Good day, and welcome to the Fourth Quarter 2025 Earnings Conference Call. All participants will be in listen-only mode. After today's presentation, there will be an opportunity to ask questions. Please note this event is being recorded. I would now like to turn the conference over to Lance Allega, Senior Vice President, Finance and Capital Markets. Please go ahead.

Good morning, and welcome to Under Armour's fourth quarter fiscal 2025 earnings conference call. Today's call is being recorded and will be available for replay. Joining us on this morning's call are Under Armour’s President and CEO, Kevin Plank; and Chief Financial Officer, Dave Bergman. Before we begin, I'd like to remind everyone that our remarks today will include forward-looking statements that reflect Under Armour management's current views as of May 13th, 2025. These statements may include projections about our future performance and are not guarantees of future results. Actual results may differ materially due to several risks and uncertainties, which are described in this morning's press release and in our filings with the SEC, including our most recent annual report on Form 10-K and quarterly reports on Form 10-Q. Today's discussion may also reference non-GAAP financial measures, which we believe provide useful insight into our underlying business trend. When applicable, reconciliations of these non-GAAP measures to their most comparable GAAP counterparts can be found in this morning's press release and on our Investor Relations website at about.underarmour.com. With that, I'll turn the call over to Kevin.

Thank you, Lance, and everyone joining us this morning. I felt confident as we closed fiscal '25 and began preparing for this call. Over the past year, we've enhanced our agility while making thoughtful and strategic choices, improving the brand through quality revenue decisions, achieving significant efficiencies in SG&A, and moving towards a stronger, healthier Under Armour, all while dealing with top-line pressures. We had a focused and disciplined strategy designed for the fiscal year '25 environment and executed it with determination. So far, we are energized and optimistic about our progress, acknowledging that there is still much to be done to change our current trajectory and foster brand loyalty. The business environment is constantly changing, and so are we. While the landscape is becoming more dynamic and our visibility beyond the short term remains uncertain, our work over the last 13 months to build agility and focus is important. We understand what it takes to succeed, and we're prepared. Dave will discuss our initial views on the current trade policy environment shortly, but the main point is that we are confident in our ability to navigate whatever challenges come our way and maintain a proactive approach. While we are not satisfied with declining revenue, our fourth-quarter results exceeded our fiscal '25 expectations, showcasing the foundational progress we are achieving as we reposition the Under Armour brand. We either exceeded or met the initial outlook we provided last May for every line item, with gross margin being a key metric that benefited from our strategies to reduce promotions in our own DTC businesses. As we strive to regain pricing power, we see a substantial long-term opportunity to increase gross margin by refining our business composition through our go-to-market strategy. By being comprehensive and considering every detail from products that only UA could create, this is our purpose. Innovation is delivered with current or forward style, supported by a knowledgeable sales force to explain the UA difference to wholesale partners, the right retail presentation—whether online or in-store—that tells our story, and social media collaborators and influencers that encourage our target consumers to engage with and purchase UA. We have a strong foundation to build upon, and we will continue to develop this competency in the coming seasons. Reflecting on my first year back as CEO, I am proud of the advancements we've made in sharpening our strategy, streamlining operations, and establishing a stronger financial foundation. Most importantly, we've confirmed our identity as a global sports house brand with undeniable authenticity across various fields and courts worldwide. We represent the underdogs, those who lacked all the advantages but worked harder to achieve excellence, who have embraced the rule of 10,000 hours to master their craft. We innovate not just to excel, but to give our athletes a fair chance. This approach also means persistently pursuing improvement. In this spirit, we're becoming leaner and more intentional, minimizing challenges wherever possible, which allows small wins to accumulate into significant successes. We're focusing on high-return categories, markets, and initiatives. By simplifying our portfolio, streamlining operations, and exiting lower-value activities, we're enhancing execution, increasing efficiency, and directing capital to its most impactful uses. Fewer initiatives done better will create stronger, more consistent value. We're working to transform complexity into clarity and taking decisive action. Our quick response capabilities drive brand visibility through trend-based launches, while our 28 million member global loyalty program strengthens engagement and encourages repeat purchases. Additionally, streamlining materials, reducing SKUs, and optimizing our supply chain will help us improve speed, decrease costs, and unlock future growth. With meticulous planning and improved liquidity, we’re aiming to operate a demand-led model that aligns us with athletes and positions us to regain market share and increase margins over the long term. At the core, Under Armour was founded on the belief that athletes deserve better. Today, we are fulfilling that promise with greater discipline and precision. Our shift toward a category management operating model signifies a structural change and a significant advancement in how we serve athletes by aligning product, marketing, and regional teams around key categories like training, running, team sports, basketball, sportswear, golf, and licensing. We aim to execute quickly and make a larger impact. This athlete-first model grants category teams clear ownership, with a single leader accountable for decisions and prompt action. Concurrently, it centralizes key functions while empowering regional strategies to create a leaner and more efficient go-to-market engine, strengthening the brand and enhancing returns. We see this disciplined approach as the way to unlock value and thrive in the marketplace. As I return to my current role, considering the lead times in our industry, product is the top priority. Without outstanding product, nothing else matters. Our spring/summer '25 collections hit retail floors with renewed confidence in the fourth quarter. Even in a tough sales environment, we achieved key apparel wins. Our HeatGear base layer exceeded expectations, the Unstoppable collection performed well, and sportswear is gaining substantial traction. Central to our strategy is accelerating innovation to energize athletes and elevate the brand. This quarter, we launched our boldest SlipSpeed yet, ECHO, debuted with Stephen Curry at the 2025 NBA All-Star Weekend through a collaboration with luxury car designer, MANSORY. Looking ahead, a premium apparel collection will launch this fall, blending performance, sport, and style. The Curry brand continues to grow its influence with the ongoing release of the new Curry 12 and De'Aaron’s Fox 1 colorways alongside exclusive athlete designs to maintain visibility and cultural relevance. We've also introduced smaller drops like our UA United Arrows collaboration in Japan and our partnership with the recently acquired UNLESS, which debuted at Milan Design Week. Our regenerative plant-based sportswear collection includes hoodies, T-shirts, and shorts made from natural fibers designed to decompose without toxic residue or microplastics. As we prepare for the fall/winter '25 season, our product focus sharpens and our design language becomes more cohesive. Our priorities are clear: excel in men's apparel, unleash footwear potential, and strengthen our connection with women, starting with essential items like bras and bottoms, then building from there to grow their affinity for Under Armour. We are particularly excited about the upcoming UA Halo collection, codenamed Aura, unveiled at our recent investor meeting, which signifies a premium expansion into next-generation performance sportswear. UA Halo will be introduced with three distinct footwear styles: trainer, runner, and racer, each tailored to meet specific athlete needs while seamlessly integrating the UA logo into the midsole structure for enhanced support. Complementing the footwear is an elevated apparel range that marks a new era for the brand, both in design and innovation. Simultaneously, we are redefining our core base layer category with NEOLAST, a groundbreaking sustainable material fiber engineered to revolutionize stretch performance in apparel. As we approach the completion of our initial 25% SKU reduction over the past year, we're maintaining disciplined inventory management to create space for a stronger, focused product architecture. Together, these measures will drive brand momentum, enhance profitability, and create new growth opportunities. Our aim is straightforward: to sell more of fewer items at a higher full price. There's also an innovative product in the lineup, a game changer disguised as a backpack. The No Weigh backpack recently launched in a short-term test, featuring patent-pending auxetic suspension straps that flex with the body to evenly distribute weight, creating a lighter feel. We're not just testing the bag, but also the $140 price point in a market where prices typically range from $40 to $65. This approach is similar to last year's launch of our StealthForm Uncrushable Hat, bringing innovation to a $13 to $25 market, introducing the UA performance lens, with an entry price of $45, and that hat is performing well. I'm sharing these details about an accessory item because it metaphorically represents what we plan to achieve with our shirts and shoes moving forward, focusing on four to six key products each season for spring and fall. This initiative aims to set expectations for our go-to-market approach for these essential products each season—a comprehensive strategy that inspires consumers to purchase UA at premium price points. If you have the opportunity, please visit our investor page at about.underarmour.com for a complete visual of our new go-to-market strategy and how we are elevating standards at UA. This strategy includes, as mentioned earlier, first and foremost, innovative, design-first products that only UA can produce. It also encompasses the tools and narratives on how our teams are being trained to sell the products effectively. Brand-appropriate point of sale execution, combined with social and influencer support to generate buzz and drive conversion, are fundamental. This success is contingent upon the product delivering the desired experience, and we are confident in our pipeline. While we have always had great innovation, we believe the biggest opportunity lies in how we fully support the product with compelling narratives that explain its uniqueness and evoke emotions. This is the essence of branding. Successful companies strategically manage commodities and promote their brand. We have not adequately focused on storytelling in the past, and that will change with the successful execution of our recent launch of the No Weigh bag within our testing protocol. This prepares us for a broader market rollout in a few months during the critical back-to-school season. In recent months, under the leadership of Brand President Eric Liedtke, we've made significant strides in redefining our narrative. We now have a distinct storytelling strategy aligned with our product vision, establishing a cohesive brand voice across various platforms. As our storytelling aligns with the strength of our product innovation in fiscal '26, our goal is to heighten our brand relevance and enhance brand differentiation. Our attention is particularly directed at young athletes. We are not increasing our marketing budget. Instead, we're working to maximize its impact, with an annual budget of around $500 million focusing on some of the world's top sports athletes and assets, redistributing resources strategically to foster greater brand visibility and engagement. Significant moments drive brand loyalty. As Stephen Curry continues to break records, the night he approached his 4,000th career three-pointer, we launched a campaign narrated by Dave Chappelle that not only captured the moment but defined it. This campaign, widely shared on social media, created a cultural impact that elevated UA's presence among basketball fans globally. Sharon Lokedi's recent record-breaking win at the Boston Marathon in Under Armour shoes was another significant moment, showcasing the performance of the Velociti Elite on an international platform. We supported this with a comprehensive campaign celebrating her achievement and firmly establishing Velociti Elite as the preferred choice for runners striving for greatness. Our portfolio now includes various price points, from the $250 Elite validated by Sharon to the $160 Pro, $130 Speed, and $100 Pace, ensuring Velociti appeals to runners at every level and generating brand energy and commercial potential. Building on this, we’re extending the design language of Velociti into our high-volume footwear line, the $75 Assert, which will relaunch with updated designs this fall, enhancing segmentation and broadening our market reach. A more visual outline of our product and pricing strategy can also be found on our investor page. We invite you to explore these examples of how we are changing at UA and elevating our standards. Our athlete strategy is equally deliberate. New signings, including NBA's Davion Mitchell, WNBA's Nika Muhl, and six NIL athletes secured in time for March Madness, reflect our careful approach to building a future-focused roster. The impact is evident, with 27 UA teams making it to the NCAA tournament, including one team from both the women's and men's brackets reaching the final four. In golf, we extend our best wishes to longtime Under Armour athlete Jordan Spieth as he competes in the PGA Championship, chasing the coveted career Grand Slam. We are all rooting for you, Jordan. This fall, we will reaffirm our commitment to American football as Under Armour becomes an official glove and footwear provider for the NFL, strengthening our performance credentials. Athletes like Justin Jefferson and Kyle Hamilton, along with this year’s number one draft pick, Cam Ward, enhance our standing in a sport central to our identity. Additionally, we're adapting our marketing approach to align with contemporary consumer behavior by emphasizing social, experiential, and digital-first branding. UA Next, our global youth activation platform, leverages events like the Under Armour All America football and volleyball games, along with serialized content and grassroots initiatives gaining traction through partnerships with creators and major colleges like Notre Dame, Wisconsin, and Maryland to drive impactful story-driven campaigns. This marks a transformative shift in our strategy, focusing on fewer but bolder actions supported by improved storytelling and smarter use of top-tier assets. This is our plan to build brand momentum and capture market share with athletes, partners, and shareholders. Under Armour is poised to lead in a dynamic environment filled with leagues, teams, collaborations, influencers, and NIL, and we are making steady progress towards that goal. Our North American transformation is in full swing. Over the past year, we've worked to redefine our e-commerce channel as a brand flagship—a destination that inspires and uplifts. By reducing promotional days and discounts, we prioritize brand equity and profitability over short-term sales volume. The results are evident, with an increase of over 10 points in the full-price sales mix, double-digit growth in Average Unit Retail, and a more profitable channel overall. As we enter the second year of this transformation, we will go beyond our outlet model to create a more connected, dynamic, and premium digital platform while applying lessons learned from our success in EMEA to accelerate progress. We also identify a clear opportunity to strengthen our value proposition in physical retail. Enhancing productivity across our various formats remains a top priority. In factory outlet stores, our largest North American presence, we are significantly reducing store-wide sales events and offering full-price items year-round, focusing on SKU rationalization to provide a more curated premium experience that improves consumer clarity and operational efficiency. Our brand houses embody the pinnacle of UA retail, and we're investing in these locations accordingly. Our new flagship store at headquarters is performing above expectations, and the new design is shaping our next retail prototype for the more than 2,000 Under Armour branded stores worldwide. We aim to grow our store base as we become more strategic with our product offerings and the stories behind them. Starting in fiscal '26, we will implement a tiered market-specific strategy to enhance merchandising and boost productivity across our network. Wholesale remains crucial and is evolving. We owe our partners exceptional products and a compelling narrative that ensures strong sell-through at full price. We are clear about our desired partnerships and are utilizing this period to strengthen these essential relationships by transparently communicating our brand direction, supported by our commitment to offering fewer products with greater intention that are unique to UA. Our category-led model greatly aids these efforts, combined with refined go-to-market discipline that we expect will yield higher demand from both our current consumers and new customers we seek to attract. In the EMEA region, our top-performing area in fiscal '25, we are upholding the discipline needed to safeguard the brand strength we've built. Strong partnerships and a clear focus on categories will foster momentum. In fiscal '26, we will concentrate on growth in key markets like France, Spain, and Germany while deepening brand advocacy across football, running, and sportswear anchored in training. In the APAC region, we are reestablishing the marketplace to encourage sustainable premium growth. Despite a challenging promotional environment, our initiatives to streamline inventory, reduce discounting, and improve sales quality are setting the stage for healthier expansion. Early indicators suggest our efforts are taking effect. UA's strong performance-driven brand equity and top-tier distribution infrastructure position us to scale sustainably at an appropriate pace. We will continue applying proven strategies from North America and EMEA to boost full-price demand across core categories. Central to our progress is our high-caliber leadership team united by a common purpose directed at ensuring sustained performance. We have not only added talent but attracted exceptional leaders, many of whom you met during our December investor meeting. This signifies a structural shift and cultural transformation at Under Armour. A higher standard of excellence is solidly taking root, and I am committed to ensuring that this strength in leadership translates into sharper execution and enhanced results. We are conclusively raising the bar at UA. The results are evident, and our culture is set to benefit. Moving to our new headquarters has accelerated this shift, infusing the company with fresh energy and innovative ideas. Although cultural change takes time, a solid foundation is securely in place, and the momentum is unmistakable. We are establishing a more connected, agile, and performance-oriented Under Armour. Additionally, we've welcomed three new Board members, Dawn Fitzpatrick, Gene Smith, and Rob Sweeney, who bring expertise in finance, operations, and sports. Their leadership will support our strategic priorities directly, speeding up financial performance, enhancing our athlete connections, and igniting brand visibility. They will play a significant role as we unlock new growth and position UA for long-term success. As we enter fiscal '26, maintaining momentum in product development, storytelling, customer service, and team cohesion is essential for advancing our brand transformation. We progress with clarity, conviction, and discipline, fully aware of the shifting global landscape and prepared to navigate it with agility and resilience. Our ambition exceeds a mere comeback; it entails a reinvention. The best chapters of Under Armour lie ahead, driven by a sharper focus, bolder innovation, and stronger connections with athletes. We are acting with urgency. While we may have more time than anticipated, we do not have as much as we wish. So we are taking decisive action. With the right team in place, a clear strategic vision, and a steadfast commitment to excellence, we are not just preparing for the future; we are determined to shape it. With that, I'll hand it over to Dave to walk us through our fourth-quarter fiscal '25 results and provide further insights into our first-quarter outlook. Dave, the floor is yours.

Thanks, Kevin. Moving straight into our fourth quarter fiscal '25 results, which exceeded expectations and allowed us to surpass our full-year fiscal '25 outlook. From a revenue perspective, the fourth quarter was down 11% to $1.2 billion. The results by region follow. North American revenue declined 11%, primarily due to a decrease in our DTC business, which was driven by lower e-commerce sales resulting from our ongoing efforts to limit promotional activities. This was accompanied by a decline in revenue from our owned and operated stores. Within wholesale, we experienced a decrease in full-price sales, which was partially offset by an increase in the timing of sales to the third-party off-price channels. Revenue in EMEA decreased 2%, although it remained flat on a currency-neutral basis. Furthermore, the decline in full-price wholesale was partially offset by growth in our direct-to-consumer, distributor, and off-price businesses. Aligned with our expectations, revenue in APAC was down 27% or 26% when adjusted for currency fluctuations. This decrease was primarily due to the highly competitive and promotional environment as well as our efforts to foster a healthier business, including adopting some of the same strategies we've employed in North America for our e-commerce operations. Within Latin America, revenue declined 10%, primarily due to unfavorable foreign exchange impacts. Without FX, currency-neutral revenue rose by 3% in the quarter, driven by our distributor business. From a channel perspective, wholesale revenue decreased 10%, driven by lower full-price sales, partially offset by growth in the off-price channel, and the timing of those sales to third-party partners. Direct-to-consumer revenue was down 15%, mainly due to a 27% decrease in e-commerce sales stemming from ongoing efforts to establish a more premium online presence through fewer promotions and discounts. Sales at our owned and operated stores declined by 6% during the quarter. Licensing was down 15%, primarily due to the decision to bring our socks business in-house. This will be the final quarter of comparing this business change. Finally, by product type, apparel revenue was down 11% with softness across most categories in the quarter, partially offset by strength in outdoor. Footwear declined by 17%, reflecting in part our ongoing proactive portfolio management efforts as we work to optimize segmentation and assortment. And our accessories business was up 2% in the quarter, with strength in team sports and run. The category also benefited from our decision to bring socks in-house. Our fourth quarter gross margin increased 170 basis points year-over-year to 46.7%. This increase was driven by 150 basis points of supply chain benefits due mainly to lower product and freight costs, 80 basis points of pricing benefits, primarily from lower discounting and promotions in our DTC business, as well as some impact from more favorable royalty terms. And roughly 20 basis points were gained from favorable foreign currency impacts and product mix. These benefits were partially offset by roughly 90 basis points of unfavorable channel and regional mix. Moving to SG&A, which increased 1% to $607 million in the fourth quarter. Excluding roughly $16 million in transformation expenses related to our fiscal 2025 restructuring plan and around $5 million in litigation settlement expenses, our adjusted SG&A expense was $586 million, up 7% versus last year's adjusted number. This was driven primarily by higher marketing expenses and incentive compensation, partially offset by savings from ongoing cost management efforts, including lower consulting expenses. During the fourth quarter, we recognized $16 million in restructuring charges, and combined with the $16 million in transformation expenses recorded in SG&A, we had approximately $32 million in restructuring charges and related expenses for the quarter. So far, under our fiscal 2025 restructuring plan, we have recognized $89 million in restructuring charges and related transformation expenses, of which $55 million is cash related and $34 million is non-cash. Our expectations for total charges and expenses under this plan remain within a range of $140 million to $160 million, and we anticipate the remainder will incur by the end of fiscal 2026. Moving down the P&L, we recognized an operating loss of $72 million in the fourth quarter. Excluding the transformation expenses, litigation settlement expenses, and restructuring charges, our adjusted operating loss was $36 million. On the bottom line, our reported diluted loss per share was $0.16, while our adjusted diluted loss per share was $0.08. Shifting to our balance sheet. Inventory was down 1% year-over-year to $946 million, which aligned with our expectations to finish in line with last year's level. Our cash balance at the end of the quarter was $501 million, and we had no amounts outstanding on our $1.1 billion revolving credit facility. Additionally, we repurchased $25 million worth of our Class C stock during the fourth quarter, retiring 4.1 million shares. So far, under our three-year $500 million share repurchase program, we have repurchased $90 million of our Class C stock, retiring 12.8 million shares. Now, going briefly into our full-year results. Fiscal '25 revenue declined 9% to $5.2 billion, slightly better than our expected 10% decline. North American revenue was down 11% for the year, EMEA was flat, and APAC revenues declined 13%. Our full-year gross margin increased by 180 basis points to 47.9%, surpassing our outlook. This improvement was driven by reduced freight and product costs and the benefits of lower discounting in our DTC channel, especially in e-commerce. Full-year SG&A expenses rose 8% to $2.6 billion. Excluding a $266 million litigation settlement expense, approximately $31 million in transformation expenses, and a $28 million impairment related to exiting our previous headquarters, adjusted SG&A expenses decreased by 2% to $2.3 billion. This decline was primarily attributed to cost management initiatives, including the benefits realized to date from our fiscal 2025 restructuring plan. Operating loss was $185 million, and excluding transformation expenses, restructuring, impairment charges, and litigation settlement expenses, adjusted operating income was $198 million, slightly ahead of our prior outlook of $185 million to $195 million. Full-year diluted loss per share was $0.47, and our adjusted diluted earnings per share was $0.31, which was above our previous outlook of $0.28 to $0.30. Moving into fiscal '26, building on Kevin's remarks, it's important to recognize the plan we established before the announcement of recent tariff changes. As we enter the second year of our turnaround, we've made measured progress across our strategic, operational, and financial objectives. Before the recent changes in trade policy, this translated into an expectation of a modest top line contraction for fiscal '26 as we continue to prioritize higher quality revenue and brand strength while driving further gross margin expansion and getting back to leveraging our SG&A cost structure. Altogether driving operating income that was set to be ahead of fiscal '25 levels. However, since changes in trade policy are expected to have a significant impact, we are proactively evaluating a range of mitigation strategies. This includes exploring potential cost-sharing initiatives with key partners, diversifying our sourcing footprint to minimize exposure to affected regions where feasible, and examining targeted price adjustments to protect margins in areas with unique pricing power. To provide a clear view of our global sourcing profile, approximately 30% of our volume is sourced from Vietnam, 20% from Jordan, and 15% from Indonesia. The remaining third is strategically diversified across a number of other countries, each representing a low to mid-single-digit percentage. This deliberate diversification creates a well-balanced portfolio, reducing reliance on any single market and enhancing our ability to navigate geopolitical, costs, and supply chain complexities from a position of strength. We also remain focused on managing SG&A by enhancing organizational efficiency, tightening discretionary spending, reducing travel and third-party costs, and concentrating investments on initiatives directly supporting near-term revenue and margin expectations. Given the significant uncertainty that tariffs create concerning potential shifts in consumer demand and rising product costs, we believe limiting our outlook to the first quarter of fiscal '26 is prudent. This measured approach demonstrates our commitment to maintaining flexibility and ensuring transparency as we navigate the evolving environment. As such, we expect our first quarter revenue to decline by 4% to 5%, with North America also experiencing the same rate of decline due to softness in our spring/summer ‘25 wholesale order book, which we've detailed in our last few calls. We anticipate high single-digit revenue growth in EMEA, supported by FX tailwinds, and the Easter shift, along with a mid-teen percentage decline in APAC as we continue actions to lay the groundwork toward a healthier business. Regarding gross margin, we expect an expansion of 40 basis points to 60 basis points compared to the previous year. This includes anticipated benefits from a more favorable product mix, reduced product freight costs, and favorable foreign exchange rates. It is important to highlight, however, that changes in tariff policy are not expected to significantly impact our first quarter. For SG&A, we remain focused on cost management in the context of our expected top line decline and the current operating environment. Excluding anticipated transformation expenses related to our fiscal 2025 restructuring plan, adjusted SG&A expenses are expected to leverage slightly compared to the prior year, driven mainly by ongoing savings from actions taken under our restructuring plan and other spending efficiencies. Bringing this together, we expect adjusted operating income to reach $20 million to $30 million and adjusted diluted earnings per share to be $0.01 to $0.03 in the first quarter of fiscal '26. In closing, while the environment remains dynamic, the sharper agility and stronger processes we've embedded give us confidence in our ability to manage near-term challenges while staying squarely focused on long-term value creation. Most importantly, we have the right team, energized, resilient, and relentlessly committed to delivering an authentic brand and business transformation. We remain unwavering in our strategic priorities, firmly believing they position us to unlock our full potential while maintaining the flexibility to adapt. Simply put, we are ready and building for what's next.

The first question comes from Jay Sole with UBS. Please go ahead.

Great. Thank you so much. I'd love to ask about the North American reset. Can you just give us a little bit more color and dive in a little bit more about how it's working and how it's shaping up in fiscal '26?

Thank you, Jay. First of all, leadership is key, and we are fortunate to have Kara Trent, who led our efforts in Europe and has been with us in North America for about 14 months. Having her in this pivotal role has been invaluable, and the team has been built around her. We focus on modeling the behavior we want to see, and that includes steering away from the excessive discounting that has shaped our interactions with customers for too long. We see this as an opportunity to redefine our excellence, using metaphors like the backpack to illustrate improvements, particularly in our products. While we've created quality items, there's room for enhancement in how products are presented in stores. Under Armour's story of years spent validating our factories and materials hasn't fully resonated yet. To move forward, a great product is essential, reflected in how customers perceive its weight advantage. We need to effectively communicate this to our sales teams and enhance our in-store displays. Moreover, we are shifting our social media strategies to connect better with the 16 to 24-year-old demographic, moving beyond traditional media. Although we don’t have a specific timeline for these changes, we are committed to executing them effectively. By modeling the right behaviors, we envision applying the principles we've learned with key products like our Halo trainers from the Unstoppable Collection and innovating in our base layers. Prior to April 2, we recognized our progress, even as we were not yet ready for growth and were in a contraction phase. However, we believe we are making strides and gaining consumer affection. We expect brand momentum to outpace revenue growth, and we are approaching the 18-month reset we discussed in May 2024 on schedule. We are working collaboratively with our wholesale partners and building their confidence, taking it one step at a time. We understand the competitive landscape but believe we have a compelling story and brand to share.

Got it. Kevin, that's great. If I can ask one more. Maybe can you share just some more details about your upcoming major brand activation? When will we be able to see it?

Yeah. Look, we told you that it was going to be a large full force campaign that we're going to have. But to be clear, it's embracing that underdog DNA that we've spoken about, I think several times, including our investor meeting back in December. Eric is digging into this marketing function, so just getting our arms around that. We've also brought in a new SVP of Brand and Americas Marketing in Tyler Rutstein who really has driving a lot of that connection that we want to the target consumer. So what you're not going to see is just a big campaign with Super Bowl ads. It is going to be smaller breakdowns of content that's relevant to the channel where we're marketing. The idea we have from a branding or marketing standpoint is that I think anyone would tell you, we make good product. What we need though is we need permission from this kid or more importantly, the person that kid is looking to across social media, the influencers, the NIL, the athletes, the others. And so that's where I think we're doing a better job of just telling the story of the product and making sure they understand what the brand DNA is all about. I can't emphasize enough a big part of this, and what's coming with this campaign is that we're leading with story, we're not leading with a price. The activation, it will mostly be in the back half of the year too, Jay, but as I said, you're going to feel this in more sort of micro doses than you will as one sort of big splash, and we think that's the most effective way for us to deal with our marketing dollars right now. I also think that you'll feel the benefits of this as we get probably a little more focused with our category management structure. And that's what's going to lead us is that each of those GMs, the five separate GMs that we have, of driving across selecting the right influencers, making sure that we're in the culture, what NIL will do for us. And then we're going to lean on some of these intrinsic assets we have. And I don't just mean our headliner banner athletes like the Stephen Currys or the Justin Jeffersons, but it's also getting into NIL athletes. It's leaning on our UA Next platform, which is we've found just as part of that, and a kid who hasn't engaged with Under Armour or seen us without UA Next, the NPS score is something that we believe can be significantly improved on. If a kid has seen us or interacted with us through our 3,000 high school base that we have, plus how that rolls up to our All-America or UA Next events, the consideration goes up considerably into the high 50s and 60s. And so we're going to continue to build out these platforms that we've got long-term legacy, and you'll continue to see us just spend our money a lot more thoughtfully and appropriately. So, product marketing is going to be a part of this as well. I think as we're showcasing with the backpack because I think that's the greatest example of what does this brand mean or stand for, it gives us the ability to do that, ensuring that we give them the, A, what it is, B, what it does, and C, how it's going to make you better, and the whole time allowing you to feel something. That's what brands do, and that's I think we're in the process of making happen.

Got it. Sounds great. Thank you so much.

Thank you, Jay.

And the next question comes from Simeon Siegel with BMO Capital Markets. Please go ahead.

Thanks. Hey guys, good morning. Kevin, how are you thinking about the path of normalizing e-com specifically, maybe with the planned reduction in promo activities? Is there a specific revenue level or just some other way we can think about the timing duration, maybe magnitude of the expected e-com revenue declines and stabilization? And then, Dave, I think you noted the costs related to the restructuring plan. Just how are you thinking about the expected savings from it? I guess, current uncertainty tariffs notwithstanding, looking a little bit longer-term, how you're thinking about the ability to take SG&A expenses out of the model with this new lower revenue base? Thank you.

Sure, I'll start with e-commerce. We've seen positive momentum after a year of focusing on what we can control, particularly our DTC business. Our full-price sales on the website have increased significantly year-over-year, while promotions and clearance have decreased. We aim to ensure that our site is not just a transactional platform but a space that inspires our brand. Many sites offer easy ordering from various places, but our website should tell a story, which is our unique advantage. For too long, we've seemed just like clothes on hangers. It's crucial to approach our e-commerce presence with intention—not just presenting a list of products but crafting a thoughtful experience. We're excited about how we present products, like with the backpack example, and envision showcasing multiple iterations each year, especially with the new Halo product launch later this year. This will enhance our website as well. Loyalty is also key for us, with 18 million rewards members in the U.S. and an additional 10 million in APAC. Active loyalty members contribute over 50% more to our revenue and have double the repurchase rates. This understanding of our consumers helps us communicate better with them. Furthermore, we're enhancing how we present products online by integrating more video content and being more dynamic. We're improving the backend of our website, which is critical. Social commerce will also play a significant role as Tyler and his team advance these efforts at a grassroots level. Overall, we are aiming for a healthier e-commerce foundation for sustainable growth, with compelling stories to share through our own channels.

Simeon, on the restructuring and SG&A side, as we drove through the restructuring plan in '25, we brought about $35 million of savings in fiscal '25 from that. When you think about the full-year run rate of those actions and then layering on the additional actions for fiscal '26, especially the closure of the Rialto DC out in California, that expected run rate savings on a full year as we get to the end of fiscal '26 is going to be closer to $75 million or so which we're excited about and then essentially a little bit higher than that as you step into fiscal '27 and you have a full year of all the fiscal '25 and '26 activities. So, that's definitely helpful and a big step in the right direction for us. And as we stepped into planning for fiscal '26 pre-tariffs, we were looking for slight leverage in our cost structure, which is a great step in the right direction as well. And we're also seeing that as we plan out just Q1 that the outlook that we've given. We do want to be mindful not to cut too deep when we think about any additional SG&A work that we want to drive, depending on what happens from a tariff and overall demand scenario, and especially in brand marketing where sustained investment is critical to the long-term breadth and health of the company. But we do manage each of our expenses pretty tightly now. We've made a lot of progress there, a lot more discipline around consulting, around CapEx spending, discretionary spending, travel and entertainment. Again, as Kevin mentioned, optimizing the marketing, spending smarter, not more. And we've been able to reduce SG&A now for multiple years in a row. So, we're definitely getting to a pretty good spot. We're going to continue to manage it tightly as we drive through the year.

That's great. Thanks a lot, guys. Best of luck for the year ahead.

Thank you, Simeon.

And the next question comes from Sam Poser with Williams Trading. Please go ahead.

Thanks for answering my questions. Could you provide some insights into your current inventory levels, both in terms of units and dollar value? Are there significantly fewer units in inventory compared to the dollar value? Additionally, how do you anticipate this will change over time, especially regarding both units and dollars in revenue for the fourth quarter and the expected growth rates?

So, from an inventory perspective, again, we feel pretty good about where we landed the year, pretty much right on what we expected. Obviously, we're managing this year pretty tightly as we get into fiscal '26 and a little bit of the uncertainties around demand with the current tariff environment. So we're being pretty tight with that, managing the PO's. We do expect that wherever demand ultimately develops through the year that we'll be able to manage inventory within a pretty tight range to that. Obviously, the cost per unit is going to be going up, by how much we're not sure as obviously, with each announcement, that seems to change a little bit. But we feel confident in our ability to manage it tightly. We don't have a large percentage of old or excess inventory. A lot of it is current, and we believe that we're going to be able to use our factory houses in a really positive way to move through a lot of that. And then obviously still tapping the off-price channel a little bit, but staying within our kind of our operating principle where we've been keeping that to the 3% to 4% mix of revenue as we did in fiscal '25. And relative to the Q1 guide, again, we're not necessarily getting into too many details for the full year, but on Q1, we feel pretty good about the outlook that we gave. There's not that much change in price versus unit in the Q1 guide, more of that will probably come as pricing changes come about later in the year.

Okay, I might have misspoken. Your inventory increased by 18% in dollars at the end of the quarter. What about the units? Also, in your first quarter guidance, with revenue expected to decline by 4.5% to 5%, do you anticipate that unit sales will not decline as much since you're moving towards a more premium positioning? I’m not assessing whether your inventory levels are appropriate; I’m really looking to understand if average selling prices will gradually increase in line with your guidance and inventory levels. If your inventory is down 18% and units are down 25%, that suggests you are effectively enhancing your brand.

Yeah. I guess, Sam, the way that we're looking at it is a little bit more holistically because there's going to be puts and takes between the different regions. We did take some returns in Q4 of fiscal '25 to help make sure that we are coming into this year healthy. More of that was footwear driven, which has a little bit of a higher unit cost. So there's a lot of mix items going on. I don't know that digging into it relative to the unit progression from Q4 into Q1 is going to tell much more of a different story for us.

Hey, Sam, just to be clear, inventory is down one on the quarter. Down 1%. I thought you referenced plus 18%.

No, I'm sorry, inventory is down 15%. I apologize for that. Yes, inventory is down. The question is whether our units are down more than the dollars or less as a percentage. Do you anticipate that as your inventory reaches the appropriate level, your dollar inventory will grow faster than your units as you focus more on elevating the brand?

I understand your question. I'm examining the scenario where I sell significantly more at a much higher full price. One of the key metrics I monitor daily is average unit retail, and I’m determining whether people are willing to pay more or less for Under Armour across apparel, footwear, and accessories. We are very attentive to this. Additionally, we aim to enhance our margins and improve consumer perceptions of the brand. However, our focus is on offering more premium products rather than just reducing costs on materials to enhance margins. Pricing power is crucial for any brand, and we are specifically concentrating on that. This means we can't just flood the market with low-priced items. We will be very deliberate and selective with the products we introduce. Yes, this will incur higher costs, but we need to demonstrate that value. We'll approach this gradually, and we have a solid foundation to build upon.

Thanks very much.

Thanks, Sam.

The next question comes from Laurent Vasilescu with BNP Paribas. Please go ahead.

Good morning. Thank you for taking my question. Kevin, Dave, I understand that you are not providing guidance for the full year, but can you discuss your full order book and how it has changed in recent months due to the tariff situation? Should we expect a decrease on a year-over-year basis? Thank you.

Yeah, I'll jump in on that one. Right now, we're definitely limiting to Q1 at this point. And a lot of that, if you think about it with the tariff rates, they're pretty much temporary at this point. They may change significantly. So we don't feel it's prudent to give an outlook that will also have to change and be adjusted kind of announcement to announcement. So we're trying to be prudent there. So we're really only looking at Q1 covering spring/summer '25. But I would say that the product feedback has been positive, and the influence of the new product organization, I think, is clearly visible. And as momentum grows, fall/winter '25 will build into spring/summer '26. And at this point, even with the tariff and uncertainty, we're not seeing any key partners with cancellations. I think our partners know that they're valued and we're really focusing on that and we're giving them reasons to believe, and Kevin went through a lot of those points in his prepared remarks. I think that there are clear improvements in the design and style that are being noted by our partners. So regaining shelf space takes time as you think about the back-half of the year, but our focus and execution are improving and we're seeing those results.

Very helpful. And then on the gross margin, again, another great quarter. I think you called out, Dave, 150 bps of supply chain benefits due to mainly from lower product and freight costs, and then 80 bps from just lower promotions. I would presume that the 80 bps continues to be a positive going forward. And then, how many more quarters do you have of the 150 bps of benefits from just lower supply chain costs? Does it end in 1Q or does it continue? And then lastly, again, EMEA guided up high single-digits for the first quarter. How should we assume that? Is that just kind of a wonky first quarter? Any one-time things that we should consider? Or is that just continued momentum for the brand in that region for the foreseeable future? Thank you.

Yeah, I think relative to gross margin, prior to the new tariffs, we were looking for continued gross margin expansion due to continued product costing improvements, ongoing work with the higher quality revenue, including the DTC discounting and promotion reductions and a little bit of slight expected FX headwinds. However, the new developing tariffs will create a significant headwind. And so we're only providing Q1 at this point. The larger benefits when you think about Q4 of '25 with the favorable supply chain impacts, product costs, freight costs, so some of that will continue. But we've got a lot of that that's been recognized and worked through with our partners through fiscal '25. So, I wouldn't expect or anticipate that those benefits would be as large in fiscal '26. And then the same thing relative to the DTC discounting favorability, because we took such big strides in fiscal '25, especially in the Americas, we wouldn't see as much of that year-over-year benefit continuing as an incremental benefit in fiscal '26. There's a little bit of benefit there in APAC because we've started to do more of that as we're helping to clean up and reset APAC a little bit, but definitely not to the magnitude that we saw in fiscal '25. And then, Kevin, I don't know if you want to touch on EMEA.

Let me provide a broader overview first. We recently made some leadership changes in Asia-Pacific, and we're about four or five months into that process with the markets reporting directly to me. I will be traveling there again in a few weeks. Regarding Europe, similar to what you heard regarding our team in America with Kara, we are fortunate to have exceptional leadership in Europe with Kevin Ross. The momentum we've experienced began under Kara's leadership and has been accelerated by Kevin over the past 18 months. This allows us to be proactive, and it's a rewarding feeling to see consistent success globally. The team has a clear value proposition for consumers, particularly in sports like football. We have nearly 30 athletes from various European leagues, including standout players like Achraf Hakimi from PSG, who will be playing in the Champions League final in Germany this weekend. This highlights our growing cultural presence in Europe, especially in France, Paris, and the UK. Our position is strong, supported by solid fundamentals. Our ambition is for people to recognize Under Armour not just for stylish apparel, but for its performance qualities. We're strengthening our association with sports, where we have a loyal following. We receive numerous inquiries from athletes, agents, and clubs interested in our football products, which benefits our entire network. We also have excellent relationships with sports directors and distributors in markets like Turkey. We're executing well in these areas, and as we focus more on product innovation with our sportswear line, including the launch of Halo, there's a lot of enthusiasm surrounding the brand. ECHO is also performing strongly for us. We're gathering valuable insights, and it's encouraging to look at Europe and see what success truly looks like. This ambition stems from the playbook we have been implementing for a considerable time.

That's great to hear. Thank you very much for all the color.

The next question comes from Peter McGoldrick with Stifel. Please go ahead.

Hi, good morning. With the ongoing evolution of the good, better, best product pyramid, I was curious if you could talk about the structural product offering influence on AUR and underlying gross margin as we look forward?

Let me give you some structure. A great metaphor for how we're approaching the business is to think of our product quality as a pyramid: 25% good, 50% better, and 25% best. We're not aiming to limit the number of good products we have; rather, we're looking to reshape our business. A prime example is Sharon's performance at the Boston Marathon. This illustration is also on our investor page. Authenticating at the highest level, like breaking a course record, highlights the impact of our $250 Elite product. We have effectively linked this top-tier product throughout our entire ecosystem. The $250 Elite shoe is offered in specialty running stores, and we’ve developed a $160 version available in larger sporting goods stores, along with a $130 and a $100 version to make this accessible to families. We also have a $75 Assert model. The same designers who worked on our top-tier products contributed to these more accessible versions, creating synergy across our product lines. Our apparel follows the same principle, especially with the Halo line, which represents our pinnacle offering. It combines authentic performance with aesthetic appeal, all while embodying the Under Armour DNA. Fixing this is really important for us.

And I think, Peter, when you think about AUR and also even ASPs too, in fiscal '25, we had a pretty much lower e-com mix. We also had a lower APAC mix. We also had lower footwear mix. All three of those contributed to a little bit lower ASPs. As we drive further into fiscal '26 and back-half of fiscal '26, those things will probably change a little bit from a mix perspective and will help ASPs in general. And as we kind of comp the promo and discounting reductions that we've been doing, that will start to stabilize and turn more towards a positive for us. So, we're definitely focused on that, we're going to keep driving that forward.

Okay. Thank you. And Dave, I recognize challenge in forecasting and guidance, but I was curious if you could give us a run rate gross tariff impact to COGS given current level of visibility.

Yeah. Listen, I totally appreciate the question. And obviously, we're running through a lot of different scenarios at this point. And every few days, it seems like there's new information and new rumors out there. So at this point, we're going to kind of stay prudent and just speak to Q1. And then obviously, we would hope to be able to give a lot more color on that as we get to the next call.

And the next question comes from Paul Lejuez with Citi. Please go ahead.

Hi. This is Kelly on for Paul. Thanks for taking our question. I appreciate you giving some color on how you were thinking about the business prior to the tariff announcements. Could you just help us bridge the gap between the kind of down mid-single-digit 1Q revenue guide and on the expectation again prior to tariffs for sales down slightly. If you could just maybe talk about that from a geo and channel perspective? Thank you.

Yeah. I mean, I guess a couple of things there. We are giving the outlook for Q1 to be down 4% to 5%. We did mention that prior to the tariff announcements and a lot of the uncertainty over there, we were anticipating a full year modest revenue decline as we continue to kind of work to reset and strengthen the brand and progress on our strategic priorities. That decline that we were anticipating for full year was anticipated to be a little smaller than the decline we had in fiscal '25. So, to kind of give a little bit of a box around that. But then also expecting some gross margin expansion due to the continued costing improvements, and also some of the continued reductions in DTC discounting and promos. And then with the SG&A leveraging that we expect to start driving in fiscal '26 as well, landing with operating income that was going to exceed fiscal '25. So that was a lot of the work that we were driving towards, and we're going to keep focused on all of those areas as we learn more about the tariffs and any potential demand impacts. But we feel pretty good about that. And you can tell from the outlook in Q1 that would basically back you into originally thinking our back half was going to be slightly better than our front half. Again, we'll have to see how things develop now with the tariffs and the uncertainty that are out there, but that's originally what we were seeing.

Got it. And just one more from us. On the DTC channel, where you've been seeing some weakness due to pulling back on e-com, as you started to lap those promos, I mean, should we expect your DTC channel growth in '26, obviously outside of some of the tariff stuff, or is what's happening with the rationalization in the factory outlets going to sort of offset that? Thanks.

Yeah. Again, we're not going to give a lot of detail on full-year, but what I would say is that as we move towards the back half of fiscal '26, we would have made a lot of those steps in finishing those plays from a DTC and health perspective in North America. So the pressures that we've had in DTC North America because of a lot of those strategic decisions should be much more minimized in the back half of fiscal '26. And so we feel pretty good about that, and obviously stepping into fiscal '27. Again, tracking the demand situation here with tariff uncertainties, but that was where we were heading.

And, Kelly, I'll drop a little color on the model that you're working on too, because as Dave is talking through some of the technicals that we're working through, we're just looking to drive brand affection right now. So, as we're thinking about fiscal '26, there's always a silver lining in everything. And so we're using this moment as an opportunity just to make sure that we're really clean and we're delivering ourselves and showing up at retail with our wholesale partners the way that we want to be seen, and we're modeling that behavior by demonstrating that in our own e-com and our own stores as well. And so it will be a full funnel approach for us for sure.

Got it. Thanks for the color. Best of luck.

Thank you.

Next question comes from John Kernan with TD Cowen. Please go ahead.

Good morning. This is Krista on for John. Two questions for us. First, in terms of sort of a broader picture for North America, kind of in relation to the broad initiatives that are underway with this reset, kind of what do you see as a normalization or long-term opportunity for segment margin recovery in North America as you kind of move along this strategic reset? And I have one follow-up. Thank you.

Let me begin by stating that while we're not entirely satisfied with our current position, we are very optimistic about the future. Culture will play a significant role in this journey, and it's crucial to instill this belief throughout our organization and among our partners at every level, including suppliers, retailers, distributors, franchisees, and especially our team. As I've mentioned in my prepared remarks, our brand reinvention begins with our team. The past 13 months have been constructive in this effort. We don't want any excuses; it's not just about competing on price, which we've relied on for too long. Our focus needs to be on building deep connections with the 16 to 24-year-old demographic, along with our existing consumers, and we believe we can enhance that engagement. The core elements we've often discussed—product story, service, and team—are foundational to our success. We believe that our top priority should be creating the best products that reflect our story. The team is aligning to ensure we have the right products, at the right places, at the right times. We're committed to getting back to the fundamentals. As we navigate this reset, particularly in North America, we're shifting from presenting Under Armour as just a brand to offering consumers specific ideas that we believe they will love. There is work ahead, but we're actively showing progress across all channels, including e-commerce, outlet stores, factory houses, and our full-price brand houses, as well as our retail partners who are eager to see us succeed. While there's competition from various angles, I feel confident in our positioning and believe this team can unite to achieve our goals, both in the near future and in the long run.

Terrific. Thank you for that. And then just how should we think about the category mix within the context of apparel and footwear in your Q1 revenue guide? And is there anything that you can talk to you about the margin differential between those two categories currently, and kind of where you see that longer-term? Thanks so much.

Yeah. I'll jump in on that real quick. When we think about Q1, we do anticipate that footwear will have a little bit more pressure than apparel and accessories for Q1, and that's something that we've been talking about over the last year as well. And from a margin perspective, that actually does help us a little bit because our footwear is a little bit lower gross margin than our apparel. That gap is something that we've been decreasing a little bit each year as we continue to design our footwear differently and continue to improve relative to our price points there. So it is something that we're cognizant of relative to the mix. We're looking forward to continuing to drive up footwear longer-term. We understand that can create a little bit of a gross margin headwind for us longer term, but that's something that we can plan for and navigate, and are looking forward to that.

Thanks very much. Best of luck.

Thank you.

Thank you.

This concludes our question-and-answer session. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.