Under Armour Inc. is embarking on a restructuring endeavor to combat its growing financial losses. Kevin Plank, the company’s founder who resumed the role of CEO last month after stepping down in 2019, outlined plans to analysts aimed at bolstering cost management and fostering brand growth.
As part of this initiative, the company will implement layoffs, although the exact number remains undisclosed. Under Armour anticipates incurring charges ranging from $7 million to $15 million for employee severance and benefits.
In a recent earnings call, Plank emphasized the need to refocus on the core men’s apparel business, which had been neglected. He acknowledged that the company’s diversion from this core area allowed it to become overly promotional and commoditized, significantly impacting brand perception, especially in North America.
“We will rectify this,” Plank asserted, clarifying that while the company remains committed to its footwear and women’s business, prioritizing men’s apparel is paramount for the time being.
Acknowledging that these decisions will exert pressure on the company’s top and bottom lines in the short term, Plank remained resolute in the strategy’s necessity.
In the first quarter ending March 31, Under Armour reported a 5% decline in global revenue to $1.3 billion, with North America experiencing a steeper 10% drop to $772 million.
Plank candidly admitted to analysts that this performance fell short of his expectations for Under Armour at this juncture.
Looking ahead, Under Armour anticipates revenue for fiscal year 2025 to decline at a low-double-digit percentage rate, with North America expected to see a 15% to 17% decrease. These projections reflect the company’s concerted efforts to reset its business model after years of heightened promotional activities.
