Operator: Okay.

Operator: Yes.

Operator: Yes.

Operator: Yes.

Operator: [music].

Lance Allega: 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.

Operator: Okay.

Lance Allega: Yes.

Lance Allega: [music].

Lance Allega: Okay.

Lance Allega: Okay.

Lance Allega: Okay.

Lance Allega: Okay.

Lance Allega: Okay.

Stephanie Lenhart: 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: Okay.

Lance Allega: Sure.

Lance Allega: Yes.

Stephanie Lenhart: Okay.

Stephanie Lenhart: [music].

Stephanie Lenhart: Yes.

Stephanie Lenhart: Okay.

Stephanie Lenhart: Yes.

Stephanie Lenhart: Yes.

Stephanie Lenhart: Okay.

Stephanie Lenhart: [music].

Stephanie Lenhart: Okay.

Stephanie Lenhart: Okay.

Stephanie Lenhart: Okay.

Stephanie Lenhart: Okay.

Speaker Change: Thank you.

Stephanie Lenhart: Okay.

Speaker Change: Good morning, and welcome to the under Armour Q3, 'twenty four 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 after today's presentation, there will be an opportunity to ask questions to ask a question you May press star one.

Stephanie Lenhart: One on your touched on fine Julien <unk>. Your question. Please press Star two. Please note. This event is being recorded I would now like to turn the conference over to Joe Lansdale Agi SVP investor.

Stephanie Lenhart: 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 Stephanie.

Stephanie Lenhart: The relationship <unk> and corporate development. Please go ahead Sir.

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

Stephanie Lenhart: Joining us on today's call are under armour, President and CEO is definitely one arch and CFO Dave Bergman.

Stephanie Lenhart: 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.

Stephanie Lenhart: 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.

Stephanie Lenhart: 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.

Stephanie Lenhart: <unk> 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 are normally 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 can be.

Stephanie Lenhart: Found in this mornings press release and at about Dot under armour Dot com.

Stephanie Lenhart: 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 years, 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.

Stephanie Lenhart: That I will turn the call over to Stephanie.

Speaker Change: 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.

Stephanie Lenhart: 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.

Stephanie Lenhart: Following our protect this house III plan 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.

Stephanie Lenhart: 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.

Stephanie Lenhart: 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.

Stephanie Lenhart: 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.

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

Stephanie Lenhart: 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.

Stephanie Lenhart: 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.

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

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

Stephanie Lenhart: Bolstering our leadership was amongst my highest priorities in my first year at USA and we've made excellent progress.

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

Stephanie Lenhart: 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 Lenhart: 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.

Stephanie Lenhart: 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>.

Stephanie Lenhart: That is currently underway.

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

Stephanie Lenhart: 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 11, the Curry One Retro, and the Spawn Flo-Tro.

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

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

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

Stephanie Lenhart: I also towards 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.

Stephanie Lenhart: Build relevance with our consumers.

Stephanie Lenhart: 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.

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

Stephanie Lenhart: 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 Lenhart: The Curry brand also dropped exciting collaborations with Bruce Lee in apparel and footwear, including the new Curry Slip 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.

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

Stephanie Lenhart: 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 Curry slip speed and with the addition of Darren Fox.

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

Stephanie Lenhart: 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. As a pinnacle grassroots program, this provides the next generation of athletes an opportunity to enhance their physical and mental gains.

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

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

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

Stephanie Lenhart: 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 use high school volleyball and football players engaged in a week of unforgettable experiences and elite level competition.

Stephanie Lenhart: 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.

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

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

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

Stephanie Lenhart: 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.

Stephanie Lenhart: This time, our Instagram followers showed strength across all UA accounts with a significant uptick in the <unk> brand.

Stephanie Lenhart: Likewise, our tictoc followers have also gotten stronger.

Stephanie Lenhart: As have our engagement rates.

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

Stephanie Lenhart: With the appointment of <unk> as our Chief product Officer, I am incredibly excited about the evolution and style for apparel and footwear.

Stephanie Lenhart: Turning us just last week <unk> 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.

Stephanie Lenhart: 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.

Stephanie Lenhart: 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.

Stephanie Lenhart: <unk> ability to attack the massive sports tail opportunity more effectively.

Stephanie Lenhart: 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 Lenhart: We have a lot of newness to be excited about as we head into spring 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 style offering. 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 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.

Stephanie Lenhart: 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 style offering.

Stephanie Lenhart: 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 bag year on trends silhouette of our classic woven pant.

Stephanie Lenhart: 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 Lenhart: 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.

Stephanie Lenhart: 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.

Stephanie Lenhart: Our retail partners are excited about this evolution and bookings for this product are strong, especially our women's products.

Stephanie Lenhart: Speaking of our women's business. We were honored to have received two women's health Fitness Magazine Awards, our UA Smart form 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 business.

Stephanie Lenhart: 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.

Stephanie Lenhart: Especially as we expand our sports style offerings.

Stephanie Lenhart: 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 Neo last this incredibly innovative fiber has the potential to offer our industry a high performing.

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

Stephanie Lenhart: 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.

Stephanie Lenhart: 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.

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

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

Stephanie Lenhart: During the third quarter, our footwear business was down 7 percent, in part due to a tougher prior year growth comparison of 25 percent, but also due to softer demand, primarily in North America. Looking back, we recognize some of the inconsistencies 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. 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.

Stephanie Lenhart: 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 Lenhart: 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 Lenhart: 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.

Stephanie Lenhart: 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 segmentation.

Stephanie Lenhart: 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 I will note was in line with our expectations and reflective of a 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. In our North American DTC business, I'd highlight that underneath the flattest results in the quarter, we are encouraged by specific operational gains made during the crucial holiday period.

Stephanie Lenhart: 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.

Stephanie Lenhart: 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.

Stephanie Lenhart: 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 Lenhart: 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.

Stephanie Lenhart: 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. Our enrollment has hit nearly 3 million members, which is well ahead of the target we set for Fiscal 24.

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

Stephanie Lenhart: 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 Lenhart: 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.

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

Stephanie Lenhart: Our members continue to show higher premium purchase frequency than non-members in these early months. We drove engagement during the third quarter via our first ever Members Week, along with 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 eCommerce 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.

Stephanie Lenhart: 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, along with eight members only holiday campaigns, which directly contributed to peak holiday business.

Stephanie Lenhart: 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.

Stephanie Lenhart: <unk> 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.

Stephanie Lenhart: 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.

Stephanie Lenhart: 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, discipline segmentation, optimized marketing strategies, and strong wholesale relationships. 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 top-line growth over the long term. And finally, another leadership appointment is the return of 25-year industry veteran and nine-year Under Armour veteran Kevin Roth, who will serve as Carrot's replacement in EMEA to lead that business as Senior Vice President and Managing Director.

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

Stephanie Lenhart: 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.

Stephanie Lenhart: 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 with.

Stephanie Lenhart: 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. In summary, as we close out the fiscal year amid 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. In the near term, this has involved making several leadership changes engineered to address our areas of opportunity.

Stephanie Lenhart: 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.

Stephanie Lenhart: In summary, as we close out the fiscal year amid 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 in the near term. This is involved in making several leadership changes engineered to address our areas of.

Stephanie Lenhart: <unk> and.

Stephanie Lenhart: In concert, we are committed to prudent cost management, including identifying and optimizing the investments in our business towards the highest returns. 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 the trisecta of product, place, and promotion are optimized to put us on a trajectory to reignite growth and deliver improved value to our shareholders. With that, I will turn it over to Dave for his comments on the quarter and our outlook. Thanks, Stephanie. And good morning, everyone.

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

Dave: 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.

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

Dave: Thanks, Stephanie and good morning, everyone. Our third quarter revenue was down 6% to $1 5 billion, which align with our outlook on a regional basis, North America revenue declined by 12% coming in at $915 million, which was in line with our expectations.

David E. Bergman: Our third-quarter revenue was down 6% to $1.5 billion, which aligned with our outlook. 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. Our North American DTC business was down slightly during the quarter. AMIA revenue was up 7% to $284 million, or up 2% on a currency-neutral basis.

David E. Bergman: <unk> 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.

David E. Bergman: Our North American DTC business was down slightly during the quarter.

David E. Bergman: 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.

David E. Bergman: 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, or 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.

David E. Bergman: Our EMEA wholesale business was also up during the quarter.

David E. Bergman: 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.

David E. Bergman: China was a leading contributor to third quarter growth.

David E. Bergman: And finally, our Latin American business was up 9% to $70 million in the quarter, or 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 channels. Direct 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 business. By product type, apparel revenue was down 6%, driven primarily by declines in our train and outdoor businesses. Partially offset by strength in our sidelines and basketball category.

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

David E. Bergman: 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.

David E. Bergman: 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.

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

David E. Bergman: By product type.

David E. Bergman: <unk> revenue was down 6% driven primarily by declines in our train and outdoor businesses.

David E. Bergman: We offset by strength in our sideline and basketball categories.

David E. Bergman: 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 23, as a significant volume of footwear products that were previously delayed due to COVID-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, mainly due to lower freight costs. These tailwinds were better than our previous expectations 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 through the OffPrice channel, along with about 20 basis points of unfavorable foreign currency impact. In the third quarter, SG&A expenses were flat year over year at $602 million. However, excluding a $23 million litigation reserve expense, adjusted SG&A expenses were down 4% to $579 million.

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

David E. Bergman: As a reminder, we had robust growth during the third quarter of fiscal 'twenty three as a significant volume of footwear products that were previously delayed due to COVID-19 related factory constraints meaningfully hit the market.

David E. Bergman: And finally, our accessories business was flat year over year.

David E. Bergman: Moving down the P&L.

David E. Bergman: Gross margin was up 100 basis points to 45, 2% during the third quarter driven by approximately 260 basis points of supply chain benefits, mainly due to lower freight costs.

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

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

David E. Bergman: Our proactive strategy to reduce inventory through our factory houses and.

David E. Bergman: And deeper discounts in our sales to the off price channel.

David E. Bergman: Along with about 20 basis points of unfavorable foreign currency impacts.

David E. Bergman: In the third quarter SG&A expenses were flat year over year at $602 million.

David E. Bergman: Excluding a $23 million litigation reserve expense.

David E. Bergman: Adjusted SG&A expenses were down 4% to $579 million.

David E. Bergman: Next, Operating Income with $70 million, and excluding our litigation reserve expense. Our adjusted operating income was $92 million, which was above our outlook of $65 to $75 million due to the gross margin overdrive and lower SG&A. After tax, we realized a net income of $114 million, or $0.26 of diluted earnings per share. Excluding a $50 million benefit from our final earn-out on the sale of the MyFitnessPal platform and a $23 million litigation reserve expense, along with the related tax impacts of each, Adjusted net income was $84 million, or $0.19 of adjusted diluted earnings per share. This came in above our 3rd quarter outlook of $0.09 to $0.11 due to our adjusted operating income overdrive and favorability on the other expense and tax lines.

David E. Bergman: Next operating income was $70 million and excluding our litigation reserve expense.

David E. Bergman: 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.

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

David E. Bergman: 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.

David E. Bergman: Along with the related tax impacts of each.

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

David E. Bergman: This came in above our third quarter outlook of 9% to 11.

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

David E. Bergman: Now, moving on to the bounds. 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 corner.

David E. Bergman: Now moving onto the balance sheet.

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

David E. Bergman: This was in line with our outlook and.

David E. Bergman: 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.

David E. Bergman: Rounding out the quarter.