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It’s been a difficult first half of 2017 for Baltimore-based sportswear brand Under Armour. A combination of declining sales and pullback from retailers has forced the company to re-strategize. A restructuring that will cause UA to lay off 2% of their workforce — roughly 280 jobs. Approximately half of those cuts will occur at the Baltimore headquarters.
Much of this is a result of fleeting investors who did away with Under Armour shares when their stock hit a record low of $18.20 earlier this week following less than stellar reported earnings for the second quarter. Under Armour stock tumbled downwards 8%, causing the brand to adjust earnings for the full year to land somewhere in the 37 cents to 40 cents per share range. Moreover, adjusted revenue is expected to grow at a rate of 9 to 11 percent when previous projections for the year were closer to 11 to 12 percent growth.
The restructuring plan, which includes the aforementioned layoffs, also focuses on getting product to retailers much faster. Some of those said retailers are new partners, like Kohls. “We’ve identified a number of areas to enhance our operational capabilities, drive process improvement and gain greater efficiencies,” said Kevin Plank, Under Armour CEO.
It’s uncertain how this move will affect the rollout of the much-anticipated Curry 4 or, for that matter, the brand’s partnership with A$AP Rocky. Plank circled this concern in his statement. “We’ve represented performance and that gives us permission to go into lifestyle, and we feel that there’s a lot of people that are in our space and category right now that don’t exactly have the staying power – the ability to be there.”
Source: CNBC
