Q4 2024 Under Armour Inc Earnings Call
Operator: Good morning, everyone, and welcome to the Under Armour Q424 earnings conference. All participants will be in a listen-only mode.
Good morning, everyone and welcome to the under Armour Q4, 'twenty earnings Conference call.
Speaker Change: All participants will be in a listen only mode.
Operator: Should you need assistance, please email a conference specialist by pressing the star key, followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press the star key and then one on a touch-down telephone.
Speaker Change: Should you need assistance please.
Speaker Change: Specialist by pressing the star key followed by email.
After todays presentation, there will be an opportunity to ask questions.
Speaker Change: Ask the question you May press Star and then one using a touchtone telephone.
Speaker Change: All your questions you May press star two.
Speaker Change: Please also note today's event is being recorded.
Operator: To withdraw your questions, you may press the star. Please also note, today's event is being recorded. At this time, I'd like to turn the floor over to Lance Allega, Senior Vice President, Investor Relations, Treasury, and Corporate Development. Sir, please go ahead.
Speaker Change: At this time I'd like to turn the floor over to Lance <unk> senior.
Speaker Change: Senior Vice President Investor Relations Treasury and corporate development. Sir Please go ahead.
Lance Allega: Good morning, and welcome to Under Armour's fourth quarter and full year fiscal 2024 earnings conference call. This event is being recorded for replay. Joining us on today's call are Under Armour President and CEO Kevin Plank and CFO David Bergman. Our remarks today will include certain forward-looking statements that reflect Under Armour Management's current view of our business as of May 16, 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.
Speaker Change: Good morning, and welcome to under armour, <unk> fourth quarter and full year fiscal 2024 earnings Conference call. Today's event is being recorded for replay.
Speaker Change: Joining us on today's call are under armour, President and CEO, Kevin Plank and CFO, David Bergman. Our remarks today will include certain forward looking statements that reflect under armour management's current view of our business as of May 16th 2024.
Speaker Change: 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 state.
Lance Allega: Statements made are subject to risks and other uncertainties detailed in this morning's press release and documents filed regularly with the SEC, including our annual report on Form 10-K and our quarterly reports on Form 10-Q. Today's discussion may also include non-GAAP references. Under Armour believes these measures give investors a helpful perspective on underlying business trends. When applicable, these measures are reconciled to the most comparable U.S. gap measures.
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.
Speaker Change: Today's discussion May also include non-GAAP references under armour believes these measures give investors a helpful perspective on underlying business trends when applicable. These measures are reconciled to the most comparable U S. GAAP measures reconciliations along with other pertinent information can be found in this morning's press release and at about Dot under armour Dot com with that I will turn the call.
Lance Allega: Reconciliations, 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 Kevin. Thank you, Lance, and to everyone joining us this morning. We've got a lot to get through on today's call, including some extended prepared remarks, so let's dive right in. Four plus years removed from the President and CEO role at Under Armour, I am bringing a clear sense of purpose and 100% commitment with zero distractions from making. I gained a unique perspective from the executive chair board seat, and while I've maintained a presence in the business throughout, that role was very different from the responsibility and opportunity I now have as CEO to affect the day-to-day decisions of this brand.
Kevin A. Plank: Over to Kevin.
Kevin A. Plank: Thank you Lance and to everyone joining us this morning.
Kevin A. Plank: We've got a lot to get through on today's call, including some extended prepared remarks, so let's dive right in.
Kevin A. Plank: Four plus years removed from the president and CEO role at under armour, I'm, bringing a clear sense of purpose and a 100% commitment with zero distractions from making UA excellent.
Kevin A. Plank: Again, a unique perspective from the executive Chair board seat and while it maintained a presence in the business throughout that role was very different from the responsibility and opportunity I now have a CEO to effect the day to day decisions at this brand I.
Lance Allega: I look forward to applying these lessons with a renewed approach to leadership. During this time, our industry has undergone significant changes, including a global pandemic that tested the resilience of the consumer value chain and increased competition with many new capable entrants that have altered shopping behavior and preferences. However, our aspiration to build the world's best athletic performance brand has not changed. Our goal has always been to be a premium brand of choice, driven by industry-leading athletic performance products, inspirational storytelling, and an elevated consumer experience.
Kevin A. Plank: I look forward to applying these lessons with renewed approach to leadership.
Kevin A. Plank: During this time, our industry has undergone significant changes, including a global pandemic that tested the resilience on consumer value chain and increased competition with many new capable entrants that have altered shopping behavior and preferences how's.
Kevin A. Plank: However, our aspiration to build the world's best Athletic performance brand has not changed our goal has always been to be a premium brand of choice driven by industry, leading athletic performance products inspirational storytelling and elevated consumer experiences yet we have not consistently nor holistically delivered on this ambition.
Lance Allega: Yet, we have not consistently nor holistically delivered on this ambition. A lack of continuity and increased complexity have challenged our execution; we have had several CEOs and heads of product marketing in North America over the past half decade. Ongoing turnover of critical leadership has been central to our inability to stay agile and decisive.
Kevin A. Plank: A lack of continuity increase complexity have challenged our execution with several Ceos and heads of product marketing and North America over the past half decade.
Kevin A. Plank: Ongoing turnover of critical leadership has been central to our inability to stay agile and decisive.
Kevin A. Plank: From uneven execution across product and marketing to suboptimal segmentation, wholesale relationships, and DTC performance, there remains a significant opportunity to activate more effectively across the dimensions that matter to drive improved brand affinity, and therefore, demand. With several of our executive team being new to their roles, my top priority is bringing clarity and stability to our business. Said better, we must make the complex simple, and the simple compelling. To address this, we will reconstitute Under Armour's brand strength over the next 18 months by focusing on brand building fundamentals, like making great products, telling the best story about those products, and servicing every aspect of running our business while building the best team.
Kevin A. Plank: From uneven execution across product and marketing to suboptimal segmentation wholesale relationships in DTC performance. There remains a significant opportunity to activate more effectively across the dimensions that matter to drive improved brand affinity and therefore demand.
Kevin A. Plank: With several of our executive team being new to their roles my top priority is bring clarity and stability to our business.
Kevin A. Plank: Said, better we must make the complex simple and the simple compelling.
Kevin A. Plank: To address this we will reconstitute under Armours brand strength over the next 18 months by focusing on brand building fundamentals like making great products, telling the best story about those products and servicing every aspect of delivering our business while building the best team.
Kevin A. Plank: As a podium brand, meaning one of just three or four global brands that have the credibility of being recognized worldwide as an authentic, on-field, court, and pitch, athletic performance brand, we have an incredible foundation from which to reconstitute a winning culture. And while I have no delusions that this is to be a repeat of how this brand was built the first time... There are certainly parts that will rhyme.
As a podium brand, meaning one of just three or four global brands that have the credibility of being recognized worldwide as it authentic on field CT and pitch Athletic performance brand, we have an incredible foundation from which to reconstitute a winning culture.
Kevin A. Plank: And while I have no delusions that this has to be a repeat of how this brand was built the first time.
Kevin A. Plank: There are certainly parts that will rhyme and.
Kevin A. Plank: And I plan to use every tool of resource or experience available to me and UA to make us successful. That said... I do not arrive at the next part of the call easily. But it is where we are today, amid a confluence of factors including lower wholesale orders, proactive decisions to restore brand health to our e-commerce business, and lead times to bring new products to market. We are at a crossroads of defensive necessity and offensive opportunity.
Kevin A. Plank: And I plan to use every tool of resource or experience available to me and UA to make us successful.
Kevin A. Plank: That said.
Kevin A. Plank: I did not arrive at the next part of the call easily but it is where we are today.
Kevin A. Plank: Amid a confluence of factors, including lower wholesale orders proactive decisions to restore brand health to our E Commerce business and lead times to bring new products to market.
Kevin A. Plank: We have a crossroads of defensive necessity and offensive opportunity.
Kevin A. Plank: Therefore, before driving forward, we'll be taking a larger step back in Fiscal 25, with an expectation that our revenue will be down at a low double-digit rate. This includes an approximate 15 to 17% decline in North America, driven by three factors that I will go into later in the call as we work to meaningfully reset this business while navigating an environment made more challenging by our execution in the past. In our international regions, we expect revenue to be down at a low single-digit rate due to some conservative macro-consumer trends we see, as well as applying lessons learned here in North America to ensure that we protect the brand strength that we've built in EMEA, APAC, and Latin America.
Kevin A. Plank: Therefore, before driving forward, we will be taking a larger step back in fiscal 'twenty five with an expectation.
Kevin A. Plank: That our revenue will be down at a low double digit rate.
Kevin A. Plank: This includes an approximate 15% to 17% decline in North America, driven by three factors that I will go into later in the call as we worked to meaningfully reset this business, while navigating an environment made more challenging by our execution in the past.
Kevin A. Plank: In our international regions, we expect revenue to be down at a low single digit rate due to some conservative macro consumer trends, we see as well as applying lessons learned here in North America to ensure that we protect the brand strength that we built in EMEA APAC and Latin America.
Kevin A. Plank: From a channel perspective... We see our wholesale business down at a low double-digit rate and direct-to-consumer to be down approximately 10% due to proactive actions to significantly reduce the discounting level within our own e-commerce business. This reflects some of the foundational steps in our ambition to create a more premium stance for our brand, by product. We expect apparel and footwear sales to be down at a low double-digit rate and our accessories business to remain essentially flat year over year.
Kevin A. Plank: From a channel perspective.
Kevin A. Plank: We see our wholesale business to be down at a low double digit rate and direct to consumer to be down approximately 10% due to proactive actions to significantly reduce the discounting level within our own E Commerce business.
Kevin A. Plank: This reflects some of the foundational steps in our ambition to create a more premium stance for our brand.
Kevin A. Plank: By product.
Kevin A. Plank: We expect apparel and footwear sales to be down a low double digit rate and our accessories business to remain essentially flat year over year.
Kevin A. Plank: Even with this revenue contraction, we expect a gross margin improvement of 75 to 100 basis points due to the material reduction in promotional and discounting activities through our DTC business and proactive product and costing initiatives. Turning to SG&A, as we work to streamline our business further, we anticipate our expenses to be down 2-4% in Fiscal 25. This includes a board-approved restructuring plan to help strengthen and support additional financial and operational efficiency.
Kevin A. Plank: Even with this revenue contraction, we expect gross margin improvement of 75 to 100 basis points due to the material reduction in promotional and discounting activities through our DTC business and proactive product and costing initiatives.
Kevin A. Plank: Turning to SG&A as we worked to streamline our business further we anticipate our expenses to be down 2% to 4% in fiscal 'twenty five.
This includes a board approved restructuring plan to help strengthen and support additional financial and operational efficiencies.
Kevin A. Plank: While Dave will provide more detail, we expect to incur a total estimated pre-tax restructuring and related charges of approximately $70 to $90 million. Excluding the midpoint of this restructuring range, we expect $130 to $150 million in adjusted operating income, representing 18 to 21 cents of adjusted diluted earnings per share.
Dave: While Dave will provide more detail, we expect to incur a total estimated pretax restructuring and related charges of approximately $70 million to $90 million.
Speaker Change: Excluding the mid point of this restructuring range, we expect $130 million to $150 million and adjusted operating income representing 18 to 21 of adjusted diluted earnings per share.
Speaker Change: Yeah.
Kevin A. Plank: This is not where I envisioned Under Armour playing at this point in our journey. That said, we'll use this turbulence to reconstitute our brand and business, giving athletes, retail customers, and shareholders bigger and better reasons to care about and believe in Under Armour's potential. A potential backed by nearly 1,900 retail stores and a worldwide presence in almost 100 countries. Respected by athletes as a podium brand with a distinctive positioning of innovation and performance that is truly unique.
Speaker Change: This is not where I envisioned under armour playing at this point in our journey.
Speaker Change: That said, we will use this turbulence to reconstitute, our brand and business, giving athletes retail customers and shareholders bigger and better reasons to care about and believe and under Armours potential.
Speaker Change: A potential backed by nearly 1900 retail stores and a worldwide presence and almost 100 countries.
Speaker Change: Respected by athletes as a podium brand with a distinctive positioning of innovation and performance that is truly unique.
Kevin A. Plank: From a product perspective, we're not just chasing the low-hanging fruit of sportswear. We're reinvigorating our culture of blowing athletes' minds with a consistent drumbeat of innovation. We must become a brand of launches, creating products that solve athlete problems while communicating the story of how and why our products deliver. The good news is that we're already doing it.
Speaker Change: From a product perspective, we're not just chasing the low hanging fruit of sportswear, we're reinvigorating our culture of blowing athletes mines with a consistent drumbeat of innovation.
Speaker Change: We must become a brand of launches creating products that solve athlete problems, while communicating the story of how and why our products deliver.
Speaker Change: The good news is that we're already doing this for example, we delivered six new footwear drops in February alone.
Kevin A. Plank: For example, we delivered six new footwear drops in February alone: Infinite Pro and Infinite Elite, Slip Speed Mega, Curry Color Drops at the NBA All-Star Game, The Apparition from UA Sportswear, and The Drive Pro and Golf. The larger problem is that you've probably never heard about any or most of them... We'll make sure that if a product is important enough for us to make and release, it's also important enough to celebrate with storytelling. Or, plainly, we just won't make it.
Speaker Change: Infinite pro and Ethernet elite slip speed Mega currently carry color drops at the NBA All star game, the operation from the UA sportswear and the drive pro in golf.
Speaker Change: The larger problem is that you probably never heard about.
Speaker Change: Or most of them.
Speaker Change: We'll make sure that if a product is important enough for us to make them relief. It's also important enough to celebrate with storytelling.
Speaker Change: Were plainly, we just won't make it.
Speaker Change: So.
Kevin A. Plank: Giving stakeholders reasons to believe begs the question, how do we plan to strengthen the Under Armour brand? It starts by reminding everyone, ourselves included, why we're here. Under Armour is a sports company. This is our reason for being. It's our DNA and identity.
Speaker Change: Giving stakeholders reasons to believe begs the question how do we plan to strengthen the under armour brand.
Speaker Change: Let's start by reminding everyone ourselves included why we're here.
Speaker Change: Under armour is a sports house, there's no reason for being it's our DNA and identity.
Kevin A. Plank: Under Armour is about athletes and innovation. Leading with team sports, we equip those athletes to push the boundaries of what is possible by inspiring them with performance solutions they never knew they needed, and once they've tried them, cannot imagine living without them.
Speaker Change: Our numbers about athletes and innovation, leading with team sports we equipped those athletes to push the boundaries of what is possible by inspiring them with performance solutions. They never knew they needed and once they have tried them.
Speaker Change: Cannot imagine living without.
Kevin A. Plank: At the backbone of all this is an authentic passion, an identity of grit. Under Armour was not born on that podium, but of an underdog spirit, the long shot, the athlete without all the gifts who somehow, somehow finds a way to persevere. That underdog grit is our differentiator, and we will embrace this mentality in this chapter as a brand. With this brand positioning re-centered and solidified, we're narrowing and simplifying our Protect This House strategy to rebuild our core through three main priorities.
At the backbone of all of this is an authentic passion then identity of grip.
Speaker Change: Under armour was not born on that podium.
Speaker Change: I have an underdog spirit the long shot the athlete without all the gifts with some way somehow finds a way to persevere.
Speaker Change: That underdog grit is our differentiator and we will embrace this mentality in this chapter as a brand.
Speaker Change: With this brand positioning re centered and solidified we're narrowing and simplifying our protect this house strategy to rebuild our core through three main priorities.
Kevin A. Plank: First, is delivering better products and storytelling to amplify demand and loyalty. Second, is running smarter plays by simplifying, modernizing, and optimizing our system's structure and processes so we harness efficiency for effective... And third, is elevating the consumer experience, mandating excellence where, when, and how athletes choose to engage with our brand and transact, starting with delivering better products and storytelling. This is about the constant and the movable troika of athlete, product, and story, particularly in our North American business. This balance of this triad has been underserved for quite some time.
First is delivering better products and storytelling to amplify demand and loyalty.
Speaker Change: It's running smarter plays by simplifying modernizing and optimizing our systems structure and processes. So we harnessed efficiency for effectiveness.
Speaker Change: And third is elevating consumer experiences mandating excellence, where when and how athletes choose to engage with our brand and transact.
Speaker Change: So starting with delivering better products and storytelling.
Speaker Change: This is about the constant and removal of troika of athlete product and story, particularly in our North American business. This balance of this triage has been underserved for quite some time.
Kevin A. Plank: In our largest market, we have become a brand that, well, competes primarily on price versus our core competency, which is performance and technical innovation, an aspect of UA that has frankly gone untold for too long. To correct this... We must reprioritize our innovation agenda by reminding athletes that our products perform like no other in the industry. A flawless balance of science, function, and style, made to empower them to be the best at whatever they do, from Monday to Sunday.
Speaker Change: In our largest market, we have become a brand that well.
Speaker Change: Well <unk>.
Speaker Change: Competes primarily on price versus our core competency, which is performance and technical innovation and aspect of UA that is frankly gone untold for too long.
Speaker Change: To correct. This.
Speaker Change: We must re prioritize our innovation agenda by reminding athletes that our products perform like no. Other in the industry, a flawless balance of science function and style made to empower them to be the best at whatever they do from Monday to Sunday.
Kevin A. Plank: We are eliminating products that do not meet our standards to sell much more of much fewer products. Accomplished by Editing More Intentionally, led by our Chief Product Officer Yasin Saidi, we are committed to this vision. But it requires having one point of view with considerably improved design language. A reduced but more intentional fabric library that includes a clear good, better, and best segmentation for our distribution.
Speaker Change: We are eliminating products that do not meet our standard.
Speaker Change: To sell much more of much fewer products.
Speaker Change: <unk> by editing more intentionally led by our Chief product officer at <unk>, We're committed to this vision.
Speaker Change: But it requires having one point of view with considerably improved design language.
Speaker Change: Our reduced but more intentional fabric library that includes a clear good better best segmentation for our distribution trend right color ways and standardized fits across all of the athletes we serve.
Kevin A. Plank: Trend-Rite colorways and standardized fits across all the athletes we serve. Dissecting our execution further, too many areas of our product strategy have been designated as priorities. This has caused operational inefficiency and a strain on resources, which has diluted our ability to have a consumer-centric point of view, consistent storytelling, and an effective go-to-market process. Over the past few years, it's also evident that we've taken our eyes off of our core men's apparel business, which, particularly in North America, has permitted this business to become more promotional and commoditized, which has significantly impacted our brand We will rectify this.
Speaker Change: Dissecting our execution further to many areas of our product strategy have been designated as priorities. This is cause operational inefficiency and a strain on resources, which has diluted our ability to have a consumer centric point of view consistent storytelling and an effective go to market process.
Speaker Change: Over the past few years, it's also evident that we take our eyes off of our core men's apparel business, which particularly in North America has permitted this business become more promotional and commoditize that.
Speaker Change: That has significantly impacted our brand's perception, we will rectify this.
Kevin A. Plank: This focus does not mean that we are deprioritizing our footwear or women's business, per se. But from a sequencing perspective, men's apparel will be our highest priority. We're also reorganizing our product and marketing teams around our largest revenue sports category, training, running, sportswear, golf, and basketball, while ensuring that the authenticator of team sports is still our front porch in every region where we compete. Here in North America, in the United States, that means our presence in American football, soccer, baseball, softball, volleyball, and lacrosse as the core sports we will speak to and solve problems for with our amazing The specific core sport authenticators will, of course, vary by region.
Speaker Change: This focus does not mean that we are prioritizing our footwear, our women's business per se, but from a sequencing perspective men's apparel will be our highest priority.
Speaker Change: We're also reorganizing our product and marketing teams around our largest revenue sports calories.
Speaker Change: Of training running sportswear golf and basketball.
Speaker Change: While ensuring that the authenticator of team sports is still a front porch in every region, where we compete.
Speaker Change: Here in North America, and United States that means our presence in American football.
Speaker Change: Soccer baseball softball, volleyball lacrosse, as a core sports, we will speak to and solve problems for with our amazing performance innovation.
Speaker Change: The specific core sport Authenticators will of course vary by region.
Kevin A. Plank: So given the newness of our leadership and product lead times, the critical mass of elevated offerings won't fully come to market until our Fall-Winter 25 collection, which is the second half of fiscal 26. However, as we work through this in-between period, I've challenged the team to adjust our operating go-to-market models in three actionable ways. First, refine our product assortment and reduce our SKU or style count by roughly 25% over the next 18 months, intentionally decreasing our good discounted level mix while scaling our better and best offerings to drive balance into our segmentation.
Speaker Change: So given the newness of our leadership in product lead times, the critical mass of elevated offerings won't fully come to market until our fall winter twenty-five collection, which is the second half of our fiscal 'twenty six.
Speaker Change: However, as we worked through this in between period I've challenged the team to adjust our operating go to market models and three actionable ways.
Speaker Change: <unk>.
Speaker Change: Refine our product assortment and reduce our SKU or style count by roughly 25% over the next 18 months.
Speaker Change: Intentionally decreasing our good discounted level mix, while scaling our better and best offerings to drive balanced into our segmentation.
Kevin A. Plank: This will significantly reduce workloads for our teams and allow them to focus and prioritize on making any product that comes from our engine excellent, with a product and story that we will be proud of. Secondly, our current go-to-market has only one gear, with an 18-month process to get a product from an idea to the sale. This is just plain uncompetitive in a 2024 landscape.
Speaker Change: This will significantly reduce workloads for our teams and allow them to focus and prioritize on making any product that comes from our engine excellent with our product and story that we will be proud of.
Speaker Change: Secondly, our current go to market has only one year with an 18 month process to get a product from an idea to the selling floor.
Speaker Change: This is just plain uncompetitive in the 'twenty 'twenty four landscape.
Kevin A. Plank: That said, we'll be pursuing a faster 6- and 12-month go-to-market capability, which was recently demonstrated with the release of the world's first true performance headwear that immediately sold out, the Stealth Form Uncrushable Hat, which debuted on Jordan Spieth at this year's Masters Golf Tournament. Delivered in just six months and is now on pre-order for athletes at a $45 price point. The stealth form on Crushable is also a good metaphor for who we expect to be in our industry. Innovative. Premium. Stylish.
That said, we will be pursuing a faster six and 12 month go to market capability, which was recently demonstrated with the release of the world's first true performance head where that immediately sold out the still form on Crushable hat.
Speaker Change: Which debuted on Jordan speeds at this years Masters Golf tournament. The delivered in just six months and is now on preorder for athletes at a $45 price point.
Speaker Change: The cell form of crush was also a good metaphor for who we expect to be in our industry innovative premium stylish and nothing else like it in the market.
Kevin A. Plank: And nothing else like it in the market. A product that truly helps you perform better with its comfortable fit, technical material cooling, and stretch that feels like a secure hug for your head. And delivered to the market with speed. And finally... building out a direct-to-consumer line of exclusive products for our own stores and e-commerce. Wholesale is about 60% of our business and will be hypercritical to our success and how we will achieve the elevated position and vision of the UA brand I'm describing.
Speaker Change: That truly helps you performed better with its comfortable fit technical material cooling and stretch that feels like a secure hug for your head and delivered to the market with speed.
Speaker Change: And finally.
Speaker Change: Building out a direct to consumer line of exclusive products for our own stores and ecommerce.
Speaker Change: Wholesale is about 60% of our business will be hyper critical for our success and how we will achieve the elevated position and vision of the UA brand I'm describing.
Kevin A. Plank: Yet, it has been far too long since we've shown retailers our vision. So, using our own physical and digital stores as a proving ground, we will demonstrate what excellence can look like for the Under Armour brand, whether that is through a more premium price point or meaningfully amplified storytelling to drive success. We want our partners to call us because they're inspired by the innovation they see us building and not just what they sold from us before.
Speaker Change: Yet it has been far too long since we've shown retailers our vision.
Speaker Change: Using our own physical and digital stores as a proving ground, we will demonstrate with excellence can look like for the under armour brand.
Speaker Change: Whether that is through a more premium price point or meaningfully amplified storytelling to drive success, we want our partners to call us because they are inspired by the innovation they see as building and not just what they sold from us before.
Kevin A. Plank: While delivering better products and segmentation is central to our ability to drive greater future demand, our products must be married to authentic, inspirational storytelling and technical education about how Under Armour makes athletes better. Our DNA, reason to buy, and storytelling must permeate all consumer touch points. With some of the highest performing material sciences in our industry, including temperature management, moisture wicking, sustainable fabrics, cushioning, and compression-based support, to be candid, we've done a poor job consistently communicating our product advantages to athletes. This must be fixed, as it's hard to sell something that is a best-kept secret.
Speaker Change: While delivering better products and segmentation is central to our ability to drive greater future demand our products must be married with authentic inspirational storytelling and technical education about how under armour makes athletes better.
Speaker Change: Our DNA reason to buy and storytelling must permeate all consumer touch points.
Speaker Change: With some of the highest performing material sciences, and our industry, including temperature management moisture wicking sustainable fabrics cushioning compression based support to be candid, we've done a poor job consistently communicating our product advantages to athletes.
Speaker Change: This must be fixed as it's hard to sell something that has the best kept secret.
Kevin A. Plank: In this respect, we are working to dramatically overhaul our product descriptions and hang tags, and how our DTC and wholesale sales forces are equipped to tout our product attributes. When athletes research Under Armour online or choose our products in a store, it should be clear to them by answering three simple questions: What it is, what it does, and how it will make them better.
Speaker Change: In this respect we are working to dramatically overhaul, our product descriptions and hang tags and how our DTC and wholesale sales forces are equipped to tout our product attributes.
Speaker Change: When athletes research under armour online or choose our products in the store it should be clear to them by answering three simple questions. What it is.
Speaker Change: What it does and how it will make them better.
Kevin A. Plank: Going forward, a simple three-point description of every UA product will be found consistently on our hang tags, point of purchase, and website, and conveyed by our associates on the floor. Brands are built with consistency, so make no mistake; we'll be strengthening our brand in this chapter. That's not to say we haven't succeeded in marrying these efforts well in our recent past. When our product and marketing engines are aligned, showcasing product innovations with relevant storytelling, we've seen success in driving positive demand. A recent example can be seen at this year's Boston Marathon, where UA athlete Sharon Locati took her third podium wearing our $250 Velocity Elite 2 running shoe.
Speaker Change: Going forward a simplistic three point description of every UA product will be found consistently on a hang tags point of purchase and website and conveyed by our associates on the floor.
Speaker Change: Brands are built with consistency so make no mistake, we will be strengthening our brand in this chapter.
Speaker Change: That's not to say we haven't succeeded in marrying these efforts well in our recent past when our product and marketing engines are aligned showcasing product innovations with relevant storytelling, we've seen success in driving positive demand.
Speaker Change: A recent example can be seen at this year's Boston Marathon, where UA athletes Sharon located took her third podium wearing our $250 velocity lead to running shoe.
Kevin A. Plank: A trend we think will continue. In preparation for the race, we immersed media and influencers in the run experience and flooded our social media channels. Of course, there are other examples where we've been running this consistent play and have shown up proudly, like our slip speed launch and ongoing business there. Our unstoppable pants and the surrounding collections that make them a force for UA, and our Women's Meridian Products, where we are building trust with her. We're at our best when we're on offense.
Speaker Change: A trend we think will continue.
Speaker Change: In preparation for the race, we immersive media and Influencers and run experience and flooded our social media channels.
Speaker Change: Of course, there are other examples where we've been running this consistent play and have shown up proudly like our slip speed launch and ongoing business there unstoppable pants in the surrounding collections that make unstoppable force for UA.
Speaker Change: And our women's Meridian products, where we're building trust with her.
Speaker Change: We're at our best when we're on offense, we must harness and homogenize. This approach more effectively across all consumer connections.
Kevin A. Plank: We must harness and homogenize this approach more effectively across all consumer connections. A strong product team also requires strategic and operational collaboration with marketing to bring it all together. As mentioned on our last call, we've consolidated our global and North American marketing teams to bring a cleaner, more creative, integrated approach for faster decision-making and improved oversight into our spending and the returns we get for our investments there. Concerning our search for a new Chief Marketing Officer, I press pause while assuming the CEO role and will be re-engaging that search immediately as we have a strong candidate pool and expect to have this chair filled soon Over the past four plus years, the company has become overly siloed and bureaucratic with competing internal agendas.
Speaker Change: Strong product team also requires strategic and operational collaboration with marketing to bring it altogether.
Speaker Change: As mentioned on our last call, we've consolidated our global and North American marketing teams to bring a cleaner more creative integrated approach for faster decision, making improved oversight into our spending and the returns we get for our investments there.
Speaker Change: Concerning our search for a new chief marketing officer, I pressed pause, while assuming the CEO role will be re engaging that search immediately as we have a strong candidate pool and expect to have this chair field soon.
Speaker Change: Over the past four plus years, the company has become overly siloed and bureaucratic with competing internal agenda.
Kevin A. Plank: We now have just one agenda, as I am describing it to you today, and communicating that to internal and external stakeholders is my immediate priority to build complete alignment. Given these changes and iterative evolutions, we are working quickly to disband these silos and drive a more productive, collaborative culture. And this brings us to the second priority within our refined Protect This House strategy: Running Smarter Plays, where we will simplify our operating model, modernize our supply chain and planning process, and optimize our cost base to drive greater efficiency. To begin with, on a broad basis, we are simply doing too much stuff.
Speaker Change: We now have just one agenda as I'm, describing it to you today.
Speaker Change: And communicating that to internal and external stakeholders is my immediate priority.
Speaker Change: To build a complete alignment.
Speaker Change: Given these changes and iterative evolutions, we're working quickly to disband the silos and drive a more productive collaborative culture.
Speaker Change: And this brings us to the second priority within our refined protect this house strategy.
Speaker Change: Running smarter place, where we will simplify our operating model modernize our supply chain and planning process and optimize our cost base to drive greater efficiencies.
Speaker Change: To begin with on a broad basis, we're simply doing too much stuff.
Kevin A. Plank: There are too many products, too many initiatives, too much of everything. To reconstitute this brand, we must be highly focused and prioritize what needs to get done so that our teams know exactly what to do with a clear definition of success for them. As such, we are going to streamlining across the organization. We will reduce the number of agencies, consultants, and outside experts across the brand, which has reached unacceptable levels, especially in functions like marketing.
Speaker Change: There are too many products to many initiatives to much of too much.
Speaker Change: To reconstitute this brand, we must be highly focused and prioritize what needs to get done so that our teams know exactly what to do with a clear definition of success for them.
Speaker Change: As such we're going to streamline across the organization we.
Speaker Change: We will reduce the number of agencies consultants and outside experts across the brand, which has reached unacceptable levels, especially in functions like marketing.
Kevin A. Plank: We are building the talent, and they will now be empowered to run with their expertise and ability to drive our vision. We are also working to reduce the number of reports generated, unnecessary meetings, and even the number of fabrics for our designers to choose from and the overall bureaucracy that occurs when a business scales from being small to mid-sized to large. In short, we will be much more intentional everywhere. This includes activities that may have had a reason to exist at one time or another but no longer serve the brand.
Speaker Change: We are building the talent and they will now be empowered to run with their expertise and ability to drive our vision.
Speaker Change: We're also working to reduce the number of reports generated unnecessary meetings and even a number of fabrics for our designers to choose from.
Speaker Change: And the overall bureaucracy that occurs when the business scales for being small to midsize to large and short will be much more intentional everywhere.
Speaker Change: This includes activities that may have had a reason to exist at one time or another but no longer serve the brand.
Kevin A. Plank: We're now prioritizing to ensure that anything we do, or have our teams doing, is only the activities that directly contribute, in one way or another, to our simplest of job descriptions, selling more shirts and shoes. We've talked about being consumer-focused for years, but never entirely organized our business as such. To enable consistency, we're employing a category portfolio structure designed to unlock the team's full potential, particularly how the work aligns with our talent, speed of delivery, and the execution required to put us on a growth path.
Speaker Change: We are now prioritizing to ensure that anything we do or have our team is doing are only the activities that directly contribute in one way or another to our simplest of job descriptions seller.
Speaker Change: Selling more shirts and shoes.
Speaker Change: We've talked about being consumer focus for years, but never entirely organize our business as such.
Speaker Change: To enable consistency, we're employing a category portfolio structure designed to unlock the team's full potential.
Speaker Change: Particularly how the work aligns with our talent speed of delivery and the execution required to put us on a growth path.
Kevin A. Plank: Under this structure, our product, marketing, and sales organizations will work as a collective to develop singular go-to-market strategies that allow each category to obsessively focus on the needs of our athletes throughout their journey under the broader UA innovation brand umbrella, will be driven by technology and design, enabling us to lead our categories with clear intent and a sharper point of view. This structure will also provide greater visibility into product performance, which is critical to developing greater agility and adaptation.
Speaker Change: Under this structure, our product marketing and sales organizations will work as a collective develop singular go to market strategies that allow each category to obsess the needs of our athletes throughout their journey under the broader UA innovation brand umbrella.
Speaker Change: We will be driven by technology and design, enabling us to lead our categories with clear intent and a sharper point of view.
Speaker Change: This structure will also provide greater visibility in the category and product performance, which is critical to developing greater agility and adaptation.
Kevin A. Plank: On the product side, there was a critical piece of the puzzle that had been missing to power up this strategy. So a few weeks ago, we announced that Yaron White, a 25-year sports industry veteran, had joined UA as our Senior Vice President of Sportswear, Running, Basketball, Curry, and Collaboration.
Speaker Change: On the product side, there was a critical piece of the puzzle that had been missing to power up this strategy.
Speaker Change: So a few weeks back we announced that Youre on White, a 25 year sports industry veteran had joined <unk> as our senior Vice President of sportswear running basketball Curry and collaborations.
Kevin A. Plank: Complementing our legacy world-class experts already here, Euron brings decades of game-changing product strategies, operational excellence, and talent development, so we're excited to have him join Yasin's team to lead those critical categories for the brand. As an important companion to our changes in product and marketing, we'll also improve our supply chain and planning capabilities, both of which offer a significant opportunity to drive operating efficiencies within our cost-of-goods sold These initiatives, along with proactive moves to reduce discounting and promotions and a reduction in SKUs, give us great confidence in our ability to improve ASPs and gross margin in the years ahead.
Speaker Change: Complementing our legacy World class experts already here Youre on brings decades of game changing product strategies operational excellence and talent development. So we're excited to have joined the <unk> team to lead those critical categories for the brand.
Speaker Change: As an important companion to our changes in product and marketing will also improve our supply chain and then planning capabilities, both of which offer significant opportunity to drive operating efficiencies within our cost of goods sold line.
Speaker Change: These initiatives along with proactive moves to reduce discounting and promotions and a reduction in skus gives us great confidence in our ability to improve asps and gross margin in the years ahead.
Kevin A. Plank: Being a better, more responsive organization is a big part of our strategy. The natural question is, can we improve our cost structure while continuing to make the investments necessary to reconstitute our brand? Last year, we told you that we expected SG&A to be flat to slightly up. With today's print, we came in better, even though our revenue was lower than our original expectation. To get there, we pushed hard on headcount and marketing, reduced travel and meeting costs, and tightened our overall SG&A. This prudence will certainly continue as we move forward.
Speaker Change: Being a better more responsive organization is a big part of our strategy.
Speaker Change: The natural question is can we improve our cost structure, while continuing to make the investments necessary to reconstitute our brand.
Speaker Change: Last year, we told you that we expected SG&A to be flat to up slightly with today's print we came in better even though our revenue was lower than our original expectation.
Speaker Change: Yet there, we push hard on head count and marketing reduced travel and meeting costs and tightened our overall SG&A.
Speaker Change: This prudence will certainly continue as we move forward.
Kevin A. Plank: In fiscal 25, we will optimize our SG&A cost base to ensure efficient and effective spending that supports the long-term health of the Under Armour brand. Of course, it's more than just cost-cutting. This year, we will be even more intentional, identifying ways to streamline and realign the entire organization globally to set us up for an even more productive P&L once revenue inflects more positively. Now, we move to our third priority.
Speaker Change: In fiscal 'twenty, five we will optimize our SG&A cost base to ensure efficient and effective spending that supports the long term health of the under armour brand.
Speaker Change: Of course, it's more than just cost cutting.
Speaker Change: This year, we will be even more intentional identifying ways to streamline and realign the entire organization globally to set us up for an even more productive P&L once revenue inflect more positively.
Speaker Change: Now we move to our third priority.
Kevin A. Plank: Elevating consumer experiences, which is critical to becoming more premium and building better connections with athletes. In this case, we must drive excellence in our retail, e-commerce, and wholesale business. Aligning with our Protect This House strategy, we must ensure that our efforts to deliver better products and storytelling, enabled by a simplified operating model, will manifest through deliberate merchandising strategies and thoughtful distribution choices, particularly here in North America. And this brings me to probably our most important question to answer. So what is happening in North America? The anticipated North American decline of Fiscal 25 is driven by three factors, versus Sector Specific.
Speaker Change: Elevating consumer experiences, which is critical to becoming more premium and building better connections with athletes.
Speaker Change: In this case, we must drive excellence in our retail ecommerce and wholesale businesses aligning with our protect this house strategy, we must ensure that our efforts to deliver better products and storytelling enabled by a simplified operating model will manifest through deliberate merchandising strategies and thoughtful distribution choices, particularly here in North America.
Speaker Change: And this brings me to our probably our most important question to answer.
Speaker Change: So what is happening in North America.
Speaker Change: The anticipated North American decline in fiscal 'twenty five is driven by three factors.
Speaker Change: The first is sector specific.
Kevin A. Plank: We're expecting lower wholesale revenue due to retailer cautiousness amid softer consumer demand and an intensely competitive environment. The second is specific to Under Armour, as our softened brand and inconsistent execution were worsened by the impact of the challenging retail environment over the past few years. The third is our proactive action to reset our business in our largest market by significantly reducing the discounting occurring with the brand, starting with our own DTC business.
Speaker Change: We're expecting lower wholesale revenue due to retailer cautiousness amid softer consumer demand in an intensely competitive environment.
Speaker Change: The second is specific to under armour as our soften brand and inconsistent execution worsened by the impacts of the challenging retail environment over the past few years.
Speaker Change: The third is our proactive actions to reset our business and our largest market by significantly reducing the discounting occurring with the brand starting with our own DTC business.
Kevin A. Plank: This reset begins with new leadership here in the Americas. Cara Trent, who is just a couple of months into the role, is a nine-year Under Armour veteran who most recently led our Mayor region, where she built an accretive brand and business strength over the last few years. She's a leader with a point of view and knows what winning looks like.
Speaker Change: This reset begins through new leadership here in the Americas.
Speaker Change: Carrier Trent Who's just a couple of months into the role as a nine year under armour veteran who most recently led our EMEA region, where she built and accretive brand and business strength over the last few years.
Speaker Change: She is a leader with a point of view and knows what winning looks like.
Kevin A. Plank: To arrest the slide in North America, CARES is bringing a strategy to simplify the business by focusing on three key areas: digital, team sports, and our premium wholesale partner. Our e-commerce business has been overly dependent on promotions and is yet to be a flagship representation of a premium athletic brand. That said, our Fiscal 25 Outlook contemplates, among other actions, more than 50% fewer site-wide promotional days than last year and a reduction in the depth of discounts on the days that we do choose to promote.
Speaker Change: To arrest the slide in North America carriers bring our strategy to simplify the business by focusing on three key areas digital team sports and our premium wholesale partners.
Speaker Change: Our E Commerce business has been overly dependent on promotions and has yet to be a flagship representation of our premium athletic brand.
Speaker Change: That said our fiscal 'twenty five outlook contemplates among other actions more than 50% fewer site wide promotional days than last year and a reduction in the depth of discounts on the days that we do choose to promote.
Kevin A. Plank: As consumers adjust to our new value proposition, these actions will weigh on our top line. The digital goal is to transform our e-commerce business into a significantly more premium platform over the next 18 months. This includes improving our online merchandising, creating a more engaging brand building environment that encourages our consumers through compelling products with a clear story of why they will make them better. This means more DTC-exclusive products and utilizing our new 6- or 12-month speed-to-market process to deliver limited-volume products that drive brand heat and help create more brand demand moments. Further, we intend to reduce the number of made-for-outlet products on our website to drive a more premium assortment as well.
Speaker Change: As consumers adjust to a new value proposition. These actions will weigh on our top line.
Speaker Change: The digital goals to transform our ecommerce business into a significantly more premium platform over the next 18 months.
Speaker Change: This includes improving our online merchandising, creating a more engaging brand building environment that encourages our consumers through compelling product with a clear story of why it will make them better.
Speaker Change: This means more DTC exclusive products and utilizing our new six or 12 months speed to market process to deliver limited volume products that drive brand heat and help create more brand demand moments.
Further we intend to reduce the number of made for outlet products on our website to drive a more premium assortment as well overall.
Kevin A. Plank: So these actions will benefit us in creating a more elevated product offering and shopping experience for athletes over the long term. It also means harnessing the growing power of our U.S. loyalty program. UA Rewards, where we continue to see strong enrollment trends with nearly 4 million members. We've engaged members with exclusive programs like a trip to the NBA All-Star Game. An exclusive members-only product, including collabs with Logic and Justin Jefferson, which sold out in just hours.
Speaker Change: So these actions will benefit us in creating a more elevated product offering and shopping experience for athletes over the long term.
Speaker Change: It also means harnessing the growing power of our U S loyalty program.
Speaker Change: <unk> rewards, where we continue to see strong enrollment trends with nearly 4 million members. We've engaged members with exclusive programs like a trip to the NBA All star game.
Speaker Change: Exclusive of members only product, including co labs with logic, and just Jefferson, which sold out in just hours.
Kevin A. Plank: Our members also continue to show higher premium purchase frequency and revenue per member, so we're encouraged about what this can mean over time. As a companion piece to this, as we improve our operating model and supply chain, we'll increase the awareness and velocity when we release new products. Ensuring that newness is consistently associated with the brand and underscoring this concept of becoming a brand of launch. Products that you never expected but could only be built by UA.
Speaker Change: Our members also continued to show a higher premium purchase frequency and revenue per member. So we're encouraged about what this can mean overtime.
Speaker Change: As a companion piece of this as we improve our operating model and supply chain, we will increase the awareness of velocity. When we released new products, ensuring that newness is consistently associated with the brand underscoring this concept to becoming a brand of launches.
Speaker Change: Products that you never expected, but could only be built by UA, telling a better story with fewer more impactful products.
Kevin A. Plank: Telling a better story with fewer, more impactful products. Shifting to our own doors, with a very small portion of North America's revenue today, our brand houses must become a premium showcase for the Under Armour brand. There's a significant opportunity to improve these stores, and we're working to create a more homogenous look and feel, curated with less product and more storytelling. We're piloting a new store concept now that we expect to test and learn from throughout Fiscal 25. Our factory house business must elevate the consumer experience by reducing unnecessary complexity. For example, at our 183 outlet doors in North America, we're over-sorted across categories and have too many different floor sets.
Speaker Change: Shifting to our own doors through a very small portion of north America's revenue today, our brand houses must become a premium showcase for the under armour brand.
Speaker Change: There is a significant opportunity to improve these stores and we're working to create a more homogenous look and feel curated with less product and more storytelling. We're piloting a new store concept now that we expect to test and learn from throughout fiscal 'twenty five.
Speaker Change: Our factory house business must elevate the consumer experience by reducing unnecessary complexity.
Speaker Change: For example, in our 183 outlet doors in North America, where over sorted across categories and have too many different floor sets.
Kevin A. Plank: This compromises the clarity of experience for consumers when they walk through the door. And from an operational efficiency perspective, it's unacceptable, and we're correcting it with the right leadership now in place. We'll also enact greater discipline and balance between our promotional activities and inventory management needs in our outlet stores. Discounting can drive revenue in the short term, but it's not good for gross margin. Balancing market price algorithms and clearly communicating them can negatively impact brand perception.
Speaker Change: This compromises the clarity of experience for consumers when they walk through the door and from an operational efficiency perspective, it's unacceptable and we're correcting it with the right leadership now in place.
Speaker Change: We're also enact greater discipline and balance between our promotional activities and inventory management needs in our outlet stores discounting.
Speaker Change: Discounting can drive revenue in the short term, but it's not good for gross margin balancing market price algorithms and clearly can negatively impact brand perception.
Kevin A. Plank: In tandem with optimizing our operations and logistics, we believe these actions should lead to higher store profitability, which will have a meaningful impact on our nearly $1 billion factory house. Turning to North American Wholesale. In my first month on the job, while I still have a few to meet with, I've had top of mind with several of our largest U.S. accounts, including Dick's Sporting Goods, Academy, Shields, and more.
Speaker Change: In tandem with optimizing our operations and logistics. We believe these actions should lead to higher store profitability, which will have a meaningful impact on our nearly $1 billion factory house business.
Turning to North American wholesale in my first month on the job I still have a few to meet with I've had top to tops with several of our largest U S accounts, including Dick's Sporting goods Academy Shields, and more and as a note I'll be meeting with key franchise retail and manufacturing partners when I traveled to Europe and China.
Kevin A. Plank: And as a note, I'll be meeting with key franchise, retail, and manufacturing partners when I travel to Europe and China before month's end. These interactions with our U.S. partners have been productive as to where we've been and where we are, and have encouraged us to where we expect to be once our product and marketing engines are re-optimized and firing on all cylinders. Given product lead times, the critical mass of this renewed product vision will not be coming until Fall-Winter 25, with a build into subsequent seasons from there. So it'll take some time for our North American wholesale business to turn positive. Until then, we will be making meaningful progress.
Speaker Change: For months and.
Speaker Change: These interactions with our U S partners have been productive as to where we've been and where we are and encouraging us to where we expect to be once our product and marketing engines are re optimized and firing on all cylinders.
Speaker Change: Given product lead times the critical mass of this renewed product vision will not be coming until fall winter 25.
Speaker Change: With a build into subsequent seasons from there. So it will take some time for our North American wholesale business to inflect positively we will be making meaningful progress until then.
Kevin A. Plank: In the meantime, we're focusing on rebuilding high-quality relationships with our key retail partners. We're confident we'll represent Under Armour in a brand-appropriate manner, especially in sporting goods and mall accounts. But this will only happen for us as long as we stay committed to being authentic in the team sports arena, which is critical for our success. And so we'll continue this focus through team outfitting on the field, court, and pitch. This is our differentiator and reason for having a relationship with our targeted 16 to 24 year-old varsity athletes.
Speaker Change: In the meantime, we're focusing on rebuilding high quality relationships with our key retail partners. We're confident we will represent under armour in a brand right manner, especially in sporting goods and mall accounts.
Speaker Change: But this will only occur for us as long as we stay committed to being authentic and the team sports Arena.
Speaker Change: Which is critical for our success and so we will continue this focus through team outfitting on the field court pitch. This is our differentiator and reason for having a relationship with our targeted 6% to 24 year old varsity athlete.
Kevin A. Plank: Elevating our product offering from mostly good to better and best-level products is also critical enablers. Combined with inspirational storytelling and more joint marketing with our wholesale partners, we have the opportunity to do much more with key accounts, but to do so, we need to drive our aligned product and marketing engines to differentiate our business and convince athletes and our customers to covet Under Armour. Simply put, we haven't been as consistent in giving athletes or retail customers a reason to buy our brand as robustly as possible.
Speaker Change: Elevating our product offering for mostly good and distorting towards better and best level products are also critical enablers combined with inspirational storytelling and more joint marketing with our wholesale partners with.
We have opportunity to do much more with key accounts, but to do so we need to drive our aligned product and marketing engines to differentiate our business and convinced athletes and our customers to covert under armour.
Speaker Change: Simply put we haven't been as consistent in giving athletes are retail customers a reason to buy our brand as robustly as possible.
Kevin A. Plank: As we execute our Protect This House strategy over the next 18 months, I'm confident this will set us on a path toward returning to growth in our critical North American market. We have the right formula for success and are driving forward with clarity and continuity of purpose. With our priority of reconstituting the brand in North America, it's important to explain the role that the international business plays in our go-forward strategy. The attention we are placing on the U.S. business is underpinned by our 28 years of learning and understanding of brand management.
Speaker Change: As we execute our protect this house strategy over the next 18 months I'm confident this will set us on a path toward returning to growth in our critical North American market.
Speaker Change: We have the right formula for success and are driving forward with clarity and continuity of purpose.
Speaker Change: With our priority of reconstituting the brand in North America, it's important to explain the role that the international business plays in our go forward strategy.
Speaker Change: The attention we are placing on the U S business is underscored by our 28 years of learning and understanding our brand management in order to be strong abroad, we must be our strongest at home.
Kevin A. Plank: That in order to be strong abroad, we must be our strongest at home. Asia and APAC remain vital markets for Under Armour, and our brand is better positioned in these regions than in the U.S. today due to a history of channel discipline across our DTC and wholesale businesses, with Consistently Optimized Brand Activation.
Speaker Change: EMEA and APAC remains vital markets for under armour and our brand is better positioned in these regions than in the U S. Today due to a history of channel discipline across our DTC and wholesale businesses.
Speaker Change: With consistently optimize brand activations.
Kevin A. Plank: Our expectation of a low single-digit revenue decline in our international business is partly due to more conservative consumer trends and ensuring that we don't erode brand equity by chasing lower-quality revenue. In EMEA, there are signs of retail caution, particularly in the U.K., which is our largest market there, including softer wholesale outlooks and increasingly cautious consumer sentiment and macroeconomic uncertainty. Sensing that trend and maintaining discipline, we expect to grow faster in our DTC channels in the region, and we'll invest in e-commerce processes and systems to support this growth.
Speaker Change: Our expectation for low single digit revenue decline in our international business is partly due to more conservative consumer trends and ensuring that we don't erode brand equity by chasing lower quality revenue.
Speaker Change: In EMEA there are signs of retail caution, particularly in the UK, which is our largest market there, including softer wholesale outlooks and increasingly cautious consumer sentiment and macroeconomic uncertainty.
Speaker Change: Something that trend of maintaining discipline, we expect to grow faster in our DTC channels in the region and will invest in e-commerce processes and systems to support this growth.
Kevin A. Plank: And Wholesale will continue to focus our business on the right partners, working to manage the environment appropriately. There's even more significant long-term growth potential in APAC. But, still, in the near term, the environment remains materially promotional in China.
Speaker Change: And wholesale will continue to focus our business on the right partners working to manage the environment appropriately.
Speaker Change: There is even more significant long term growth potential in APAC is still in the near term the environment remains materially promotional in China.
Kevin A. Plank: Southeast Asia and Japan, so our focus is to grow carefully and productively while investing in key markets, balancing short-term performance with long-term brand affinity. So we're not taking our eye off the ball in our international markets. We'll focus on maintaining high-quality sales across all channels and protecting our premium brand position. Additionally, once we start to see a positive inflection in our largest and most profitable region, North America, more resources will be available to invest outside our home market to drive sustainable growth and profitability over the long term.
Speaker Change: Southeast Asia, and Japan, So our focus is to grow carefully and productively, while investing in key markets balancing short term performance with long term brand affinity.
Speaker Change: So we're not taking our eye off the ball in our international markets, we will focus on maintaining high quality sales across all channels and protecting our premium brand positioning.
Speaker Change: Significantly once we start to see a positive inflection in our largest and most profitable region of North America more resources will be available to invest outside of our home market to drive sustainable growth and profitability over the long term.
Kevin A. Plank: And with that, I'll hand it over to Dave to review our fourth quarter of Fiscal 24 results, provide more color on our Fiscal 25 outlook, and then I'm going to come back to close out the prepared report. Thanks, Kevin.
Dave Will: And with that I'll hand, it over to Dave to review, our fourth quarter of fiscal 'twenty four results provide more color on our fiscal 'twenty five outlook, and then I'm going to come back to close out our prepared remarks. Thanks, Kevin.
David E. Bergman: Starting with our fourth quarter fiscal 24 results, which were in line with our outlook, revenue was down 5% to $1.3 billion, with a 10% decline in North America due to softer wholesale demand and lower sales to the off-price channel. Our DTC business was also down during the quarter, with positive store growth offset by softness in our e-commerce. EMEA revenue was up 10% or 7% on a currency-neutral basis, driven by strength in our wholesale and DTC business.
Dave Will: Starting with our fourth quarter fiscal 'twenty four results, which were in line with our outlook revenue was down 5% to $1 3 billion with a 10% decline in North America due to softer wholesale demand and lower sales to the off price channel.
Dave Will: Our DTC business was also down during the quarter with positive store growth offset by softness in our ecommerce business.
Dave Will: EMEA revenue was up 10% or 7% on a currency neutral basis, driven by strength in our wholesale and DTC businesses.
David E. Bergman: APAC revenue was up 1% in the quarter, or 5% on a currency-neutral basis, driven by positive BTC sales, while wholesale results remained flat. And in Latin America, revenue was up 20% or 12% on a currency-neutral basis. From a channel perspective, fourth-quarter wholesale revenue was down 7%, driven by software demand in our full price and distributor business and lower sales to the off-price channel. Our direct-to-consumer business was flat, with 7% growth in our stores offset by a 7% decline in our e-commerce business, and licensing was up 11%, led by positive results in our North American business.
Dave Will: APAC revenue was up 1% in the quarter or 5% on a currency neutral basis, driven by positive DTC sales, while wholesale results remained flat.
Dave Will: And in Latin America revenue was up 20% or 12% on a currency neutral basis.
Dave Will: From a channel perspective.
Dave Will: Fourth quarter wholesale revenue was down 7% driven by softer demand in our full price and distributor businesses and lower sales to the off price channel.
Dave Will: Our direct to consumer business was flat with 7% growth in our stores offset by a 7% decline in our E Commerce business.
Dave Will: And licensing was up 11% led by a positive results in our North American business.
David E. Bergman: By product type, apparel revenue was down 1%, driven primarily by softness in our team sports, run, and outdoor businesses, offset by strength in train and golf. Bolt wear was down 11% due to a tough comparison and softer demand, primarily in North America.
Dave Will: By product type.
Dave Will: <unk> revenue was down 1% driven primarily by softness in our team sports run and outdoor businesses offset by strength in training golf.
Footwear was down 11% due to a tough comparisons and softer demand primarily in North America.
David E. Bergman: As a reminder, we had robust growth during the fourth 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 our accessories business was down 7%. Next, Gross Margin, which was up 170 basis points to 45% and aligned with our outlook. This increase was driven by 260 basis points of supply chain benefits, including lower product and freight costs, and 100 basis points of favorable channel mix, primarily related to lower sales to the off-price channel.
Dave Will: As a reminder, we had robust growth during the fourth 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.
Dave Will: In our accessories business was down 7%.
Dave Will: Next is gross margin.
Dave Will: It was up 170 basis points to 45% and aligned with our outlook.
This increase was driven by 260 basis points of supply chain benefits, including lower product and freight costs.
Dave Will: And 100 basis points of favorable channel mix, primarily related to lower sales to the off price channel.
David E. Bergman: These benefits were partially offset by 90 basis points of unfavorable pricing related to our proactive inventory management actions, including promotional activities in our DTC business and actions to reduce inventory through our factory health. We also realized about 90 basis points of unfavorable foreign currency impact.
Dave Will: These benefits were partially offset by 90 basis points of unfavorable pricing related to our proactive inventory management actions, including promotional activities in our DTC business and actions to reduce inventory through our factory houses.
Dave Will: We also realized about 90 basis points of unfavorable foreign currency impacts.
David E. Bergman: Moving down the P&L, our SG&A expenses in the fourth quarter were up 5%. Excluding a $58 million litigation reserve expense, adjusted SGA expenses were down $5 due to ongoing cost management actions including reduced salary and non-salary compensation and driving efficiencies in discretionary spending across our marketing and consulting budget. Bringing this together, we had an operating loss of $4 million, or, excluding the litigation reserve expense, with an adjusted operating income of $54 million.
Moving down the P&L our.
Dave Will: Our SG&A expenses in the fourth quarter were up 5%.
Dave Will: Excluding a $58 million litigation reserve expense adjusted SG&A expenses were down 5% due to ongoing cost management actions, including reduced salary and non salary compensation and driving efficiencies in discretionary spending across our marketing and consulting budgets.
Dave Will: Bringing this together we had an operating loss of $4 million.
Dave Will: <unk>, excluding the litigation reserve expense.
Dave Will: Adjusted operating income of $54 million.
David E. Bergman: Taking this to the bottom line, we realize that diluted earnings per share of $0.02, or adjusted diluted earnings per share of $0.11. From a balance sheet perspective, inventory was down 19% to $958 million, approaching our pre-pandemic level. And we close the year with a strong cash position of $859 million and no borrowings under our $1.1 billion revolving credit facility. For the full year, fiscal 24, revenue declined 3% to $5.7 billion, primarily due to challenges in our North American business, partially offset by international growth.
Dave Will: Taking this to the bottom line, we realized that diluted earnings per share of <unk>.
Dave Will: Our adjusted diluted earnings per share of 11.
Dave Will: From a balance sheet perspective inventory was down 19% to $958 million approaching our pre pandemic levels.
Dave Will: And we closed the year with a strong cash position of $859 million and no borrowings under our $1 $1 billion revolving credit facility.
Dave Will: For the full year fiscal 'twenty four revenue declined 3% to $5 7 billion, primarily due to challenges in our north American business, partially offset by international growth.
David E. Bergman: Despite the revenue contraction, our full-year gross margin increased 130 basis points to 46.1%, driven primarily by supply chain benefits related to lower freight and product costs. This was partially offset by proactive inventory management actions, including increased promotional activities in our direct-to-consumer business. Whole year SG&A expenses were up 1% to $2.4 billion, excluding an $80 million litigation reserve expense. Adjusted SG&A expenses were down 2% to $2.3 billion. Operating income was $230 million, or $310 million on an adjusted basis if you exclude our litigation reserve. This aligns with the outlook we provided one year ago. Full-year diluted earnings per share was $0.52, and our adjusted diluted earnings per share was $0.54.
Dave Will: Despite the revenue contraction, our full year gross margin increased 130 basis points to 46, 1% driven primarily by supply chain benefits related to lower freight and product cost.
Dave Will: This was partially offset by proactive inventory management actions, including increased promotional activities and our direct to consumer business.
Dave Will: Full year SG&A expenses were up 1% to $2 4 billion.
Dave Will: Excluding an 80 million litigation reserve expense adjusted SG&A expenses were down 2% to $2 3 billion.
Dave Will: Operating income was $230 million or $310 million on an adjusted basis, If you exclude our litigation reserve.
Dave Will: This aligns with the outlook, we provided one year ago.
Dave Will: Full year diluted earnings per share was <unk> 52.
Dave Will: And our adjusted diluted earnings per share was <unk> 54.
David E. Bergman: A Beat vs. Our Previous Outlook of $0.50-$0.52, mainly due to a better than anticipated tax rate and lower net income. Shifting next to our Fiscal 25 Outlook. Given the magnitude of a low double-digit revenue decline, including a large step back in our wholesale volume and proactive actions we are taking to reset our North American e-commerce business, we are encouraged by our expectation of gross margin improvement and what that will mean as we retune the base over the next 18 months.
Dave Will: Our beat versus our previous outlook of 50 to 52.
Dave Will: Mainly due to a better than anticipated tax rate and lower net interest expense.
Dave Will: Shifting next to our fiscal 'twenty five outlook.
Dave Will: Given the magnitude of a low double digit revenue decline, including a large step back in our wholesale volume and proactive actions. We are taking a reset our north American E Commerce business.
Dave Will: We are encouraged by our expectation for gross margin improvement and what that will mean as we retuned the base over the next 18 months.
David E. Bergman: Additionally, we will continue to prioritize investments and manage costs aggressively. As part of this effort, our Fiscal 25 Restructuring Plan amplifies our focus on driving higher returns to deliver more consistent, long-term shareholder value. Within this plan, we expect to incur total estimated pre-tax restructuring and other related transformational charges of approximately $70 to $90 million, including up to $50 million in cash-related charges consisting of approximately $15 million in employee severance and benefit costs, and 35 million related to various transformational initiatives, and up to $40 million in non-cash charges comprised of approximately $7 million in employee severance and benefit costs, and $33 million in facility, software, and other asset-related charges and impairments.
Dave Will: Additionally, we will continue to prioritize investments and manage costs aggressively.
Dave Will: As part of this effort our fiscal 'twenty five restructuring plan amplifies our focus on driving higher returns to deliver more consistent long term shareholder value.
Dave Will: Within this plan, we expect to incur a total estimated pretax restructuring and other related transformational charges of approximately $70 million to $90 million.
Dave Will: Including <unk>.
Dave Will: <unk> to $50 million in cash related charges, consisting of approximately $15 million of employee severance and benefit costs and $35 million related to various transformational initiatives.
Dave Will: And up to $40 million in non cash charges comprised of approximately $7 million in employee severance and benefit costs and.
Dave Will: And $33 million in facility software and other asset related charges and impairments.
David E. Bergman: That said, we continue to dig in and may uncover additional opportunities, concerning anticipated savings and what that means for run rates moving forward. Because we've only recently begun the work executing against this plan, it is too early to share those expectations. We anticipate providing additional details on our Q1 call in August. Next, I'd like to provide some color on the first quarter of Fiscal 25. From a revenue perspective, we expect our first quarter to be down at a low teen rate, marking the most pronounced decline of the year due to continued wholesale softness and DTC Contractors.
Dave Will: That said, we continue to dig in and May uncover additional opportunities.
Dave Will: Concerning anticipated savings and what that means for run rates moving forward.
Dave Will: Because we have only recently begun to work executing against this plan. It is too early to share those expectations, we anticipate providing additional details on our Q1 call in August.
Dave Will: Next I'd like to provide some color on the first quarter of fiscal 'twenty five.
Dave Will: From a revenue perspective, we expect our first quarter to be down at a low teen rate, marking the most pronounced decline of the year due to continued wholesale softness.
Dave Will: And DTC contraction.
David E. Bergman: The growth in our retail stores was more than offset by a decline in our e-commerce business reflecting our actions to reduce promotion. Next, we expect our first quarter gross margin to be down about 20 to 30 basis points due to a tough comp related to the timing of prior year supply chain benefits and negative foreign currency. These challenges more than offset the benefits we expect to see with less discounting in our DTC business.
Dave Will: With growth in our retail stores more than offset by a decline in our e-commerce business, reflecting our actions to reduce promotions.
Dave Will: Next we expect our first quarter gross margin to be down about 20 to 30 basis points due to a tough comp related to the timing of prior year supply chain benefits and negative foreign currency impacts.
Dave Will: These challenges more than offset the benefits, we expect to see with less discounting and our DTC business.
David E. Bergman: After that, we expect our gross margin to expand for the rest of fiscal 25 as our product costing initiatives and material reductions to our promotional activities should drive more meaningful improvement as we progress through the year, from an SG&A perspective. We expect to realize close to half of our restructuring charges during the first quarter of fiscal 25. Bringing this to the bottom line, we expect a first quarter operating loss of approximately $75 to $80 million, excluding planned restructuring and other related impacts. This translates to an adjusted operating loss of $35 to $40 million, or an adjusted diluted loss per share of 8 to 10 cents.
Dave Will: After that we expect our gross margin will expand for the rest of fiscal 'twenty five as our product costing initiatives and material reductions to our promotional activities should drive more meaningful improvement as we progress through the year.
From an SG&A perspective.
Dave Will: We expect to realize close to half of our restructuring charges during the first quarter of fiscal 'twenty five.
Dave Will: Bringing this to the bottom line, we expect a first quarter operating loss of approximately $75 million to $80 million.
Dave Will: Excluding planned restructuring and other related impacts we.
Dave Will: We expect an adjusted operating loss of $35 million to $40 million.
Dave Will: Translating to an adjusted diluted loss per share of eight to 10.
David E. Bergman: Given our expected revenue decline, inventory management is top of mind. And having planned for this impact, our initial expectation is that inventory will be down at a high single-digit rate in the first quarter, followed by slight declines after that, and then bringing Fiscal 25 to a close at essentially the same level as Fiscal 24. And relative to CapEx, we anticipate spending approximately $200 to $220 million. Finally, our Board of Directors approved a new three-year, $500 million share buyback program.
Given our expected revenue decline inventory management is top of mind.
Dave Will: And having planned for this impact our initial expectation as that inventory will be down at a high single digit rate in the first quarter, followed by slight declines after that.
Dave Will: And then bringing fiscal 'twenty five to a close at essentially the same level as fiscal 'twenty four.
Dave Will: And relative to Capex, we anticipate spending approximately $200 million to $220 million.
Dave Will: Finally, our board of directors approved a new three year $500 million share buyback program.
David E. Bergman: With confidence in our ability to generate cash, we believe this program provides an excellent opportunity to enhance shareholder value without compromising the financial flexibility necessary to reconstitute our brand as we target our return to top-line growth. With that, I'll turn it back to Kevin for closing remarks before we open it up for questions. Yeah, thank you, Dave.
Dave Will: With confidence in our ability to generate cash. We believe this program provides an excellent opportunity to enhance shareholder value without compromising the financial flexibility necessary to reconstitute our brand as we target a return to topline growth.
Kevin A. Plank: With that I'll turn it back to Kevin for closing remarks, before we open it up for questions.
Kevin A. Plank: As we wrap up today's prepared remarks, and thank you for your patience and allowing us a chance to lay out our strategy and the actions we're already taking at UA, I'll touch on one final question. So what's different this time, and what are the reasons to believe in Under Armour? From my vantage point, we've got a lot going for us. As an authentic on-field performance brand with more than five billion in revenue, millions of athletes worldwide believe Under Armour products make them better. But to be sure, there's much more work to be done.
Kevin A. Plank: Yes, Thank you Dave.
Kevin A. Plank: As we wrap up today's prepared remarks, and thank you for your patients and allowing us the chance to lay out our strategy and the actions we are already taking it UA I'll touch on one final question.
Kevin A. Plank: So what's different this time than what are reasons to believe and under armour.
Kevin A. Plank: From my Vantage point, we've got a lot going for US is an authentic on field performance brand with more than $5 billion in revenue millions of athletes worldwide believe under armour products to make them better to.
Kevin A. Plank: To be sure there is much more work to be done and while there may be 50 things to fix at under armour. Theyre also 500 things that are working really well.
Kevin A. Plank: And while there may be 50 things to fix in Under Armour, there are also 500 things that are working really well. We are a sports company centered on athletic performance and a heritage authenticated by competition. Our refined Protect This House strategy is engineered to cut through the noise and complexity we've allowed to dilute the clear mission that once gave us our core focus and energy. As such, we are urgently working to regain our front foot, put wins on the board that can continue to build over time, and optimize our business across the dimensions that matter.
Kevin A. Plank: We are sports house centered on athletic performance in our heritage authenticated and competition.
Kevin A. Plank: Our refined protect this house strategy is engineered to cut through the noise and complexity, we've allowed to dilute the clear mission that once gave us our core focus and energy.
Kevin A. Plank: As such we are urgently working to regain our front foot what wins in the board that can continue to build over time and optimize our business across the dimensions that matter.
Kevin A. Plank: I cannot guarantee perfection as we undertake this journey, but I promise 100% team commitment to get Under Armour on a winning front foot, leading from the top along with our energized executive team. We will bring a clear, unified vision, empower the organization by providing stability and alignment to drive consistent execution with a clear articulation for all stakeholders of what success looks like. I'll say to investors today that when you buy Under Armour, you're buying a brand, a brand with a formidable heritage that is not easily replicated, and one that is more valuable.
Kevin A. Plank: I cannot guarantee perfection as we undertake this journey, but I promise, 100% team commitment to get under armor and are winning front foot.
Kevin A. Plank: Leading from the top along with our energized executive team will bring a clearer unified vision empowering the organization by providing stability and alignment to drive consistent execution with a clear articulation for all stakeholders of what success looks like.
Kevin A. Plank: I'll say to investors today that when you buy under armour you are buying a brand a brand with a formidable heritage that is not easily replicated and one that is more valuable.
Kevin A. Plank: Then even the company is at this point our job my job is to close that gap with a strong balance sheet global presence and awareness ample resources and a talented team to take the necessary actions to evolve our company.
Kevin A. Plank: [inaudible] We'll lead from the front foot; I'll lead from the front foot. Knowing the name on the front of our GUA jersey matters more than the name on the back, and as a team, we'll take care of the Under Armour brand.
Kevin A. Plank: We'll lead from the front foot I'll lead from the front foot knowing the name on the front of our Joy Jersey matters more than the name on the back.
Kevin A. Plank: And as a team we'll take care of the under armour brand.
Operator: We are fully committed to shifting our trajectory. And for that to happen, we must change rhetoric into results. And with that, we'll open it up for questions. Operator. Ladies and gentlemen, at this time, we'll begin the question and answer session. To ask a question, you may press star and then 1 on a touch-tone telephone.
Kevin A. Plank: We are fully committed to shifting our trajectory and for that to happen, we must change rhetoric into results and with that we'll open it up for questions operator.
Kevin A. Plank: Yeah.
Operator: To withdraw your questions, you may press star and two. If you are using a speakerphone, we do ask that you please pick up your handsets prior to pressing. To join the question... Our first question today comes from... and Siegel from BMO Capital. Please go ahead with your questions. Thanks, everyone.
Speaker Change: Ladies and gentlemen at this time, we'll begin the question and answer session.
Speaker Change: Ask the question you May Press Star then one using a touchtone telephone withdraw your question you May press Star two.
Speaker Change: If you are using a speakerphone please pick up your handset.
Speaker Change: Pressing the keys.
Speaker Change: Withdraw your question you May press Star two.
Speaker Change: Once again that is star then one to join my question to you.
Speaker Change: Our first question today comes from.
Speaker Change: And from BMO capital.
Speaker Change: Go ahead with your question.
Speaker Change: Thanks, Hi, everyone. Good morning.
Simeon Avram Siegel: Kevin, so recognizing the tone shift, it makes me think of the last time you successfully focused, I think your words have been, on building a healthier rather than a louder company or something to that effect. So how do you think about this go-around of the brand elevation versus revenue contraction versus the last time you successfully re-elevated the brand and the gross margins? Maybe could you speak to how you'd expect the timeline of the path improvement to look?
Speaker Change: Kevin's recognizing the tone shift makes me think of the last time he successfully focus I think your words.
Speaker Change: Building, a healthier rather than a lateral company or something to the effect. So how do you think about this go around of the brand elevation versus revenue contraction versus the last time he successfully reactivated the brand and the gross margins. Maybe you could you speak to how you would expect the timeline of the path of improvement to look obviously the focus on brand health feels like the right move, but understandably, it's not an overnight fix so would love to hear you.
Kevin A. Plank: Obviously, the focus on brand health feels like the right move, but understandably, it's not an overnight fix. So I would love to hear how you think that timeline and any goalposts or hurdles we should be watching for. And, I guess, is your expectation that North America would return to growth in 26 or later?
Think that timeline and any goalpost of hurdles, we should we should be watching for.
Speaker Change: And I guess is your expectation in North America would return to growth in 26 or later.
David E. Bergman: And then just if I can, Dave, can you just remind us what percentage of the OPEX or fixed versus variable costs the gross margin gains are going to be powerful, and they feel key, but also trying to think through what the right longer-term OPEX should be on the lower revenues? Thanks, guys. Yeah, thank you, Simeon. And I think that really gets to the heart of it.
Speaker Change: And then just if I if I can Dave can you just remind us what percentage of the opex are fixed versus variable cost. The gross margin gains are going to be powerful and they feel key but just also trying to think through what the right longer term opex should be on the lower revenues. Thanks guys.
Kevin A. Plank: I'm not sure if there's, as I said, a repeat that's available to us, but there are certainly a lot of lessons about what brand building looks like. This is, this is going to be a little different. So we're approaching it that way. And frankly, just using all the reasoning and thoughtfulness that experience and, hopefully, some wisdom that we've gained over the years and being able to apply that to this, this chapter, is what's most important. Let me just start because I think this really just nails what's happening in North America. You know, not winning here hits me and our incredible teammates; it hits at our core.
Simeon: Yeah. Thank you Simeon.
Speaker Change: That really gets to the heart I'm not sure if theres a as I said.
Speaker Change: Ah repeat that's available to us, but theres certainly a lot of lessons what brand building looks like.
This is this is going to be a little different so we're approaching that way and frankly, just using all the.
Speaker Change: The reasoning and thoughtfulness that an experienced and hopefully some wisdom that we've gained over the years and being able to apply that to this this chapter is what's most important.
Speaker Change: Let me just start because I think that's really just nails into what's happening in North America.
Kevin A. Plank: You know, we are truly an authentically American brand. That, you know, is something we know how to do. And it's, it's something that we can fix. I think it's not going to happen overnight.
Speaker Change: Not winning here it hits me and our incredible teammates it hits at our core.
Speaker Change: We are truly an authentically American brand that is.
Speaker Change: It's something we know how to do and it's something that we can fix.
Speaker Change: It's not going to happen overnight and that's why we continue to use this 18 months sort of outlook that we've been providing.
Speaker Change: And frankly, we've seen this in the face of the same cautionary consumer sentiment that you guys are hearing out in the market right now as well.
Kevin A. Plank: And that's why we continue to use this 18 month sort of outlook that we've been providing. And, and frankly, we've seen this in the face of the same cautionary consumer sentiment that you guys are hearing out in the market right now as well. You know, the shifting consumer de-stocking cycle among retailers, and bloated industry inventories.
The shifting consumer destocking cycle, among retailers bloated industry inventories, so they've been pretty conservative and we're reacting and we're dealing with that but as it relates to UA specifically.
Speaker Change: It's time for us to affirm our brand up and we want to make sure that we're transparent with this messaging as well is that what we're seeing with the call down about.
Speaker Change: About two thirds of it is happening to us here in North America and about a third of it is proactive where we're actually we're making sure that we cut anything out we give ourselves room to really start building the base of the brand now.
Kevin A. Plank: So they've been pretty conservative, and we're reacting, and we're dealing with that. But as it relates to UA specifically, it's time for us to firm up our brand. And we want to make sure that we're transparent with this messaging as well, that what we're seeing with the call down, about two-thirds of it is happening to us here in North America, and about a third of it is proactive, where we're actually, we're making sure that we cut anything out that we give ourselves room to really start building the base of the brand.
Kevin A. Plank: Now, if there's any positive to be taken from, you know, sort of where we are right now beyond the macro environment softness, the majority of our difficulties, as I think I laid out pretty well in the script, have been, you know, for lack of a better phrase, pretty much self-inflicted.
Speaker Change: Now if there is any positive be taken from sort of where we are right now beyond the macro environment softness the majority.
Speaker Change: The of our difficulties as I think I laid out pretty well in the script.
Speaker Change: Lack of a better phrase pretty much self inflicted and the good news that we can control that more importantly, we can address and we can fix that.
Kevin A. Plank: And the good news is that we can control that. More importantly, we can address it, and we can fix that. You know, at the simplest level, we find ourselves, for the most part, when we show up at retail, we're trading on price with more than should be a good level of product. That's just not who we are representative of the opportunity that this brand has. And we're not falling on a sword saying we just have to be premium. Our eyes are wide open. That consumer is there for us. They're not mad at us.
Speaker Change: At the simplest level that we would find ourselves for the most part when we show up at retail where we're trading on price.
Speaker Change: With more than should be good level product. That's just not who we are representative of the opportunity that this brand has and we're not falling on absorbed saying, we just have to be premium where our eyes are wide open that consumer is there for us they're not mad at us when we do it right and we get the product and the brand and the story right and we've seen it with slips.
Kevin A. Plank: When we do it right, we get the product and the brand and the story right. And we've seen it with Slip Speed, Unstoppable, this hat, you know, I'm really excited about that. It's a brilliant definition of what our team does. And when our team gets together, that is the team that built that, brought that together. And, you know, so many other products in the pipeline that we have like that, but contextualizing them and getting them to market, commercializing them, that's where we can be just much better at telling their stories.
Speaker Change: Slip speed unstoppable this happening.
Speaker Change: I'm really excited about that as a a.
Speaker Change: A brilliant definition of what our team does and when our team gets together that is our team that built that brought that together.
Speaker Change: So many other products in the pipeline that we have like that but contextualize them and getting them to market commercialize them, that's where we can be just much better and telling their stories.
Kevin A. Plank: You know, in the script, I consistently refer to this idea of reconstituting the brand, and that runs across products, supply chain, distribution, and segmentation. So we must be better, of course, across the board, but it's probably best articulated at the simplest level in our lack of a consistent story with our great products. So I'm taking a brand lens to this approach and where I can be the most helpful. And that's really attacking from, you know, the product and story and making sure that those two functions are truly married.
Speaker Change: And in the script I consistently referred to this idea of reconstituting the brand and that runs across product supply chain distribution segmentation. So we must be better of course across the board, but it is probably best articulated at the simplest level and our lack of consistent story with our great products. So I'm, taking a brand lens to this approach and where I can be the most helpful.
Speaker Change: And that's really attacking from the product and story and making sure that those two functions are truly married now of course, there is an entire organization that supports beneath that but that's where I think we've been most inconsistent and where we can just get better really quickly.
Kevin A. Plank: Now, of course, there's an entire organization that supports beneath that, but that's where I think we've been most inconsistent and where we can just get better really quickly. You know, we need to ensure that only the amazing products that we make are the ones that make it to market, which is why just taking that 25% off the top is just forcing the teams to say, "Let's make a harder, better decision and make sure that we really, really love it, and that we're excited about it, and that we can articulate a story about it."
Speaker Change: We need to ensure that only the amazing products that we make.
Speaker Change: The ones that make it to market, which is why just taken that 25% off the top it's just for us and the teams to say lets make a harder better decision.
And make sure that we really really love it and that we're excited about it and then we can articulate a story about it.
Kevin A. Plank: So as I said, story is just central to what we're doing, retail, in-store, online, especially, you know, with Better and Best, and so we're going to focus and drive there. But I do want to emphasize, I spoke about the opening we have in the CMO function, but building out marketing with just, frankly, we're so proud, I think, of the engine that's been built on the product side, when you look at from, you know, John Morvado's joining, you know, close to a year ago, and Yasin now on board to lead the CPO effort, and the ability to attract talent like Yaron White, giving a voice to that team is my highest priority, and it's going to take some time for us to see the goods that are coming from John and Yasin, and Yaron, and again, complemented with the incredible experts that we already still have here at UA, there's like a worldwide team that isn't, they're not disappointed by this leadership coming in, they're really inspired by it, because they see that this is about a bigger team winning, and everyone, I think, is really excited about our opportunity to do that.
Speaker Change: So as I said story is central to what we're doing retail in store online, especially with better and best and so we're going to focus and drive there.
Speaker Change: But I do want to emphasize that I spoke about the opening we have in the in the CMO function, but building out marketing with just frankly, we're so proud I think of the engine. That's been built on the product side. When you look at from Jamba vadose, joining close to a year ago and you're seeing now on board to lead the CPO effort.
Speaker Change: And the ability to attract talent like youre on white.
Speaker Change: Giving a voice to that team is my highest priority and it's going to take some time for us to see the the goods that are coming from John and you have seen in Europe, and again complemented with the incredible experts that we already still have here at UA theres like a worldwide team that isn't.
Speaker Change: They're not they're not disappointed by this leadership coming in but really inspired by it.
Speaker Change: Because they see that this is about a bigger team winning.
Speaker Change: And everyone. I think is really excited about our opportunity to do that.
Kevin A. Plank: You know, I think as we talk about the marketing side, but none of this happens because the three heads that we really need are the product story, and it's the regional expertise. I mentioned Cara on the call, and she's just been a terrific leader who's dove right in and helping us reestablish relationships with our critical wholesale partners, as well as taking a real firm hand in what we're doing with our own DTC. But we're putting the pieces in place for this to happen.
Speaker Change: I think as you talk about the marketing side, but none of this happens because the three that the.
Speaker Change: The three heads that we really need its product story and it's the regional expertise I mentioned carried on the call and she has just been a terrific leader, who is dove right in and helping us reestablish the relationships with our critical wholesale partners as well as taking a real firm hand them, what we're doing with our own DTC, but we're putting the pieces in place for this to happen I don't have a crystal ball.
Kevin A. Plank: I don't have a crystal ball beyond, as we're talking through fiscal 25 right now, but we do know that this brand deserves to establish our go-forward voice. I think we have a really clear point of view of how to do that and what success looks like. Now it's up to execution. If we're looking for some kind of a bellwether to measure our success, I think gross margin is going to be a great indicator for us throughout fiscal 25. And Simeon, this is Dave.
Speaker Change: Beyond as we're talking through fiscal <unk> fiscal 'twenty five right now.
Speaker Change: But we do know that this brand deserves to establish our go forward voice.
Speaker Change: I think we have a really clear point of view of how to do that and what success looks like now it's up to execution and if we're looking for some kind of a bellwether to measure our success I think gross margin is going to be a great indicator for us and throughout the fiscal 'twenty five.
David E. Bergman: Relative to variable and fixed costs, you know, I think If you kind of remove the compensation cost, which isn't necessarily fixed, and just get back to, you know, what's kind of locked in that isn't going to change with revenue, that's probably a little bit less than a third of our SG&A base, something that we've been working on over the years. Great. Thanks a lot, guys.
Dave Will: Simeon this is Dave relative to variable and fixed.
Simeon: Thank you.
Speaker Change: If you kind of remove the compensation costs, which isn't necessarily fixed and just get back to what is kind of locked in that isn't going to change with revenue.
Speaker Change: That's probably a little bit less than a third of our SG&A base something that we've been working on over the years.
Jay Daniel Sole: Best of luck. Thank you. Our next question comes from Jay Sole from UBS. Please go ahead with your question. Great, thank you so much.
Speaker Change: Great. Thanks, a lot guys best of luck.
Speaker Change: Thank you.
Speaker Change: Our next question comes from James.
Speaker Change: UBS. Please go ahead with your question.
Kevin A. Plank: Kevin, I'm really interested in something you said at the top of the prepared remarks. You mentioned you have a renewed view on leadership. If you just kind of take a step back and, you know, think about, you know, all of you, tell us what's renewed.
Speaker Change: Great. Thank you so much.
James: Kevin I'm really interested in something you said at the top of the prepared remarks, you mentioned you have a renewed view on leadership. If you just to kind of take a step back and think.
James: Think about.
James: No.
You know all of UA.
Speaker Change: Tell us what's what's renew tell us how you're thinking about leadership today, maybe versus how you thought about it before and how it is going to help drive under armour forward I mean, it's clear that you have it clear.
Kevin A. Plank: Tell us how you think about leadership today, maybe versus how you thought about it before, and how it is going to help drive Under Armour forward. I mean, it's clear that you have a clear vision about what needs to be done and where Under Armour needs to go. Explain for us how the leadership is going to play into that. Yeah, well, thanks, Jay. I think, you know, from the top of the script to the end of my prepared remarks. Number one, I love the 80s hockey reference, which is about the name of the jersey on the front versus the name on the back.
Speaker Change: Clear vision about what needs to be done and we're under our own needs to go.
Speaker Change: Connect for us how the leadership is going to play into that.
Speaker Change: Yes.
Jay: Thanks, Jay I think you know from the top of the script to the to the end of my prepared remarks.
Jay: Number one I love the the 80 hockey reference, which is about the name of the Jersey on the.
Jay: On the front versus the the name on the back.
Kevin A. Plank: It's building a team, and we've done a really good job, I think, of understanding what that means to set a vision, empower that team, and let them run. We've got capability, and being in the roles that I've been in around the company, I've always had the ability, I think, to plug in different areas but really been able to focus, I think, on building a team. Probably the thing I'm most proud of in the last 10 months is, as I described about our product team, the ability to attract John Barbados to get John here, the ability to attract Yassine here, and the ability to get Yaron here as well.
Jay: It's building a team and we've done a really good job I think.
Jay: Of understanding what that means to set a vision empower that team and let them run and we've got we've got capability in.
Jay: You know being in sort of the.
Jay: The roles that I've been around the company I've always had the ability I think to plug in different areas, but.
Jay: <unk> really been able to focus I think on building a team.
Jay: Probably the thing I'm most proud of in the last 10 months as I described about our product team with you.
The ability to attract John Barbados to get John here, its ability to track you're seeing here the ability to get.
Jay: Youre on here as well and most importantly, it was the ability to you know.
Kevin A. Plank: Most importantly, it was the ability to complement and keep those existing team members. Our 15-year innovation head, our 21-year design head, now gets to work with John. He'll be watching our team sports and working with Yaron, based on his experience.
Jay: Complement and keep those existing team members are 15 year innovation had our 21 year design had now gets to work with John.
Jay: You're watching our team sports and working with your honest as experience so that meld of old and new is.
Kevin A. Plank: That meld of old and new is something that we're just going to utilize agility, that we're going to play the best hand that we have. I think at the SVP and above level, we've brought in nine executives in the last eight or 10 months, and I've been directly involved in recruiting virtually eight of the nine. Touching this team, it really feels like it's ours, but I think not having to press too hard and, hopefully, that energy of finding that wisdom where you can tip your glasses to the end of your nose and answer or say much more just through the way that you respond and the energy that you have.
Jay: It's something that we're just kind of use utilize agility that we're gonna play the best hand that we have.
Jay: The C P and above level, we brought in nine executives and less.
Jay: Eight or 10 months and you know I've been directly involved in recruiting.
Jay: Virtually eight of the nine.
Jay: So touching this team it really feels like it's ours, but.
Jay: I think not having a press too much and hopefully that and energy of finding that wisdom, where you can keep your glasses to the end of your nose.
Sort of answer to say much more just through.
Jay: The way that you respond and the energy that you have and so I'm really looking forward to that and looking forward to watching this leadership team really explode with.
Kevin A. Plank: I'm really looking forward to that and looking forward to watching this leadership team really explode with the likes of Yassine, what we've done with supply chain, and Sean Kern coming here from 30-year experience at Gap. And maybe Kevin, if I can follow up on that in the spirit of leadership, are there other potential changes in the management team in the future, and how will you work to retain this fairly new team?
Jay: The likes of the you've seen the.
Jay: What we've done with supply chain and Sean current coming here from 30 year experienced a gap and now it's a matter of just combining them together and building that and so it's going to be a little.
Jay: As we're pulling everybody together this team likes each other and it's just a matter of us running.
Speaker Change: Got it and maybe Kevin if I can follow up on that in the spirit of leadership are there other potential changes to the management team in the future.
Speaker Change: How will you work to retain this fairly Youtube.
Kevin A. Plank: Well, I think we're all incentivized by, you know, seeing where we are right now because we believe that we've got a brand that is not, you know, trading at the value of that it is. And so everyone's incredibly inspired by that. No, I think most importantly, I'm looking for the additions is that we are in the market, and we're looking for a CMO, and we'll have that position posted and leave it open for the best, the best candidates to come. But I tell you, our phone has been ringing. Is this the buzz?
Speaker Change: Well I think we're all incentivized by seeing where we are right now is that we believe that we've got a.
Speaker Change: A brand that is not trading at the value of that that it is and so everyone's incredibly inspired by that.
Speaker Change: No I think most importantly, I'm looking for the additions that we are in the market and we're looking for a CMO in and we will have that physician posted and.
Speaker Change: Leaving it open for the best.
Speaker Change: The best candidates to come but I would tell you our phone has been ringing.
Is this buzz I keep describing that.
Kevin A. Plank: I keep describing that product organization that we built. And you walk into that product, and you can just feel something. And so I feel that obligation to make sure that we get a team to complement and round them out. And I know that we've got the region leaders between Jason and APAC and Kevin Ross, another former UA veteran in EMEA, and Kerry Trent here. So we're pretty much stabilized, but there will always be some limited amount of movement there. But the next one we're looking forward to is the addition of our new CMO. Got it. Thank you so much.
Speaker Change: That product organization that we've built.
Speaker Change: And you walk into that product that you can just feel something and so I feel that obligation to make sure that we get a.
Speaker Change: A team to complement and round them out and I know that we've got the the region leaders between Jason in APAC and Kevin Ross another former UA veteran.
Speaker Change: In EMEA in care trend here so.
Speaker Change: We're pretty much stabilized, but there'll always be some some limited amount of movement there, but the next one we're looking forward to the addition of our new CMO.
Speaker Change: Got it thank you so much.
Jay: Thank you Jay.
Robert Scott Drbul: Thank you, Jay. Our next question comes from Bob Drbul of Guggenheim Securities. Please go ahead with your question. Hi, good morning. Have a couple if that's okay with you.
Speaker Change: Our next question comes from Bob <unk> from Guggenheim Securities. Please go ahead with your question Hi.
Kevin A. Plank: Um, you know, the first one is on the, you know, international outlook: how much of the macro is driving the low single-digit percent decline international? Or is there something specific that you're saying specific to Under Armour? And do you feel like you're being conservative in that international outlook? And I have a second. Yeah, thanks, Bob.
Bob: Hi, Good morning, I have a couple if that's okay.
The first one is on the on the international outlook, how much of the macro is driving the low single digit percent decline in international or is there something is there a weakness that you're seeing specific to under armour and do you feel like you're being conservative in and that international outlook and I have a second one.
Kevin A. Plank: I think that we're cautiously approaching this now. We've got the benefit of 20 years of having done and driven the UA brand and, frankly, the lessons of the last five or six years here in North America. So we're incredibly bullish on the opportunity that we have, especially in the mid and long term. I think we're being cautious in the short term because we don't want to get caught up in a situation where we feel like we're trying to flood the market with big logo hoodies. We've run that play before.
Bob: Yeah, Thanks, Bob I think that where we.
Speaker Change: We're cautiously approaching this now we've got the benefit of 28 years, having done and driven the UA brand and frankly, the lessons of the last five or six years here in North America. So.
Speaker Change: We're incredibly bullish on the opportunity that we have especially.
Speaker Change: Mid and long term I think we're being cautious in the short term because we don't want to get caught up in a situation, where we feel like were trying to fly big logo hoodie like we've run that play we've seen how that works. So I think we're bringing a bit of cautiousness, and frankly, a bit of experience or wisdom to the way that we're approaching that.
Kevin A. Plank: We've seen how that works, so I think we're bringing a bit of caution and, frankly, a bit of experiential wisdom to the way that we're approaching that. But in EMEA specifically, it's definitely soft.
Speaker Change: But in EMEA, specifically is that its definitely its soft.
Speaker Change: The same sort of.
Kevin A. Plank: There's the same sort of inventory issue that we're seeing with some of our wholesalers here. And so we're just representing a bit of caution there and also that we don't need to push the sales, meaning that we don't need to do anything other than what is in the absolute best interest of making sure that the 16 to 24-year-old just loves and covets the Under Armour brand. And what we've done in Europe, too, is probably its own little soundbite.
Speaker Change: Inventory issue that we're seeing with some of our wholesalers here and so we're just we're representing a bit of caution there and also that we don't need to push the sales meeting.
Speaker Change: We don't need to do anything other than what is in the absolute best interest of making sure that the 6% to 24 year old just loves and covets the under armour brand.
Speaker Change: And what we've done in Europe to its probably its own little soundbite.
Kevin A. Plank: We brought Cara here from Europe, from the success that she had, from going back to 2019, a $600 million-ish brand that ended in 2000, this past year, crossing over a billion dollars. And the one thing that's really compelling is that we actually grew a contribution margin from 8% to 16%, so doubling that contribution. So we've really been leveraging that hard. So we want to make sure that we can invest there as well. And, as I said, I think we have the right leader to take us to the next level there.
Speaker Change: We brought Cara here from Europe from the success that you had from going back to 2019, a 600 million a stellar brand that ended in 2000 and this past year crossing over $1 billion and the one thing. It's really compelling is that we actually grew contribution margin from 8% to 16% so doubling that that contribution so we've really been leveraging that.
Speaker Change: Hard to want to make sure that we can invest there as well and as I said I think we have the right leader to take us to the next level there, but what we're seeing all the signs of success our largest market. There is the U K. We're the number one training brand at for instance, the JD sports were within.
Kevin A. Plank: But what we're seeing are the signs of success. Our largest market there is the UK. We're the number one training brand at, for instance, JD Sports. We're within an arm's length at SDI if we're not number one, depending on the week.
Speaker Change: Yeah.
An arm's length that at SDI, if we're not number one depending on the week.
Kevin A. Plank: So we've got a great base to build from, and I think it's just us making sure that we do this smartly, and we build this as a brand together.
Speaker Change: We've got a great base to build from and I think it is us just.
Speaker Change: Making sure that we do this smartly and we build this is a brand together.
Kevin A. Plank: And just, I guess, a second question. Can you talk about the progress, your view on the progress that you've made in e-commerce and the e-commerce channel? And how long, you know, will it take you to get your website to where you want it?
Speaker Change: Great and just.
Speaker Change: Ask your second question.
Speaker Change: Can you talk about the progress you your view on the progress that you've made in E Commerce and E Commerce channel and and how long will it take you to get your website to where you want it to be.
Kevin A. Plank: Yeah, I think that's a work in process that, you know, will never be done with that, but it's something that we've got, you know, we've got a tremendous team and so, you know, Jim coming on board has brought a lot of expertise that really parallels our loyalty program as well that we have in a place that's been, you know, really good and really positive for us. So, I think we've made great progress when it comes to what we can do on the web, but frankly, I don't think that's probably the best place where I think our product and our story are just not lining up well enough.
Speaker Change: Yeah, I think that's a that's a work in process that will never be done with that but it's something that we've got.
Speaker Change: We've got a tremendous team and so Jim coming on board has brought a lot of expertise that that really parallels into our loyalty program as well that we have in a place that's been really good and really positive for us.
Speaker Change: So I think we've made great progress when it comes through what we can do in the web but.
Speaker Change: Frankly, I don't think Thats, probably the best place, where I think our product and our story or just not lining up well enough.
Kevin A. Plank: You know, I mentioned just finding some of the simple things to apply brand management like identifying, you know, what are the three aspects that make this product desirable for the consumer. So, I don't feel like we've played our best game online yet and that's why we're beginning by eliminating or significantly reducing the amount of promotion so we can have a much cleaner story that comes through on the website. Thank you very much.
Speaker Change: I mentioned lets just finding some of the simplistic things to apply brand management like identifying what are the three aspects that make this product desirable for the consumer.
Speaker Change: I don't feel like we've I don't feel like we've played our best game on online yet and that's why we're focused by beginning with eliminating the <unk>.
Speaker Change: Significantly reducing the amount of promotions. So we can have a much cleaner story of that come through on the website.
Speaker Change: Great. Thank you very much good luck.
Speaker Change: Thank you.
Kevin A. Plank: Good luck. Thank you. Our next question comes from Brian Nagel from Oppenheimer. Please go ahead with your question. Hi, good morning.
Speaker Change: Our next question comes from Brian Nagel from Oppenheimer. Please go ahead with your question.
Brian William Nagel: Hi, good morning.
Brian William Nagel: A couple questions, a couple questions, Kevin, I'll merge them together to make it simple, but I mean, first off, with regard to, talk about this in your script, but the product innovation, the new products coming, I guess just to make sure I want to understand, overall with the product innovation under, Let's be clear, we haven't been standing still, thanks Brian for that question, but no, I mean, we've been moving forward the whole time, so it's not like we're waiting for Fall 25, we're still going to move $5 billion plus of product this year, so there are athletes out there that have us, and I think the base that we have from team sports across the board is something we're really excited about, and we have, I think it's just more of a focus, you know, this goes back to the, you know, trimming the number of SKUs that we have and being really clear with our outlook there, but, you know, Unstoppable for us is working, in an incredible way, in something which is our, basically our jogger pants line that we have in five or six different expressions, and we've really made a commitment to driving and really getting back to the fundamentals of what makes you a UA, our base layer compression, as we call it here, heat gear and cold gear, we've tested that, for instance, in DSGs, houses of sport, and it's something that's done really well for us, and that's an area that we'll continue to expand, but it's really just re-anchoring and resetting ourselves, you know, we talked about how that, you know, men's apparel is going to be a priority for us, just because it's the lowest hanging fruit where we can win the easiest for us, it doesn't mean we're going to neglect what we're doing on the women's front, the opportunity we have there, it doesn't mean we're going to neglect footwear, and that's why we're bringing these footwear experts across the industry, and I think that's what's so exciting, you know, we first and foremost need to make sure that we're authenticating ourselves, and that's why I talk about the front porch of team sports, revenue-wise, that aligns up to the five key categories that I mentioned in the script, but we know where we need to be better, and this isn't like we're just going to, you know, go turn on the faucet, and all of a sudden sportswear is going to be the answer, it's that we have to drive and grind this thing the right way with making sure that every product that we put to the consumer is something that has them say, wow, it's making sure that we're, you know, approaching all these things, as I say, is that any product that we build, number one, there's three functions that I've asked for our product teams to do, number one is to edit and innovate, and that speaks to the 25% decline, it means being faster with the way that we are looking at product, number two is ensuring that every product that we build begins with the athlete story of the problem that it's solving for, I just don't think we've done a good enough job there, but we've got places that are winning right now, our Vantage Collection, our Meridian Collection, on the footwear side, you know, Curry is something that still we think has massive upside and opportunity for us, and then we'll keep, you know, driving innovation with explanations like we did in accessories with the new Self-Form Uncrushable hat, and so as we start to replicate that and become more famous for less things, I like to say, you know, companies are built because they made one product famous, brands are built because they do it over and over again, so we need to focus on doing that through our product engine and making sure that that's not going to happen unless we have an amazing story to be told, and, you know, getting those two things up to speed I think almost go hand in hand. Well, that's very helpful.
Brian William Nagel: Good morning, Brian a couple of questions. A couple of quick Kevin I'll merge them together just make it simple, but I mean first off with regard to.
Speaker Change: You talked about this in your script.
Speaker Change: Innovation, the new products coming I guess, just to make sure I don't understand it.
Speaker Change: The timing of that and when we should start to see these products, but then with that.
Speaker Change: Okay.
Speaker Change: The teams are assembled the team Cedar loose before you, but there was already product innovation has already been discussing that upon completion are you are you picking up on that or is it really more of a revamping.
Speaker Change: Overall with product innovation at under armour.
Speaker Change: Let's be clear, we haven't been standing still.
Speaker Change: Thanks, Brian for that question, but I.
Speaker Change: I mean, we've been moving forward the whole time, so it's not like we're waiting for fall 'twenty five we're still gonna move 5 billion plus dollars of product. This year. So there are athletes out there that have us and I think the.
Speaker Change: The base that we have from team sports across the board or something we're really excited about and we we have I think it's just more of a focus this goes back to the trimming the number of Skus that we have and being really clear with our our outlook there, but you know unstoppable forces working in an incredible way and something which is our basically our jogger pants line that we have in five or 6%.
Speaker Change: Expressions, and we've really made a commitment to driving and really getting back to the fundamentals of what makes UA or base layer compression as we call. It here heat and cold gear, we've tested that for instance in Dsg's.
Houses of sport and it's something that's done really well for us and that's an area that we'll continue to expand but it's really just re anchoring of resetting ourselves we talked about.
Speaker Change: How about.
Men's apparel was going to be a priority for us its just because its the lowest hanging fruit, where we can win the easiest is it easiest for us. It doesn't mean, we're going to neglect what we're doing on the women's front the opportunity we have there. It doesn't mean, we're going to neglect footwear and that's why we're bringing these these footwear experts across the industry and I think that's what's so exciting.
Speaker Change: We first and foremost thing to make sure that we're authenticating ourselves and that's why I talked about the front porch team sports revenue wise that aligns up through the five key categories that are that I that I mentioned in the.
Speaker Change: In the script, but we know where we need to be better and this isn't like we're just going to go turn on the faucet and all of a sudden sportswear is going to be the answer is that we have to drive and grind. This thing the right way with making sure that every product that we put to the consumers something that Hasnt say wow.
Speaker Change: It's making sure that we're approaching all of these things is as I say is that any product that we build number one theres three functions that I've asked for our product teams to do.
Speaker Change: Number one is to edit and innovate and that speaks to the 25%.
Speaker Change: The decline it means being faster with the way that we are looking at product and number two is ensuring that every product that we build that begins with the athlete story of the problem that it's solving for.
Speaker Change: I just don't think we've done a good enough job there, but we've got places that are winning right now our vantage collection, our meridian collection.
Speaker Change: On the footwear side Curry is something Thats still.
Speaker Change: We think has a massive upside and opportunity for us.
Speaker Change: And then we'll keep driving innovation with explanations like we did in accessories with the new cell, forming crushable hat and so as we as we start to replicate that and become more famous for less things I'd like to say.
Speaker Change: Companies are companies are built because they made one product famous brands are built because they do it over and over again, so we need to focus on doing that through our product engine and making sure that that's not going to happen unless we have an amazing story to be told in getting those two things up to speed I think almost go hand in hand.
Speaker Change: That's very helpful. I appreciate it.
Brian William Nagel: I appreciate that. I think this is a follow-up, I guess, bigger picture as well. You're talking about, and others have talked about, the more promotional environment within the space broadly. So I guess the questions I have there are, one, do you view that as more shorter-term in nature?
Speaker Change: Follow up I guess, a bigger picture as well youre talking about and others have talked about the more promotional environment within the space broadly. So I guess the questions I have one do you view that as more shorter term in nature and then secondly, this is a bigger picture part of it for those of US who followed under armour for Awhile, we remember very clearly wouldn't brand was very successful.
Kevin A. Plank: And then secondly, this is the bigger picture part. I mean, for those of us who have followed Under Armour for a while, we remember very clearly when the brand was very successful. You know, as you're looking at the competitive landscape now, you know, putting aside some of these promotions, do you still see that clear lane for the Under Armour brand when Under Armour was performing well, or has competition changed that? Yeah, thank you.
Speaker Change: You know as Youre looking at the competitive landscape now you'll put aside some of these promotions you still see that clear lane for the under armour brand when they are under performing well or who has competition changed that land.
Kevin A. Plank: I can't speak to that. I'm not a prognosticator on what the market has in front of us or what will happen on a broad basis. But we know that we're, I think we're just playing the hand that's right in front of us today. You know, we're giving information, which is why when I said, you know, it's almost like running the company by the constraints of like, let's just take, let's take a smaller bite. We've got them 100 miles in front of us.
Speaker Change: Yes. Thank you.
Speaker Change: I can't speak to that I'm, not a prognosticator on what's the market has in front of us.
Speaker Change: What happens on a broad basis, but we know that we're I think we're just playing the hand, that's right in front of us today.
Speaker Change: We're giving you information, which is why we've really just when I say, it's almost like running the company by constraints like let's just take let's take a smaller buyer. We've got them 100 miles in front of us, but we're going to work the three feet right in front of us right now.
Kevin A. Plank: We're going to work on the three feet that's right in front of us right now. And I think this is what it's telling us. So that's what we're going to respond to. What I want to say about UA is interesting because I think about this deeply. Our authentication of being in team sports, as I described it in the remarks, as a podium brand, it's such a unique position. And when you look at anyone else that's out there, I think where Under Armour stands alone is that, you know, there are big companies that you call old money, there are the cool kids, there's sort of a Sunday leisurely crowd, but there's no one that stands up for the little guy, for the athlete that was not picked first, for the long shot, the underdog.
Speaker Change: And I think this is what it's telling us so that's what we're going to respond to.
Speaker Change: What I, what I want to say about UA, it's interesting because I.
Speaker Change: I would think about this deeply.
Speaker Change: Our authentic identification of being in team sports as I just described it in the remarks as a podium brand, it's such a unique position and you look at anyone else. That's out there I think we're under armour stands alone as that.
Speaker Change: Big companies that you could call them old money, there's the cool kids.
Speaker Change: There's sort of a Sunday leisurely crowd, but theres no one that stands up for the little Guy.
Speaker Change: For the athlete that was not picked first for the long shot the underdog I think that representation for UA. It probably has a story that speaks to virtually everyone on the planet.
Kevin A. Plank: I think that representation for UA probably has a story that speaks to virtually everyone on the planet. And it's a position I feel that we own completely uniquely. But I don't approach this as saying that it's something that's, you know, God given for us for the rest of time.
Speaker Change: And it's our position I feel that we own completely uniquely I don't know approach. This is saying that's something that's.
Speaker Change: <unk> given for us for the rest of the time.
Kevin A. Plank: So we'd better act on it soon. And that's the humble and hungry mentality that Under Armour, you know, long shot overcoming. And, you know, it's probably a really good metaphor for where we are right now.
Speaker Change: So we'd better act on it soon and that's we're playing that humble and hungry mentality that under armour long shot overcoming.
Speaker Change: And it's probably a really good metaphor for where we are right now so I'm I'm excited about what the future holds for US I'm excited about this unique position that we hold in the marketplace now we just need to make sure that we deliver the product and the story together at once its way it relates it goes goes and shows up at retail.
Kevin A. Plank: So I'm excited about what the future holds for us. I'm excited about this unique position that we hold in the marketplace. Now, we just need to make sure that we deliver the product and the story together at once in the way it relates and goes and shows up at retail. Appreciate all the color.
Speaker Change: I appreciate all the color.
Brian William Nagel: Good luck here; thank you. Our next question comes from Sam Poser from Williams Trading. Please go ahead with your question. Thank you for taking my question. Um, Kevin, I just want to ask you a couple of things about Europe and as it relates to the United States. I'm wondering, in the US, trying to elevate the brand, does this mean that, you know, that, you know, does this mean that you're going to cut off some of the more moderate distribution in order to elevate it and get away from, over time, to get to elevate the brand and make, sort of, force better and Yeah, I don't think that we like our distribution today.
Speaker Change: Good luck here. Thank you.
Kevin A. Plank: I don't, that'll be part of the exercises, as it always is, constantly calling our retail partners. But it's also, it's walking into some partners and some of this, Sam, it's been on us. We do walk into one of our, you know, premium or close to premium sporting goods stores, even here in the States, and the only thing that's leading or explaining what the product is is the price that's in the upper left-hand corner. And it's hard to explain the difference between, you know, a $20 graphic t-shirt and a $45 Vantage t-shirt that has Rush technology. And it's just not clearly articulated.
Speaker Change: Our next question comes from Sam Poser Williams.
Speaker Change: Please go ahead with your question.
Speaker Change: Thank you for taking my question.
Speaker Change: Kevin just a couple of things you talked about Europe as it relates to the United States and I'm wondering in the U S trying to elevate the brand does this mean that back does this mean that youre going to cut off some of the more moderate distribution in order to elevate it to get away from over <unk>.
Speaker Change: To get to.
Speaker Change: To elevate the brand and make it sort of course, better and best to to have more prevalent survival follow up.
Speaker Change: Yeah, I don't think that we we like our distribution today I hope that that'll be part of the exercise as it always is is constantly calling our retail partners, but it's also it's walking into some partners in some of the sandwich, it's been as much on us of.
Speaker Change: We do walk into one of our.
Speaker Change: Premier or close to premium sporting goods stores, even here in the states and in all the only thing thats, leading our explaining what the product is as the price that's in the upper left hand corner and it's hard to explain the difference between a 20 dollar graphic T shirt, and a $45 vanish T shirt that as Russ technology.
Kevin A. Plank: So I think we're probably in a pretty good space; we may close some of the doors and make sure that we're only coming through with some of those retailers. It's always on the table for us as well. But that's something, you know, six weeks in the job, I'll continue to evaluate. But for the most part, I just want to focus on the product that goes to anyone and ensure that that product and story come hand in hand. And then, thank you. And then, um, what made you? I mean, this is a combined question.
Speaker Change: And it's just not clearly articulated so.
Speaker Change: I think we're probably in a pretty good space, we made contract some of the doors and make sure that were only coming through and some of those retailers.
Speaker Change: It's on the table always for us as well, but.
Speaker Change: But that's something you know six weeks in the job will continue to evaluate but for the most part I just want my main priority is focusing on the product that goes to anyone and ensuring that that product and story show up hand in hand.
Samuel Marc Poser: You said, I want to know what led you to step back into this role and follow up on Jay's question: over the last few years, what have you learned, and how are you going to approach it? What have you learned over the last few years that made you step back in and believe that it was time?
Speaker Change: And then thank you and then.
What made you I mean this is a combined question.
Speaker Change: <unk>.
Speaker Change: I'm wondering what what led the decision for you.
Speaker Change: To step back into this role and follow up on Jays question over the last few years, what have you learned and how are you going to approach it.
Speaker Change: What have you learned over the last few years.
Speaker Change: 222.
Speaker Change: <unk>.
Speaker Change: <unk>.
Speaker Change: That made you step back in and believe that it was time and then secondly, you said earlier, you know that everybody should be focusing on selling shirts and shoes, but I get it.
Kevin A. Plank: And then secondly, you said earlier that everybody should be focusing on selling shirts and shoes, but I've had the issue with brand first, product first. And I'm wondering, you know, is it selling shirts and shoes to the right people at the right time at the right price? versus just selling shirts and shoes. Yeah. Well, first of all, I think, you know, the ability to step away allowed me to get a lot of reflection on number one, taking a breath after, you know, 24 years of running hard with the company since beginning in 1996 or 25 years doing that. I got to watch my kids, my son and my daughter play high school sports.
Speaker Change: The issue with brand first product first.
Speaker Change: And I'm wondering is it sell shirts and shoes to the right people at the right time at the right price.
Speaker Change: Versus just selling shirts and shoes.
Kevin A. Plank: I got to watch graduations, you know, and I got to take a bit of a bit of a beat. But that's not to say that I haven't been, you know, closer to the business at the same time. I've been watching the business just from a different chair. And there's a very different outlook that you can have as coming from being the chairman to being the active CEO and being able to actually affect day-to-day decisions. So I view this, you know, honestly, Sam, I've been pinching myself for the last six weeks.
Speaker Change: Yeah.
Speaker Change: Well first of all I think you know the ability to step away. It allowed me to get a lot of reflection of number one taking a breath. After 24 years of running hard with the company since beginning of $96 25 years doing that.
Speaker Change: I got to watch My Kid, My son, and my daughter play High School sports.
Speaker Change: I got to watch graduations.
I got to take a bit of a a bit of a beat and that's not to say that I haven't been closer near the business at the same time I've been watching the business just from a different chair and Theres a very different outlook that you can have is coming from being in the chairman to be in the active CEO and being able to actually effect day to day decisions. So I view this.
Sam: Honestly, Sam Ive been pension myself for the last six weeks.
Kevin A. Plank: You know, I've done different things, but I realized that what I really love doing is selling shirts and shoes. And in doing that, let me be really clear. This isn't just selling any shirts and shoes. It's selling the best shirts and shoes and the product spectrum of good, better, best. I think Under Armour makes a lot of good stuff, some better, and nowhere near enough of the best.
Sam: I've done different things, but I've I've I realize that what I do love doing is selling shirts and shoes.
Sam: And in doing that let me just be really clear this isn't just selling any shirts and shoes selling the best shirts, and shoes and the product spectrum of good better best I think under armour makes a lot of good.
Sam: Some better and nowhere near enough fast, we're going to focus on that and again. This isn't just with an eye on we should do it because we see ourselves as a premium brand. It's because I do believe that under armour has that upside and we're also gonna make sure that we pay the rent and so we'd like to secure and solidify. This this good level of business and we want to emphasize and focus on our better and best level business and I can tell you confidently.
Kevin A. Plank: We're going to focus on that. Again, this isn't just because we should do it because we see ourselves as a premium brand. It's because I do believe that Under Armour has that upside, and we're also going to make sure that we pay the rent.
Kevin A. Plank: And so we'd like to secure and solidify this, this good level business. And we want to emphasize and focus on our better and best level business. And I can tell you confidently that we have the product engine and team now in place, both legacy and new additions that have come on to lead this with Ashina at the top of that engine. I owe them, and I owe this organization; this organization owes itself a great storytelling function.
Sam: We are a product engine and team now in place both legacy as well as the new additions that have come on to lead this with you've seen at the top of that engine I owe them and I Hope. This organization. This organization owes itself a great storytelling function and we have some great people on our marketing teams, but we need to put all those pieces together and get product and story to be one.
Kevin A. Plank: And we have some great people on our marketing teams, but we need to put all those pieces together and get product and story to be one functioning engine for us to sell only and mostly focus on more, better, and best as we look to grow from where we are today. Our next question comes from Laurent Vasilescu from BNP Paribas. Please go ahead with your question.
Sam: <unk> engine for us to sell only and mostly focusing on more better and best is we look to grow from where we are today.
Speaker Change: Thank you.
Speaker Change: Our next question comes from neurons.
Speaker Change: That's the last few BMP parabolic. Please go ahead with your question.
Laurent Andre Vasilescu: Oh, good morning. Thank you very much for taking my question. I wanted to ask about the guide for international being down to low single digits. Is that on a reported basis or a constant currency basis? And then, Kevin, I think you mentioned that the environment in China is very promotional. Can you provide a little bit more color on what you're seeing in that marketplace overall and how you're thinking about that business, that geography, for fiscal year 2025? Hey Laurent, this is Dave.
Speaker Change: Good morning, Thank you very much for taking my question.
Speaker Change: I wanted to ask about.
Speaker Change: The guide for international being down low single digits.
Speaker Change: Is that is that on a reported basis or a constant currency basis, and then Kevin I think you mentioned that the environment in China is very promotional can you provide a little bit more color on what youre seeing in that marketplace.
Overall, and how youre thinking about that business that that geography for fiscal year 'twenty five.
David E. Bergman: I'll jump in on this one. I don't want Kevin to lose his voice, so, you know, I think that, you know, a couple different things. When we think about the high-level leadership, I think Kevin gave a lot of color around that relative to, you know, how we're kind of smartly approaching our international and our growth and being prudent about that. You know, I think within APAC, and this is actually consistent with EMEA as well, the DTC growth, we do see it being offset by some of the wholesale and distributor slowdown and caution that we see.
Hello. This is Dave I'll jump in on this one I don't want Kevin to lose his voice so.
Speaker Change: Okay.
Speaker Change: I think that a couple of different things when we think about the high level lead and I think Kevin gave a lot of color around that relative to how we're kind of smartly approaching our international in our growth and being prudent about that.
Speaker Change: You know I think within APAC.
Speaker Change: And this is actually consistent with EMEA as well the DTC growth.
Speaker Change: We do see it being offset by some of the wholesale and distributor slowdown and caution that we see so where we can directly control and drive the brand within DTC, we see that growing well, but it is some challenges in the markets with the wholesale and distributors.
David E. Bergman: So, where we can directly control and drive the brand within DTC, we see that growing well, but there are some challenges in the markets with wholesalers and distributors. You know, within APAC more specifically, I would say that there is a little bit around the retail and e-com traffic, but we're driving against that very well. We've also got a little bit of pressure with a partner in South Korea that we're working through. There are some financial pressures there.
Speaker Change: Within APAC more specifically I would say that you know, it's a little bit around the retail and E com traffic, but we're driving against that very well.
Speaker Change: We've also got a little bit of pressures with a partner in South Korea that we're working through there are some financial pressures there.
David E. Bergman: But we are planning to increase our APAC store fleet, you know, by more than 80 doors this year, and that's more back half-weighted. And we're excited about the upcoming Curry Tour in Asia as well, which is really going to help from a brand voice and energy perspective. Within EMEA, you know, Kevin alluded to this, but we have seen some higher inventory levels within some of our retail partners as we've finished out Fiscal 24, and that does impact Fiscal 25 orders a little bit. And so, you know, we've planned for that appropriately. We do believe that this is more of a temporary situation.
Speaker Change: But we are planning to increase our APAC store fleet by more than 80 doors. This year.
Speaker Change: And that's more back half weighted.
Speaker Change: And we're excited about the upcoming Curry tour in Asia, as well, which is really going to help from our brand voice and energy perspective within EMEA.
Speaker Change: Kevin alluded to this but we have seen some higher inventory levels within some of our retail partners. As we finished out fiscal 'twenty four and that does impact the fiscal 'twenty five orders a little bit and so we planned for that appropriately.
Speaker Change: We do believe that thats more of a temporary situation and as those inventory levels clean up you would expect better order flow coming through because the brand is very strong in EMEA and we have great relationships with our partners. There. So you know a little bit of caution maybe a little bit of prudence.
David E. Bergman: And as those inventory levels clean up, you would expect better order flow coming through because the brand is very strong in EMEA, and we have great relationships with our partners there. So, you know, a little bit of caution maybe, a little bit of prudence, making sure that we're fueling the brand, making sure we're not, you know, chasing any revenue that's not the most premium revenue that we want to get after, and just playing the smart game going forward. That's very humbling.
Speaker Change: Making sure that we're fueling the brand making sure we're not chasing any revenue that's there.
Speaker Change: It's not the most premium revenue that we want to get after and just playing smart game going forward.
Speaker Change: That's very <unk>.
David E. Bergman: In the spirit of supporting the team, Dave did a great job on that answer. I have nothing to add. Okay, thank you. And then Dave, maybe in order to spare Kevin's voice, you mentioned the adjusted SG&A was down 5% in 4Q. Maybe for the audience, can you just parse out where marketing went as a percentage of sales for 4Q? And as we think about the SG&A guide for the year down 2 to 4, to your point, Kevin, you mentioned how you were able to manage that for fiscal year 24.
Speaker Change: Yes, and the spirit of insured supporting the team Dave did a great job on that answer I have nothing that [laughter].
Speaker Change: Thank you and then Dave maybe.
Speaker Change: Fair Kevin's boys.
Speaker Change: You mentioned, the adjusted SG&A was down 5% in.
Speaker Change: <unk> maybe for the audience can you just parse out.
Speaker Change: We did marketing gopro as a percentage of sales for <unk> and as we think about the SG&A guide.
Kevin: For the year of down two to four to your point, Kevin You mentioned, how you were able to manage that.
Kevin: For fiscal year 'twenty four.
David E. Bergman: Where does marketing as a percentage of sales go for fiscal year 25? Yeah, so when we think about marketing throughout all of Fiscal 24, we ran pretty close to kind of the 10% of revenue mark. So little fluctuations up and down. I think Q4 is probably high 9%, really close to 10%, finishing out the year at about 10%. And that play for Fiscal 25 isn't significantly different. We've rebalanced some of that and really made sure that we're prioritizing the marketing investments, and Jim's done an excellent job working with the teams on that. But you're not going to see a noticeable difference in that percentage of revenue as we go through Fiscal 25.
Kevin: Marketing as a percentage of sales go for for fiscal year 'twenty five.
Speaker Change: Yes, so when we think about marketing throughout all of fiscal 'twenty, four we ramp pretty close to kind of the 10% of revenue Mark So little fluctuations up and down I think Q4 is probably high 9% are really close to 10%, finishing out the year at about 10%.
Speaker Change: And in that play for for fiscal 'twenty, five isn't significantly different we've rebalanced some of that and really making sure that we're prioritizing.
The marketing investments and Jim has done an excellent job working with the teams on that but youre not going to see a noticeable difference.
Speaker Change: In that percentage of revenue as we go through fiscal 'twenty five.
Laurent Andre Vasilescu: Very helpful. Thank you very much. Welcome. Thank you. And ladies and gentlemen, with that, we'll be concluding today's question and answer session as well as today's conference call and presentation. We thank everyone for joining this morning. You may disconnect. Have a great day. ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? http://www.underarmourinc.com http://www.underarmourinc.com http://www.underarmourinc.com http://www.underarmourinc.com http://www.underarmourinc.com http://www.underarmourinc.com http://www.underarmourinc.com ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ?
Speaker Change: Very helpful. Thank you very much.
Speaker Change: Welcome. Thank you.
Speaker Change: And ladies and gentlemen, with that we'll be concluding today's question and answer session as well as today's conference call and presentation. We thank everyone for joining this morning.
Speaker Change #100: You May have you may disconnect and have a great day.
Speaker Change #100: [music].
Speaker Change #100: [music].
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