Under Armour to cut jobs, warns of surprise drop in sales this year as company looks to ‘meaningfully reset’

Under Armour on Thursday forecast a surprise fall in sales for the year and laid out plans to overhaul its business, as the sportswear maker looks to revive demand for its brand in the US.

The company said it looks to “meaningfully reset” business in North America, its biggest market, and reverse impact from years of heightened promotions and inflated inventories.

“Too many areas of our product strategy have been designated as priorities. This has caused operational inefficiency and a strain on resources, which has diluted our ability to have a consumer-centric point of view,” founder Kevin Plank, who returned to the role of CEO in April, said on a post-earnings call.

As part of the restructuring plan, the company expects to incur total pre-tax charges of up to $90 million, including employee severance costs.

It, however, did not disclose how many jobs would be affected.

Under Armour said it would add more premium price points in its direct-to-consumer channel, as it looks to revive brand appeal and counter a hit from the wholesale business that is grappling with weak demand from retailers.

It would also aim to reduce its style count by roughly 25% over the next 18 months.

“The changes being made are the most aggressive we have seen to overhaul Under Armour, showing management is willing to forego the short-term for the long-term health of the brand,” said Telsey Advisory Group analyst Cristina Fernandez.

Shares of the company were marginally up, with some analysts being optimistic about Plank’s new plan.

“We are encouraged by management’s change in tone to elevate the brand by containing revenues,” BMO Capital Markets analyst Simeon Siegel wrote in a note.

The company’s weak projection echoed disappointing forecasts from sportswear peers Nike and Lululemon Athletica.

Under Armour expects fiscal 2025 revenue to be down at a low double-digit percentage rate, while analysts expect a 2.1% rise, according to LSEG data.

It also sees earnings to be between 18 cents and 21 cents per share, below estimates of 59 cents.

Under Armour’s fourth-quarter adjusted earnings per share of 11 cents beat estimates of 8 cents. Its revenue of $1.33 billion also edged past expectations.