Under Armour Announces 400 Layoffs
(Bloomberg) -- Under Armour Inc. said it will cut 3 percent of its global workforce, or about 400 jobs, part of ongoing changes at the sports apparel company.
Expected to be finished by April, the layoffs are the final component of a 2018 restructuring plan that the company says will cost up to $220 million. They follow a handful of changes aimed at making the company more efficient long-term, according to Chief Financial Officer David Bergman.
“This redesign will help simplify the organization for smarter, faster execution, capture additional cost efficiencies, and shift resources to drive greater operating leverage as we move into 2019 and beyond,” Bergman said in a statement.
The overall goal is to reverse a lengthy slump. Shares declined 65 percent through Wednesday’s close from their all-time high in Sept. 2015, as Under Armour tries to fend off a resurgent Adidas AG.
In July, Under Armour announced that sales in its all-important home market had risen for the first time in a year, sending shares up the most in two months. The stock jumped as much as 6.4 percent to $19.96 on Thursday.
Under Armour has invested in getting product to market faster while cutting spending on endorsement deals and licensing agreements. It also wrote down a large chunk of inventory and eliminated about 40 percent of its products to focus on its highest-selling lines, primarily in performance apparel.
The company said it will pay an estimated $10 million in cash severance and, as a result, Under Armour updated its forecasts for 2018. Operating loss is now expected to be $60 million (versus a previous range of $50-$60 million) and excluding the impact of the restructuring, adjusted diluted earnings per share is expected to be between $0.16 and $0.19 (the previous forecast was $0.14 to $0.19).
Executives see the second half of 2018 as a critical period for evaluating the company’s new direction. As inventory overhead shrinks and new products and production come online, investors will get a clearer picture of whether the restructuring is working.
©2018 Bloomberg L.P.