Under Armour Announces Major Restructuring Amid Revenue Decline

US sportswear and equipment manufacturer Under Armour has unveiled a restructuring plan that involves job losses following significant declines in both quarterly and annual revenues.

The company's board of directors has approved the restructuring plan, anticipating pre-tax charges between $70 million (€64.4 million) and $90 million.

This plan includes a job-cutting program, although specifics on the number of jobs affected were not disclosed.

Under Armour expects up to $50 million in cash-related charges, including approximately $15 million for employee severance and benefits and $35 million for various transformational initiatives.

Additionally, up to $40 million in non-cash charges will address around $7 million in employee severance and benefits and $33 million for facility, software, and other asset-related charges and impairments.

Under Armour reported a 5% decline in fourth-quarter revenues for 2024, totalling $1.3 billion.

While international revenue saw a 7% increase to $561 million, the overall decrease was driven by a 10% drop in North American revenue, which fell to $772 million.

Net income for the quarter was $7 million, a sharp decline from $170.6 million in the same period the previous year.

For the fiscal year ending March 31, 2024, overall revenue decreased by 3% to $5.7 billion.

This decline was primarily due to an 8% drop in North American revenue, which fell to $3.5 billion.

Conversely, international revenue grew by 8% to $2.2 billion.

This financial update follows the announcement in March that Kevin Plank, Under Armour's founder, would return as the company's leader after Stephanie Linnartz's departure as president and CEO.

Linnartz, a former Marriott International executive, had taken on the role in February 2023 after being hired in December 2022.

Plank founded Under Armour in 1996 and served as CEO until December 2019, when he became executive chair and brand chief.

Looking ahead to fiscal 2025, Under Armour expects revenue to decline at a low-double-digit percentage rate.

Operating income for 2025 is projected to be between $50 million and $70 million.

Speaking on the current situation, Plank stated: "Due to a confluence of factors, including lower wholesale channel demand and inconsistent execution across our business, we are seizing this critical moment to make proactive decisions to build a premium positioning for our brand, which will pressure our top and bottom line in the near term.

"Over the next 18 months, there is a significant opportunity to reconstitute Under Armour's brand strength through achieving more by doing less and focusing on our core fundamentals: driving demand through better products and storytelling, running smarter plays like simplifying our operating model and elevating our consumer experience.

"In parallel, we're focused on cost management and implementing the strategies necessary to grow our brand and improve shareholder value as we move forward."