Despite continuing headwinds, particularly in its home market of North America, Under Armour managed to exceed analyst expectations in the third quarter and raised its profit guidance for the fiscal year.

Before the market opened Friday, the Baltimore-based sports brand reported adjusted diluted earnings per share of 9 cents, surpassing analyst expectations of a 2-cent loss. It also reported an operating loss of $150 million. Excluding litigation reserve expense and transformation and restructuring charges, adjusted operating income was $26 million. Sales fell 5 percent to $1.33 billion, slightly above analyst projections of $1.31 billion.

By region, North America, the company’s largest market, continued to struggle, with a sales decline of 10 percent to $757 million. International revenue, led by Latin America and the EMEA, increased 3 percent to $577 million. Latin America sales were up 20 percent in the period and the EMEA was up 6 percent. Asia-Pacific sales, however, declined 5 percent.

Wholesale revenues were also down, dropping 6 percent to $660 million. Direct-to-consumer sales dipped 4 percent overall to $647 million with Under Armour owned and operated store revenue falling 2 percent and e-commerce down 7 percent.

By category, apparel revenue decreased 3 percent to $934 million, footwear declined 12 percent to $265 million, and accessories decreased 3 percent to $108 million.

Despite the continued struggles, Under Armour founder and chief executive officer Kevin Plank remained optimistic: “Our third quarter adjusted operating results exceeded expectations, and despite a few unfortunate, non-recurring impacts, we’re encouraged by the progress we’re making in the business to reignite brand momentum,” he said. “In North America, we believe the December quarter marked the most challenging phase of our business reset, and we expect greater stability ahead as we build on this progress globally.”

Plank continued, “Our transformation is accelerating as we sharpen our focus and strengthen execution. Our strategy is gaining traction through better products, bolder storytelling, and a more disciplined market presence, positioning Under Armour to operate with greater intention and confidence going forward.”

In May 2024, Under Armour unveiled a restructuring plan to improve financial and operational efficiency. The plan, which has been updated since then, is now expected to cost up to $255 million, including up to $107 million in cash charges and up to $148 million in non-cash charges. Through the end of the third quarter of fiscal 2026, the company recorded $178 million in restructuring and impairment charges and $47 million in other transformation-related expenses. Of the $224 million incurred to date, $89 million is cash-related and $135 million is non-cash. The company expects to recognize the remaining charges under the updated plan by the end of fiscal 2026.

Under Armour has updated its projections for fiscal 2026. The company is now projecting adjusted diluted earnings per share of 10 cents to 11 cents, compared to its prior outlook of 3 cents to five cents and above analyst expectations of 5 cents.

Revenue is now expected to decline about 4 percent, compared to the prior outlook of a 4 to 5 percent decline. This includes an approximate 8 percent decline in North America and a 6 percent decline in Asia-Pacific, each compared with a previously expected high-single-digit decline, partially offset by an approximate 9 percent increase in EMEA revenue, compared with a previously expected high-single-digit increase.

The operating loss is expected to be about $154 million, compared with the prior outlook of a $56 million to $71 million loss. Excluding the litigation reserve expense and expected transformation and restructuring charges, adjusted operating income is expected to be about $110 million, compared with the prior outlook of $95 million to $110 million.

In pre-market trading on Friday, Under Armour stock was trading up 4.8 percent to $6.45.