Under Armor is walking the plank again.
On Thursday, the company announced earnings that fell short of Wall Street expectations, and co-founder Kevin Plank, who returned to the reins in March, warned that the sportswear brand’s revival will take time.
Plank said the company expects sales to decline by more than 10% this fiscal year and will implement additional job cuts as part of a comprehensive restructuring plan.
After initially falling after disappointing quarterly results, the stock rose Thursday morning after Plank spoke to analysts.
“We’re just too spread out,” Plank said on a call with analysts. “We have too many products, we have too many initiatives, we have too many things.” by Wall Street Journal.
Under Armor executives believe the company has gone too far downmarket and want to make a strategic shift to becoming a more “premium brand,” something many apparel brands have been trying to do for years. This is the axis that I have been working on. This shift includes reducing sales of discounted products through wholesale customers and focusing on higher-priced, exclusive products through its own retail stores and digital platforms.
“Over the next 18 months, we have a significant opportunity to rebuild the Under Armor brand by doing more with less and focusing on our core fundamentals,” he added.
Under its former chief executive, the company sought to expand its brand from sports into the then-popular “athleisure” sector. He also focused on expanding his appeal to women. Now, Plank is reversing that strategy and focusing on men’s apparel and hardcore sporting goods.
“We’re going to correct this,” Plank told analysts. According to CNBC. “This focus does not mean we deprioritize our footwear or our women’s business itself, but from a sequencing standpoint, men’s apparel is our top priority.”
It’s not clear how many employees will be laid off as part of the restructuring, but “retrenchment” suggests the number could be significant. As of March 2023, Under Armor employed approximately 15,000 people, approximately 10,000 of whom were employed in retail jobs. wall street journal report. The company said it expects to incur restructuring costs of $70 million to $90 million this year, including reducing the number of consultants and outside experts, particularly in its marketing department.
