Under Armour: Kevin Plank Announces Comprehensive Restructuring and Layoffs

CEO Kevin Plank: Market overreached – focus on fewer products with discounts in the future.

5/18/2024, 3:32 PM

The heading in English would be:
"The returned CEO of Under Armour, Kevin Plank, warned on Thursday that there would be no quick fix for the sportswear brand's problems. He announced that revenue would decline by more than 10% this fiscal year, and the company would undergo another round of layoffs as part of a restructuring plan."

"We are simply doing too much," Plank said during an analyst conversation. "There are too many products, too many initiatives, just too much of everything." The plan is to rebuild the brand by focusing on fewer, but more effective products.

The executives explained that the decline in sales was partly due to the strategy of giving the brand a more exclusive image. The company is reducing the amount of discounted goods it sells to wholesale customers and will instead offer higher-priced, exclusive products through its own stores and digital channels.

The Under Armour Stock, which peaked at $52 in 2015 with impressive quarterly growth, has significantly declined in recent years. On Thursday morning, the stock was trading at $6.74, after recovering from a pre-market drop.

Plank Resigned as CEO in 2019, But Remained Active as Chief Brand Officer and the Company's Largest Shareholder. Initially, Under Armour celebrated success by selling sweat-resistant clothing for athletes and securing major advertising contracts with colleges and athletes; however, attempts to penetrate the basketball sneaker and lifestyle products market failed.

Here is the translated heading into English:

"Plank's new restructuring plan for the brand is expected to take about 18 months. The new approach comes one year after the launch of a new strategy by former CEO Stephanie Linnartz. Plank emphasized that Under Armour wants to revitalize the brand through faster innovations, aiming to bring new products to market within six to twelve months. An example of this is the recently introduced indestructible hat 'StealthForm' for 45 dollars."

The company did not disclose how many jobs will be affected by the restructuring. As of March 2023, it employed about 15,000 workers, approximately 10,000 of whom worked in its retail stores. It is expected that costs of 70 to 90 million US dollars will be incurred in the current year.

As a cost-cutting measure, the company plans to part ways with some consultants and external experts who, according to Plank, have reached an unacceptable level, especially in marketing. Currently, the company is looking for a new Chief Marketing Officer.

Under Armour Expects a Revenue Decline in the Low Double-Digit Percentage Range for the Fiscal Year Ending in March 2025, Mainly Due to a Decrease of 15% to 17% in North America. Wall Street Had Forecasted Revenue Growth of About 1.8%, According to FactSet.

The company also forecasts an adjusted earnings per share of 18 to 21 cents, significantly below the 59 cents per share expected by analysts.

For the quarter ending in March, the company reported a net profit of $6.6 million, compared with $170.6 million in the previous year. Quarterly revenue fell by 4.8% to $1.33 billion.

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