Under Armour is now expecting a larger net loss due to higher-than-expected costs in its restructuring plan.
Previously, the Baltimore-based sportswear brand expected to incur pretax restructuring and related charges of about $70 million to $90 million as a result of its fiscal 2025 restructuring plan. However, a decision to close one of its primary distribution facilities in Rialto, Calif., is now expected to result in $70 million in charges, bringing the total to between $140 million and $160 million in fiscal 2025 and fiscal 2026.
That includes cash charges of about $30 million in employee severance and benefits costs and $45 million related to what it called “various transformational initiatives.” There are also expected to be up to $85 million in noncash charges, including about $7 million in employee severance and benefits costs and $78 million in facility, software and other asset-related charges and impairments, the company said.
“We continue to proactively identify opportunities to optimize our business to help create a better and stronger Under Armour,” said chief financial officer David Bergman. “As we work to reconstitute our brand and increase our financial productivity over the long term — optimizing our supply-chain network will make us a more efficient, uncomplicated and agile company.”
As a result of this move, Under Armour updated its fiscal 2025 outlook and is now expecting an operating loss of $220 million to $240 million versus the previous expectation of $194 million to $214 million. Adjusted operating income is expected to be $140 million to $160 million.
The diluted loss per share is expected to be 58 cents to 61 cents, up from the 53 cents to 56 cents previously projected. Adjusted diluted earnings per share are now expected to be 19 cents to 22 cents.
Shares of the company were down just over 4 percent in after-market trading to $7.46.
In May, Kevin Plank, who returned to the top post at the company he founded in March, outlined a restructuring plan that would include an unspecified number of layoffs, a 25 percent reduction in product, a renewed focus on its historic strength in menswear, substantially less discounting and a new communication strategy to get the message out to consumers.
In the first fiscal quarter, Under Armour reported an operating loss of $300 million on sales that dropped 10 percent to $1.2 billion. Excluding transformation expenses and other charges that totaled $308 million, however, the company’s adjusted operating income was $8 million.
