Under Armour is walking the plank again.
On Thursday, the company reported earnings that fell short of Wall Street’s expectations and Kevin Plank, the company’s co-founder who returned to run the company in March, warned that reviving the sportswear brand will take time.
Plank said that the company expects more than a 10 percent decline in sales this fiscal year and plans to implement additional layoffs as part of a comprehensive restructuring plan.
After dipping initially following the disappointing quarterly results, shares rose on Thursday morning after Plank spoke with analysts.
“We are simply spread too thin. We have too many products, too many initiatives—too much of everything,” Plank remarked during a call with analysts, according to the Wall Street Journal.
Under Armour executives think that they have gone too downmarket and want to make a strategic shift towards being a more “premium brand,” a pivot that many apparel brands have attempted to execute over the years. The shift will include cutting back on selling discounted items through wholesale clients and focusing on higher-priced, exclusive offerings through the company’s own retail outlets and digital platforms.
“Over the next 18 months, there is a significant opportunity to reconstitute Under Armour’s brand strength through achieving more, by doing less and focusing on our core fundamentals,” he added.
Under the previous chief executive, the company sought to expand the brand away from sports into the then-trendy “athleisure” sector. It also pushed to expand its appeal to women. Now Plank is looking to reverse that strategy, focusing on men’s apparel and hardcore sports gear.
“We will rectify this,” said Plank to analysts, according to CNBC. “This focus does not mean that we are deprioritizing our footwear or women’s business per se but from a sequencing perspective, men’s apparel will be our highest priority.”
It’s not clear how many employees will be let go as part of the restructuring, although “doing less” suggests the number could be significant. As of March 2023, Under Armour had about 15,000 employees, with roughly 10,000 in retail positions, the Wall Street Journal reported. The company said it anticipates restructuring charges between $70 million and $90 million this year, including reducing the number of consultants and external experts, particularly in marketing.
