Under Armour Announces Layoffs Amid Restructuring and Sales Slump
Under Armour Inc. has announced a restructuring initiative as the company faces declining sales in its North American market, with revenue in this region falling by 10% to $772 million this quarter. The company expects a further decrease in sales of between 15% and 17% during the current fiscal year. In response, Under Armour is planning to reduce its workforce, though the exact number of employees affected has not been disclosed. The estimated cost of the restructuring is between $70 million and $90 million, which includes funds allocated for employee severance and benefits, ranging between $7 million to $15 million.
This announcement comes during a period of significant change for Under Armour, with CEO and founder Kevin Plank recently returning to lead the company. The restructuring plan is part of a larger strategy aimed at improving the company's gross margin by up to 1.0% by fiscal 2025 and includes simplifying the operating model as well as reducing reliance on agencies, consultants, and outside experts. Despite the short-term negative impact anticipated on revenue and profit, Under Armour remains committed to reinforcing its brand's premium positioning.
The news of the restructuring and expected downturn in sales has affected Under Armour's stock, which has fallen approximately 25% from its year-to-date high. Additionally, the company is looking to buy back up to $500 million in shares as part of its effort to manage high inventories and execute a turnaround strategy amidst fluctuating demand in the wholesale channel and operational challenges.
