Under Armour announced Tuesday plans to reduce its global workforce by about 2 percent, or approximately 280 jobs, as it restructures its business to stay competitive. The Baltimore-based company reported a net loss of $12 million for the three months that ended June 30 and now expects slower revenue growth for the fiscal year. Here’s a closer look at the details.
Q2 Results
Under Armour saw an operating loss of $5 million, a net loss of $12 million and a $0.03 loss per diluted earnings per share. Second quarter revenue increased 9 percent to $1.1 billion, beating analysts’ expectations of $1 billion. Wholesale revenue grew 3 percent to $655 million, and direct-to-consumer grew 20 percent to $386 million.
North American revenue remained stagnant, while international revenue increased 57 percent, representing 22 percent of total revenue. EMEA revenue increased 57 percent, Asia-Pacific nations grew a whopping 89 percent and Latin America increased 10 percent.
Restructuring Plan
Under Armour’s board of directors approved a restructuring plan to “more closely align its financial resources to support the company’s efforts to better serve the evolving needs of the changing consumer and customer landscape.”
Bloomberg reported that Under Armour is working to “shore up back-end efficiencies,” including speeding up its footwear manufacturing capabilities.
In a press release, Under Armour Chairman and CEO Kevin Plank stated, “As we stand up our category management structure within a consumer-led approach, we intend to meaningfully increase our go-to-market speed and amplify our digital capabilities. We’ve identified a number of areas to enhance our operational capabilities, drive process improvement and gain greater efficiencies.”
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2017 Outlook
Under Armour updated its fiscal year outlook, expecting growth of 9 to 11 percent, versus the previous expectation of 11 to 12 percent. The new outlook reflects Under Armour’s slowing North American business. Gross margin is expected to decrease at least 120 basis points compared to 46.4% last year. On a reported basis, full year diluted earnings per share is expected to be between $0.18 and $0.21, while adjusted diluted earnings per share are now expected to reach $0.37 to $0.40, with capital expenditures expected to reach around $350 million.
“More than doubling our business over the last three years has required significant investments and resources to build our brand,” said Plank. “We are utilizing 2017 to ensure that operations across our diverse portfolio of sport categories, distribution channels and geographies are optimized as we are building a stronger, faster and smarter company.”