Athletic apparel maker Under Armour (UAA, Financial) is experiencing a significant selloff, dropping 14% over the past two sessions following its Investor Meeting. This meeting aimed to boost confidence in its turnaround plan but instead raised doubts about its timing and effectiveness. Despite reaffirming its FY25 EPS guidance of $0.24-$0.27, investors are seeking more concrete evidence of success in upcoming quarters.

• The core strategy is to enhance product, brand, and commercial strategies to make UAA more competitive and drive shareholder value. UAA's brand lags behind larger competitor Nike (NKE, Financial), which also faces innovation challenges. Rising competition from brands like On Holdings (ONON, Financial) and Skechers (SKX, Financial) adds to the pressure.
• Key to UAA's strategy is revitalizing its product lineup and shifting towards premium offerings, particularly in the struggling North American market. In Q2, North American revenue dropped 13% year-over-year to $863 million, while international revenue decreased by 5% in constant currency.
• The turnaround won't be immediate, as UAA's new products won't launch until fall 2025, with a full rollout expected in 2026. Following Q1 results, UAA projected a 14-16% revenue decline in North America, which aligns with its reaffirmed FY25 guidance.
• On a positive note, UAA has reduced promotional activities and maintained strict expense control. This led to a 200 basis point increase in gross margin to 49.8% in Q2, and a 13% decrease in SG&A expenses to $530 million, resulting in a 63% year-over-year EPS increase to $0.39. Continued pricing and cost discipline are crucial to UAA's plan, with an expected gross margin improvement of 125-150 basis points in FY25.

Overall, UAA presented a comprehensive turnaround strategy, but the anticipated lack of progress for the rest of FY25 is causing disappointment. The absence of detailed information about its new product lineup for fall 2025 adds to the uncertainty about the plan's success in the coming year.