Under Armour announces restructuring and layoffs

Sportswear company Under Armour, Inc. has announced a restructuring strategy alongside the release of its annual results, for which net income almost halved and sales fell by several percent.

The company’s revenue came to 5.7 billion dollars, at a 3 percent year-on-year decline. The decline was largely due to worse results from the company’s North America and wholesale branch, a contrast to the growth seen internationally and in the direct-to-consumer channel. However, North America and the wholesale branch bring in the most sales, so the declines here have a stronger impact on total sales.

Under Armour’s net income for the financial year came to 232 million dollar, almost half of its results from the year prior.

Under Armour expects further decline in results, initiates restructuring

In light of the results achieved, Under Armour has made the decision to restructure, as confirmed by the company’s CEO Kevin Plank, who said in a release: “Due to a confluence of factors, including lower demand from the wholesale channel and inconsistent execution across our business, we are taking this critical moment to make proactive decisions to build premium positioning for our brand, which will put pressure on our top and bottom lines in the short term.

“In the next 18 months, there is a significant opportunity to restore Under Armour’s brand strength by achieving more, doing less and focusing on our core business: driving demand through better products and storytelling, smarter actions such as simplifying our business model and improving our consumer experience. At the same time, we are focusing on controlling costs and implementing the strategies needed to grow our brand and improve shareholder value.”

While restructuring should ultimately deliver cost savings and improvements, it will also come with costs of its own. Under Armour indicated that it expects costs linked to this plan to amount to be between 70 million and 90 million dollars. Part of these costs will be set aside for “employee severance payments”. Exactly how many layoffs will occur is unclear at this time.

The expectation for the 2025 financial year is therefore tempered. The company expects sales to fall between 10 and 15 percent. This is partly caused by the expected decline in North America as the company wants to “reset the business in the region after years of discounting”. Internationally, the company expects a smaller decline.

This article originally appeared on FashionUnited.NL. Translation and edit by: Rachel Douglass.