- Under Armour on Thursday announced an update to its massive, $US200 million restructuring effort.
- Shares fell about 1% after the company said it will spend $US10 million to cull its workforce by 3%.
- Follow Under Armour’s stock price in real-time here.
Under Armour said Thursday that it will spend $US10 million on severance payments not previously reported as it works to reduce its global workforce by 3%
It’s the second round of layoffs in the past year for the struggling athletic brand, which cut about 140 jobs at its Baltimore headquarters last August, when it first announced the $US200 million restructuring plan. The layoffs should be completed by April 2019, it said, without adding how many jobs were being cut.
“In our relentless pursuit of running a more operationally excellent company, we continue to make difficult decisions to ensure we are best positioned to succeed,” David Bergman, Under Armour’s chief financial officer, said in a press release. “This redesign will help simplify the organisation for smarter, faster execution, capture additional cost efficiencies, and shift resources to drive greater operating leverage as we move into 2019 and beyond.”
Shares of the company fell about 1% in early trading Thursday, after previously pointing to an open in the green by about 2%, following the announcement.
Under Armour also said its operating loss for the full year of 2018 will be approximately $US60 million. It had previously forecast a range between $US50 million and $US60 million. Adjusted operating income could be slightly higher, between $US140 million and $US160 million, where the previous window had been between $US130 million and $US160 million.
“Bulls see UAA undergoing a transformation to become a better operator to go along with its strong brand,” Jay Sole, an analyst at UBS, said following the first round of layoffs and second-quarter earnings. “By doing so, bulls think UAA can drive much better EBIT margin over time.”
Still, much of the bad news may be priced in, Sole says. Shares are now well off their recent high of $US24.68, and were set to open around $US18.76 on Thursday morning.
“The last two years have shown, in our view, it takes nothing less than large misses to get the stock to drop significantly,” he continued.
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