S&P Puts Under Armour on CreditWatch as Turnaround Stalls

Under Armour’s credit stress is deepening as its turnaround slows and restructuring costs rise.

S&P Places Under Armour on CreditWatch

S&P Global Ratings has placed all of Under Armour’s debt ratings on CreditWatch with negative implications. This signals that a downgrade is now a real possibility.

The firm’s turnaround is taking longer than expected to show results. This is despite restructuring initiatives launched last year and a major new restructuring update. These were tied in part to its split with NBA star Stephen Curry.

S&P’s long-term issuer credit rating on Under Armour currently stands at ‘BB-’, a speculative-grade level now under review for potential further downside.

Leverage Rising and Leadership Changes

According to S&P, Under Armour’s lease-adjusted leverage is trending toward about 4x for the 12 months ended September 30, 2025, and is now expected to remain around 4x through fiscal 2026 rather than falling below that mark as previously forecast.

That pressure reflects recent underperformance in the business, with weaker revenue and margins than anticipated.

The announcement that the company’s long-tenured chief financial officer will step down and be succeeded in February 2026 is adding another layer of uncertainty to efforts to stabilize sales and profits next year.

Sales Declines and Margin Squeeze

S&P calls out “operational declines and continued challenges” across Under Armour’s core categories.

Apparel revenue fell 1 percent, footwear dropped 16 percent, and accessories declined 3 percent in the most recent quarter. This underscores broad-based softness.

Gross margin slid by 275 basis points in the second quarter, driven largely by U.S. tariffs, and the company expects an additional 310 to 330 basis point margin decline in the third quarter, which S&P notes is a sharper drop than it had projected.

Macro Uncertainty and Tariff Risk

The rating agency also highlights elevated macro risk and policy unpredictability. This is especially around U.S. tariffs and potential responses that could disrupt supply chains. These issues could also affect credit conditions worldwide.

It notes that its baseline forecasts now carry significant uncertainty, amplified by ongoing geopolitical tensions, and that it will continue to reassess the macro and credit impact of shifting conditions as they evolve.

Curry Brand Split and Brand Risk

S&P describes the separation of the Curry brand as unexpected. It is closely monitoring the fallout.

While basketball accounts for only about 2 percent of Under Armour’s global sales and the company does not expect a major direct hit to consolidated results, the agency is focused on how losing such a high-profile athlete partner might affect Under Armour’s global footwear turnaround.

It will also watch for any changes in other key athlete and organizational relationships and for additional costs tied to the Curry exit, with the final Curry brand shoe set to arrive in February 2026 and related product flowing through October 2026.

Restructuring Costs Climb Sharply

Under Armour’s 2025 restructuring plan is proving more expensive than first outlined.

The company has approved an additional 95 million dollars in restructuring actions. This takes total estimated restructuring and related charges to 255 million dollars through fiscal 2026. This number is up from an original estimate of up to 160 million dollars in May 2024.

The higher figure reflects the Curry brand separation, more contract terminations, and incremental asset impairments. It also includes extra employee severance and benefits, with as much as 107 million dollars of that total expected to be cash-related charges.

What the Negative CreditWatch Means

S&P says the negative CreditWatch reflects a clear likelihood that ratings could be lowered. This depends on how Under Armour executes from here.

The agency is evaluating the scale of the rating impact from the weaker performance and higher restructuring burden, including the company’s forward strategy by category, its management and governance profile, and whether further restructuring is added.

90-Day Window and Key Triggers

S&P expects to resolve the CreditWatch within roughly 90 days. It will use several key benchmarks.

The final decision will hinge on whether Under Armour can improve profitability, how the crucial holiday season performs on sales and profits, and how far leverage moves beyond S&P’s 4x downgrade trigger.

If results disappoint and leverage remains elevated, a downgrade from the current ‘BB-’ rating is increasingly likely.