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Investing.com -- S&P Global Ratings has placed Under Armour on CreditWatch with negative implications due to operational declines and continued business challenges.
The rating agency now expects Under Armour’s lease-adjusted leverage to be around 4x for fiscal 2026, higher than its previous expectation of below 4x earlier in 2025.
The company is experiencing persistent sales decreases across its main product lines. In the latest quarter, apparel sales fell 1%, footwear dropped 16%, and accessories declined 3%. Gross margin also decreased by 275 basis points in the second quarter, primarily due to U.S. tariffs. The company expects margins to decline a further 310-330 basis points in the third quarter, which is a larger drop than S&P anticipated earlier in the year.
The recent split with the Curry brand was unexpected. While basketball generates only 2% of Under Armour’s global sales, and the company does not expect significant effects on consolidated financial results, S&P is assessing how this separation from a high-profile athlete could impact efforts to turn around the footwear business globally. The company plans to release the final Curry brand shoe in February 2026, with additional associated products available through October 2026.
Under Armour’s expenses have increased due to its 2025 restructuring plan. The company recently approved an additional $95 million of restructuring actions, bringing total estimated restructuring and related charges to $255 million through fiscal 2026. This is significantly higher than the $160 million initially estimated when the plan was announced in May 2024. The increase includes costs related to the Curry brand separation, further contract terminations, incremental asset impairments, and additional employee severance and benefits costs. The company expects up to $107 million in cash-related charges for the program.
S&P Global Ratings plans to resolve the CreditWatch placement within the next 90 days. The determination will be based on whether Under Armour can improve profitability, holiday season sales and profits performance, and the extent to which leverage exceeds the rating agency’s 4x downgrade trigger.
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