Company: UAA
Filing Date: 2025-02-06
Form Type: 10-Q
Source: 0001336917-25-000016
Chunk: 9

Company: Under Armour, Inc.
Filing Date: 2025-02-06
Form: 10-Q
Item: Part I, Item 2
Chunk 9
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 freight and duty costs, outbound freight costs, handling costs to make products floor-ready to customer specifications, royalty payments to endorsers based on a predetermined percentage of sales of selected products and write downs for inventory obsolescence. In general, as a percentage of net revenues, we expect cost of goods sold associated with our apparel and accessories to be lower than that of our footwear. No cost of goods sold is associated with our license revenues. 

We include outbound freight costs associated with shipping goods to customers as cost of goods sold; however, we include the majority of outbound handling costs as a component of selling, general and administrative expenses. As a result, our gross profit may not be comparable to that of other companies that include outbound handling costs in their cost of goods sold. Outbound handling costs include costs associated with preparing goods to ship to customers and certain costs to operate our distribution facilities. These costs were $20.4 million and $58.7 million for the three and nine months ended December 31, 2024, respectively (three and nine months ended December 31, 2023: $19.6 million and $58.7 million, respectively).

Gross profit decreased by $5.5 million to $665.2 million during the three months ended December 31, 2024, as compared to $670.6 million during the three months ended December 31, 2023. Gross profit as a percentage of net revenues, or gross margin, increased to 47.5% from 45.1%. This increase in gross margin of 240 basis points was primarily driven by favorable impacts of approximately 100 basis points of pricing benefits, primarily from lower levels of discounting and promotions within our direct-to-consumer channel; approximately 100 basis points from supply chain benefits related to lower freight and product costs; and approximately 35 basis points from changes in foreign currency.

Gross profit decreased by $106.7 million to $1,924.0 million during the nine months ended December 31, 2024, as compared to $2,030.7 million during the nine months ended December 31, 2023. Gross profit as a percentage of net revenues, or gross margin, increased to 48.3% from 46.5%. This increase in gross margin of 180 basis points was primarily driven by favorable impacts of 120 basis points from supply chain benefits related to lower freight and product costs and approximately 60 basis points of pricing benefits largely due to lower