Letter From The CEO, Patrick Freisk

March 26, 2021

Dear Shareholders,

This past January marked my first anniversary as CEO of Under Armour.

As I reflect on my time in the role, I am appreciative of our 15,000 teammates around the globe for their teamwork, resiliency and commitment. They are the heart of the Under Armour brand. I am also grateful for our board’s guidance, specifically Executive Chairman and Brand Chief Kevin Plank, whose passion for our athletes and business is extraordinary and makes our partnership a terrific balance.

As we say at Under Armour, The Only Way Is Through. 2020 was a year that demanded agility, adaptation, and an unrelenting focus on changing consumer needs. Amid a global pandemic, we prioritized our teammates’ health and safety, launched our North American eCommerce platform, divested the MyFitnessPal platform, and continued to execute a comprehensive restructuring effort.

The work we have done over the past few years positioned us well to meet the challenges of this unprecedented year with resilience. We continued to execute against our strategy with patience and perseverance and remained true to our commitment to making athletes better.

And as consumers pivoted their exercise routines to at-home workouts and outdoor runs, Under Armour met them with athlete-led solutions. From our Project Rock collection, UA HOVR Machina, Phantom 2, and Breakthru footwear offerings to the Meridian pant, Infinity sports bra, and award-winning UA Sports Mask – we drove hard against our innovation agenda in 2020. Additionally, we passed one million pairs of connected footwear, a significant milestone in deepening our connection with consumers.

That said, there is no doubt that last year was challenging. In 2020, our revenue declined 15 percent to $4.5 billion and – on an adjusted basis: our gross margin increased 170 basis points to 48.6 percent, our operating income was $537 thousand, and our diluted loss per share was $0.26.

Yet even through the challenges and uncertainty, it is clear that we are on the right path. Our efforts to pursue a clearly defined target consumer, rebase our cost structure, and fundamentally change the way we work are beginning to yield results. And as we work towards improving profitability in 2021, we also believe we are on a measured path to return to a double-digit operating margin over the long-term.

Central to our transformation is an evolution from being a product-led to a purpose-led organization. We are clear about what defines us, why we compete and who we serve. Our purpose is to Empower Those Who Strive for More, which begins with our commitment to our target consumer – the focused performer. Any product or experience we bring to market must make athletes better.

Purpose lies at the intersection of our culture and our relationship with consumers. This empowers us to support the communities we serve more meaningfully. The launch of the Curry Brand is the perfect embodiment of this in action. In late November, we announced our partnership with Stephen Curry to deliver a suite of performance products, including the Curry 8 basketball shoe – the first

footwear to feature our proprietary, high-traction footwear cushioning technology: UA Flow. As a powerful foundation, community impact is built into the Curry brand’s business model. Product sales and focused partnerships are being engineered to help fund youth sports in under-resourced areas through equitable access and safe places to play.

Purpose also means greater consistency in strategic execution while maintaining our operating principles and enterprise-wide financial discipline. And earning trust from you, our shareholders, by delivering the outcomes that signal our playbook is working.

Throughout 2020, we worked to rebase our cost structure to ensure we are positioned with an appropriate foundation and agility to scale with future growth. In pursuit of premium brand-right growth, we have more sharply focused our voice, utilizing consumer-centric marketing activations to elevate industry-leading innovations and unique experiences across our business. Greater marketing productivity, along with the tighter alignment of our supply and demand planning functions, has also afforded us greater optionality to maintain a more consistent profitability trajectory over the long-term.

Simultaneously, we are hyper-focused on meeting consumers wherever and whenever they want to engage with us. With an emerging omnichannel focus, we are pursuing a channel-agnostic approach – an effort made even stronger by pandemic-accelerated eCommerce results, which represented nearly half of our total direct-to-consumer business in 2020. In retail, we are working to deliver more profitable formats and greater in-store productivity by reducing promotional levels and creating a more seamless shopping experience across all consumer touchpoints.

Deepening our relationship with consumers also means living up to increasingly higher brand expectations. This includes sustainability, which we believe drives performance innovation. Across our business practices, as we strive for proficiency, accountability, and transparency – we’re dedicated to making better, resource-efficient products, leaving a cleaner world wherever our brand touches the environment, and adding value to the communities we engage. Earth is our home field. It’s the only one we’ve got and we’re going to protect it.

Bringing it all together, we remain focused on maintaining our discipline around profitability to drive sustainable shareholder value over the long term. From ongoing operating model refinements, our robust innovation pipeline, and brand elevating strategies to our tighter inventory management and a rebased cost structure, we are working to deliver greater confidence, consistency and credibility.

At this point in 2021, the global pandemic’s current state means we’re still operating with a high level of uncertainty. That said, I remain appropriately cautious and confident in our future. We are on the path to becoming a stronger brand and a better run company. We are leading with greater purpose and more assertive discipline. And we are working hard to continue earning your trust with our actions and performance.

Sincerely,



Patrik Frisk
President and Chief Executive Officer