S&P Global Puts Under Armour Ratings on Downgrade Watch Amid Declining Sales and Margin Pressure

On November 25, 2025, credit rating agency S&P Global placed Under Armour’s credit ratings on downgrade watch, citing ongoing restructuring difficulties and falling sales figures. This move reflects growing concerns over the company’s financial health following a 16% drop in footwear sales and a 1% decline in apparel revenue during the latest quarter. Alongside shrinking sales, Under Armour faces significant margin compression and escalating restructuring expenses, prompting close analyst scrutiny.

Sales and Margin Pressures Fuel Downgrade Watch

Under Armour experienced a 275 basis point contraction in gross margin in the second quarter, which S&P analysts largely attributed to the U.S. tariff environment and enduring geopolitical conflicts affecting regional markets. The company anticipates an additional margin decline between 310 and 330 basis points in its third quarter, signaling a deeper financial strain than earlier forecasts suggested.

Restructuring efforts also continue to weigh heavily on Under Armour’s financial outlook. S&P revised up the company’s planned restructuring charges by $95 million, raising the total expected costs to $255 million through fiscal year 2026. This exceeds the original estimate of $160 million announced during last summer’s restructuring plan. Despite these mounting pressures, S&P maintained Under Armour’s speculative-grade BB- rating but cautioned the credit outlook remains uncertain, with a rating resolution expected within 90 days. The suspense partly hinges on underwhelming holiday sales and profit performances.

Downgrade Watch: Impact and Investor Focus

The downgrade watch highlights substantial headwinds confronting Under Armour as it navigates structural and macroeconomic challenges. Steeper-than-expected margin erosion coupled with persistent revenue setbacks underscore the difficulty of reversing negative trajectories amid tariff impacts and geopolitical volatility. Investors are likely to pay close attention to upcoming quarterly financial disclosures, particularly during the critical holiday season, which could influence S&P Global’s ultimate rating decision.

This rating watch status signals elevated risks to Under Armour’s creditworthiness if financial results fail to improve. Restructuring costs and external policy factors continue to pressure the firm’s capital markets prospects. Consequently, the company’s ability to stabilize margins, generate growth, and manage expenses will be pivotal in shaping its near-term market standing and credit profile.

Strong focus remains on the next 90 days as S&P evaluates Under Armour’s operational progress and market conditions, determining whether the downgrade watch will culminate in a formal downgrade or a reaffirmation of its current credit rating.