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."
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.