Moody’s Downgrades Under Armour (UA) Amid Turnaround Challenges

Under Armour, Inc. (NYSE:UA) is one of the best NYSE stocks under $5 to buy. On December 4, Moody’s downgraded Under Armour, Inc.’s (NYSE:UA) corporate family rating to B1 from Ba3. The agency shifted the outlook to stable from negative and upgraded the speculative grade liquidity rating to SGL-2 from SGL-3.

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According to Moody’s, the downgrade was triggered by ongoing difficulties in Under Armour’s operational turnaround. This is driven by cautious retailer orders, sluggish consumer spending on discretionary items, and rising tariffs, noted the agency. Other factors include fierce industry competition, past challenges in restoring brand strength, and recent executive changes. This action builds on an earlier Moody’s downgrade in April 2025 from Ba2 to Ba3, which also highlighted tariff pressures and consumer spending risks impacting the turnaround plan.

However, Moody’s noted that Under Armour, under the leadership of returning founder and CEO Kevin Plank, is taking steps to address concerns. One of the things it’s doing is pursuing a comprehensive strategy to boost brand appeal through revamped products, marketing, and segmentation. The ratings agency pointed out that the strategy is showing early gains, like improved gross margins from reduced promotions and better consumer engagement with premium offerings.

As such, Moody’s anticipates Under Armour’s adjusted debt-to-EBITDA ratio to climb to the high-5x range by March 2026. However, the ratio should ease to low- to mid-3x in fiscal 2027 as restructuring winds down and product updates drive earnings growth.

Under Armour, Inc. (NYSE:UA) is a sportswear and footwear company that designs, manufactures, and distributes performance apparel, footwear, and accessories for athletes and fitness enthusiasts worldwide. The company’s portfolio includes compression shirts, training gear, running shoes, and connected fitness products marketed under the Under Armour brand.

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Disclosure: None. This article is originally published at Insider Monkey.