Company: UAA
Filing Date: 2025-11-06
Form Type: 10-Q
Source: 0001336917-25-000198
Chunk: 57

Company: Under Armour, Inc.
Filing Date: 2025-11-06
Form: 10-Q
Item: Part I, Item 1
Chunk 57
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 primarily due to higher revenues from our licensing partners in North America and from our international licensing partners.

Gross Profit

Cost of goods sold consists primarily of product costs, tariffs, inbound 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 $39.9 million for the three and six months ended September 30, 2025, respectively (three and six months ended September 30, 2024: $20.8 million and $38.3 million, respectively).

Gross profit decreased by $65.5 million to $630.6 million during three months ended September 30, 2025, as compared to $696.1 million during three months ended September 30, 2024. Gross profit as a percentage of net revenues, or gross margin, decreased to 47.3% from 49.8%. This decrease in gross margin of approximately 250 basis points was primarily driven by unfavorable impacts of 275 basis points from supply chain, primarily due to the impact of tariffs, and 100 basis points from channel and regional mix. These were partially offset by favorable impacts of 50 basis points from changes in foreign currency, 50 basis points from pricing benefits and 25 basis points from product mix.

Gross profit decreased by $81.7 million to $1.2 billion during six months ended September 30, 2025, as compared to $1.3 billion during six months ended September 30, 2024. Gross profit as a percentage of net revenues, or gross margin, decreased to 47.7% from 48.7%. This decrease in gross margin of approximately 100 basis points was primarily driven