Company: UAA
Filing Date: 2025-08-08
Form Type: 10-Q
Source: 0001336917-25-000136
Chunk: 119

Company: Under Armour, Inc.
Filing Date: 2025-08-08
Form: 10-Q
Item: Part I, Item 8
Chunk 119
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-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 $19.5 million for the three months ended June 30, 2025 (three months ended June 30, 2024: $17.5 million).

Gross profit decreased by $16.2 million to $546.5 million during three months ended June 30, 2025, as compared to $562.7 million during three months ended June 30, 2024. Gross profit as a percentage of net revenues, or gross margin, increased to 48.2% from 47.5%. This increase in gross margin of approximately 70 basis points was primarily driven by favorable impacts of 55 basis points from changes in foreign exchange, 30 basis points from product mix and 30 basis points from pricing benefits. These benefits were partially offset by unfavorable impacts of 30 basis points from channel mix and 15 basis points from supply chain.

Selling, General and Administrative Expenses

Our selling, general and administrative expenses consist of costs related to marketing and advertising, selling, product innovation and supply chain, and corporate services. We consolidate our selling, general and administrative expenses into two primary categories: "marketing and advertising" and "other." The other category is the sum of our selling, product innovation and supply chain, and corporate services categories. The marketing and advertising category consists primarily of sports and brand marketing, media, and retail presentation. Sports and brand marketing includes professional, club and collegiate sponsorship agreements, individual athlete and influencer agreements, and providing and selling products directly to teams and individual athletes. Media includes digital, broadcast, and print media outlets, including social and mobile media. Retail presentation includes sales displays and concept shops and depreciation expense specific to our in-store fixture programs. Our marketing