SEPTEMBER 8, 2020 — MORE RESTRUCTURING WITH 600 LAYOFFS
According to an SEC filing, the struggling company has added another $75 million in restructuring costs to support the company-wide layoff of another 600 employees.
APRIL 3, 2020 — A CRISIS IN TIME?
It appears that the company can continue its restructuring activities without intense scrutiny as people concentrate on the pandemic and forgive financial issues as the crisis unfolds.
"In these unprecedented and challenging times, the majority of stores where Under Armour is available remain closed, contributing to a significant decline in revenue," said Under Armour President and Chief Executive Officer Patrik Frisk.
While we're thankful for the meaningful balance sheet improvements we've driven over the past two years and we are seeing some early signs of recovery in our APAC region, this unanticipated shock to our business has been acute, forcing us to make difficult decisions to ensure that Under Armour is positioned to participate in the eventual recovery of demand.
We do not take these decisions lightly and are doing all we can to minimize the impact on our teammates during this time. Because of the strength of our brand and the steps we have taken, we will weather this storm."
The actions announced today include:
The extension of current store closures until further notice.
The company will continue to monitor the situation globally, and will make re-opening decisions on a country-by-country basis based on guidance provided by local health authorities.
Beginning April 12th, the company will temporarily lay off the teammates that work in its U.S. Brand (full price) and Factory House (outlet) stores, and approximately 600 teammates that work at its U.S.-based distribution centers.
Additionally, the company will begin paying premium bonuses to its distribution center teammates continuing to work during the crisis. The company will have provided up to four weeks of full pay for these retail store and distribution center teammates since this crisis started.
Effective immediately, the company's Board of Directors will be reducing its compensation by 25% and all of the company's Executive Vice Presidents and above will be taking a 25% salary cut through the duration of the crisis.
The company will cover full health benefits for benefit-eligible teammates for approximately two months during this temporary layoff period. Due to varying degrees of pandemic impact outside of the U.S. and differing local employment laws, regulations and government relief considerations, the company will address employment status and potential considerations on a country-by-country, local basis for retail teammates.
Under Armour continues to monitor this fluid situation closely, and will take decisive and measured action as appropriate. 2020 Restructuring Plan
On February 11, 2020, Under Armour announced it was assessing a potential 2020 restructuring plan designed to rebalance the company's cost base to further improve profitability and cash flow generation, and on March 31, 2020, its Board of Directors approved this restructuring plan.
This restructuring plan was developed prior to assessing the potential impacts of the COVID-19 pandemic on the company's business and it continues to evaluate what actions may be necessary related to this rapidly developing situation.”
MARCH 2, 2019 — HEADQUARTERS TO SHED 50
Continuing with the previous announced reduction in force, the company has notified the State of Maryland that it will be laying off 50 employees at its Baltimore, Maryland headquarters as the restructuring effort winds down.
UPDATE: September 26, 2018 ADDITIONAL LAYOFFS ANTICIPATED
In an update on its 2018 restructuring plan, the company has announced that it will be reducing its global workforce by approximately 400 jobs representing approximately 3% of its workforce, 400 jobs.
The company claims that “The reduction in workforce is expected to be completed by March 31, 2019 and represents the final component and update to the company's 2018 restructuring plan.”
Chief Financial Officer David Bergman noted, "This redesign will help simplify the organization for smarter, faster execution, capture additional cost efficiencies, and shift resources to drive greater operating leverage as we move into 2019 and beyond."
Original Post…
As they say, fashion is fickle, and in the performance sportswear market, it is all about reputation, badge-value status, and gross margins. Unfortunately, relative newcomer Under Armour is announcing a restructuring that will result in approximately 280 lost jobs. It appears that the brand is losing market share to iconic sports manufacturers such as Nike, Adidas, and Puma.
The attempt to extend the company’s fortunes on so-called “athleisure” wear ("street brands" and “lifestyle brands”) appears to be fading fast as fads and fashions are wont to do on a periodic basis. The company has put forth the usual answers, “restructuring,” “better positioned for future growth,” yadda, yadda, yadda.
The problem with branded fashions is that they require a substantial up-front investment in product and advertising while catering to a fickle customer base whose opinion of any given product hinges on which sports figures and influencers are flogging the brand. I have a hard time believing that 280 or so jobs will make a difference to the bottom line of this billion-dollar company if customers continue to shun the company after its CEO appeared to endorse controversial President Donald Trump. An attempt to rebound by condemning Trump’s withdrawal from the Paris climate accords seemed to fall on deaf ears.
There is still considerable brand-equity in the Under Armor name, but their reputation relates to performance wear, not street or lifestyle brands.
This tale should serve as a cautionary red flag to employees of companies whose CEOs and other leadership attempts to endorse politicians and political causes that are associated with controversy. Shoemakers should stick to their last, knitters to their knitting.
Change is coming. There will always be a tomorrow, no matter how much you may try to ignore it. There are no guarantees in life, or promises for a bright future. Just because something bad hasn't happened yet, doesn't mean it won't. It can happen to anyone, anytime, anywhere ... are you now wondering, Am I Next?