Colin Browne
Interim President & Chief Executive Officer at Under Armour
Thank you, Kevin, and good morning, everyone. I'll start by underscoring that amid a highly challenging retail environment, we're pleased that we were able to deliver second quarter results that were in line with our expectations. This demonstrates our team's ability to operate through near-term volatility, staying focused on execution and delivering the world's best sports performance products. As we navigate this environment, we are working to amplify opportunities for our existing core business while laying the groundwork to accelerate broader product considerations for more pronounced growth in the years to come.
Essential to this effort is ensuring we keep athletes at the center of everything we do and ensuring we continue our strong operational discipline. I want to stress that again. This is an and, and not an or, we are taking action to empower our ability to deliver the growth we know we're capable of over the long term and protecting our brand as we scale. As we strengthen our foundation and architect our evolving path forward, our growth strategies are focused on product, story, digitalization and culture. I'll start with product. It's at the core of our DNA and what inspires and drives athletic performance. Under Armour's promise to athletes is to make them better to provide them with performance solutions they didn't know they needed and once they have them, cannot imagine living without. We are at our best when we empower those who strive for more. To equip athletes on the journey is a privilege, we honor and respect.
We love athletes. Expecting to reach nearly $6 billion in revenue this year, we've done an incredible job at building an iconic brand. Still, as we continue to fine-tune our strategy, there are areas we are good at and areas that we must address more effectively to realize our full potential. In this respect, I'll highlight two refinements we've made to strengthen our long-term growth strategy. First, the foundational underpinnings of our unique brand are strong, and unmistakably present in the products and how we connect with athletes. Yet as we observe meaningful changes in the market dynamics and consumer behavior over the past few years, it was clear that our consumer-centric strategy needs to evolve. Consequently, we have refined our target audience, which is now centered on the 16- to 20-year-old teen sport athlete.
This definitive group personifies our brand attitude and Lives at the intersection of multigenerational influence from pushing the boundaries of what's possible in sports, to seamlessly blending fitness, music and street culture. This target audience will allow us to bring our product and storytelling into sharper intensity across the entire athlete experience, influencing the larger target market. This brings us to our second refinement. As Kevin alluded to, broadening our product aperture, driven by insights, we are working to outfit occasions beyond the fields, courts and gyms, so we cover young athletes entire day. Still, we won't stray from our unique performance DNA that every product must do something. Under Armour's versatility and consideration will spend an athletes closet by encapsulating magical fabrics with premium beautiful and fresh designs. Adding Live, to our train, compete and recover construct nearly triples our total addressable market to around $300 billion.
Our Live strategy has already begun to manifest itself in fiscal '23, and we expect it will show up even more significantly in fiscal '24 with expanded product offerings and experiences to balance all parts of an athlete day. Within product, another area we're digging into is segmentation. While we've done a solid job of building good and better level products, we have opportunities to do more with our best level offerings. As we look to fiscal '24 and beyond, we are working to elevate the premium aspects of our brand and product portfolio with a greater focus on better and best products to drive growth in key areas such as footwear, women's and international. This should also contribute to our ability to drive more significant gross margin expansion over time. We've also barely scratched the surface on exclusives and collaborations. So we believe there is a flywheel opportunity with these offerings to drive improved brand consideration and loyalty. On our last call, we teased a new footwear platform discovered through athlete insights.
Three days ago, we had our initial limited launch of the $150 under Armour SlipSpeed, the world's most versatile training shoe and a perfect example of what's widening our aperture while building best level product means. SlipSpeed has a molded convertible heel so that the athlete can wear speed mode with the help for training or switch over to the heel down slip mode for recovery. This new trainer uses our award-winning Flow cushioning and BOA Precisional system, which enables a unique lockdown fit. This is part of a six feature set, which includes being machine washable. Since Monday, we've sold out on ua.com with limited peers still available in our North American brand houses and at DICK'S Sporting Goods.
This was a prequel to our broader launch plan for Valentine's Day in February when a full assortment of colors will be offered. Even more exciting, this is just the start of a larger platform we are looking to leverage into other categories in the future. Now let's move to our second strategic focus, which is story. Telling great stories is the most powerful means to influence and inspire. This connection between athletes, passion and performance drives us to do what we do. It's at the core of building consumer relationships, inspiring them and welcoming them into our family.
Our recent SlipSpeed launch is an excellent example of what you can expect from us moving forward, where the ingredients of innovative product, authentic athletes and cultural relevance build the story. Pure performance and versatile footwear combined with Under Armour NIL athletes in an authentic setting doing what they do best and engaging the artist logic to develop the sound for SlipSpeed. This demonstrates how we see -- how we are going to market in the future. Through combined social channels, we've generated millions of positive brand impressions in just seven days. A great example of what can happen when we combine terrific product, story and execution.
Our third strategic focus is digitalization and driving a premium frictionless experience as consumers engage our brand across their journey. Insights and benchmarking have helped inform where we're doing well and where we have work to do. To address these opportunities, we're investing in mobile speed, brand and storytelling, SEO site search and loyalty. This is grounded in improving the user experience, further strengthening the Under Armour brand. From finding our product quickly to telling inspirational stories with cutting-edge visuals to product specs and data, the frictionless cart building and checkout routines evolving this ecosystem is crucial to how we intend to unlock more significant ROI in the future.
We are also committed to delivering premium retail experiences in our physical doors, both full price and outlet, where we are investing in order management and point-of-sale systems and advancing our endless aisle and buy online pick up in store capabilities. With more work still to come, we are beginning to see the benefit of these investments with solid e-commerce growth in the second quarter, particularly in our largest North American market, momentum we expect to continue for the balance of the year. Further, in the second quarter, we began testing in select markets, our first-ever North America loyalty program, UA Rewards. Members can join for free to earn points for gearing up and working out. Points will be redeemable for rewards, including exclusive athlete experiences and our latest gear. They will also be able to access member-only perks, including special events, promotions and expert training shifts and birthday rewards.
Only a few weeks into the pilot phase, we are encouraged by the results and the initial learnings are helping us refine this essential offering for our consumers. We expect to roll this out more broadly in 2023. And finally, this takes us to our fourth focus culture, which makes Under Armour unique. We've worked hard to cultivate our identity and how our family is defined. When an athlete wears the UA logo, when they run our flag, it represents something different. It's grip. It's determination. It signals when they step into the gym, onto the field, court or track they put in the work, will perform at their best and earn the swagger that are Under Armour athletes have in common.
This culture starts with the thousands of teammates who work daily to make this the best athletic performance brand in the world. Our talented team is more efficient, effective and inclusive than ever. Our discipline, agility and powerful playbook remains critical advantages for both the near-term environment and the longer-term opportunities before us. Now pivoting back to our plan, playing both offense and defense is critical in this environment. It's not yet clear how prolonged these conditions may persist. However, elevated inventories, including late-arriving products across our sector, higher levels of discounting and promotions and softer retail trends have impacted how we see the rest of fiscal '23 playing out.
Based on these factors, we've revised our full year outlook. At the top line, we expect revenue to increase at a low single-digit rate. This revision is related to softer retail trends, particularly in North America, along with additional FX headwinds. Even so, we're holding the line on the gross margin outlook, which reflects our measured approach to maintaining brand health. We are also being vigilant with SG&A, which we now expect to be slightly down as we prioritize investments towards areas with the highest returns and actively managing expenses.
Taking it to the bottom line, our full year operating income and EPS outlooks have also been revised slightly. Additionally, we remain in a strong cash position, and we are proud of our inventory management. The last two years have had us in a defensive position concerning inventory but also left us with more out of stock than optimal to service our business. As inventory approach is a more appropriate level for our size, and with the composition of this inventory being mostly current and not aged, we feel confident in how we are managing this aspect of our business.
And finally, before transitioning today, I want to highlight a significant event that occurred during the second quarter. In September, we published our new sustainability and impact report from how we create our products to our workplace interaction with suppliers and key relationships with stakeholders worldwide. We are proud of this work. With this strategy in place, the next phase of our journey has begun, and I'm inspired every day by the work our team is doing to reach our targets while being transparent about our progress and challenges.
This is a strengthening step in our long-term commitment to run a more sustainable business and like our report title states, what's under matters. In closing, as we navigate this dynamic near-term environment, I'm emboldened by the opportunities to continue fine-tuning our strategy and laying the groundwork for Under Armour's next chapter. We are in this fight, and I am confident that by leveraging our strengths, product innovation deep consumer connection and Under Armour's unique culture, we will create better value for our shareholders through more robust profitable growth over the long term.
Now I'll hand the call over to Dave.
