Under Armor on Thursday announced plans to overhaul its business, predicting an unexpected drop in sales this year as the sportswear maker seeks to revive demand for its brands in the United States.
The company said it aims to “meaningfully reset” its operations in North America, its largest market, and reverse the effects of years of increased promotions and bloated inventories.
“Too many areas of our product strategy have been designated as priorities. This has created operational inefficiencies and strained resources, and diluted our ability to take a consumer-centric view. Founder Kevin Plank, who returned as CEO in April, said in a post-earnings conference call.
As part of its restructuring plan, the company expects to incur total pre-tax costs of up to $90 million, including employee severance benefits.
However, it has not been made clear how many jobs will be affected.
Under Armor said it would add more premium price points to its direct-to-consumer channel in a bid to revive the brand’s appeal and counter the damage to its wholesale business, which has suffered from weak demand from retailers.
We also aim to reduce the number of styles by approximately 25% over the next 18 months.
“These changes represent the most aggressive overhaul of Under Armor we’ve seen to date, and management’s commitment to “It shows that they are willing to hold back on the short term for the long-term health of the brand.”
The company’s stock rose slightly, and some analysts were optimistic about Planck’s new plans.
“We are encouraged by management’s change in attitude to enhance the brand by restraining profits,” Simeon Siegel, an analyst at BMO Capital Markets, said in a note.
The company’s weak outlook echoed disappointing outlooks for sportswear peers Nike and Lululemon Athletica.
According to LSEG data, Under Armor expects fiscal 2025 sales to decline by a low double-digit percentage, while analysts expect a 2.1% increase.
The company also expects earnings to range from 18 cents to 21 cents per share, below expectations of 59 cents.
Under Armor’s fourth-quarter adjusted earnings per share were 11 cents, beating expectations of 8 cents. Sales also exceeded expectations at $1.33 billion.
