Under Armour, Inc. (UA) shares are trading lower premarket Tuesday following an update to the company’s FY25 restructuring plan. The revised plan introduces new initiatives focused on enhancing strategic supply chain capabilities and overall business performance.
After further evaluation, Under Armour identified approximately $70 million in additional charges primarily attributed to the decision to exit its primary distribution facility in Rialto, California, by March 2026. As a result, the company now expects pre-tax restructuring charges of $140 million to $160 million for FY25 and FY26. This includes up to $75 million in cash charges – $30 million for employee severance and benefits and $45 million for transformational initiatives – and up to $85 million in non-cash charges – $7 million for employee severance and benefits and $78 million for facility, software, and asset impairments.
In May 2024, Under Armour initially announced a restructuring plan with estimated charges of $70 million to $90 million for its FY25 plan. Through June 30, 2024, the company incurred approximately $34 million in restructuring and related charges, comprising $19 million in cash and $15 million in non-cash. The company anticipates incurring roughly two-thirds of the revised total charges by the end of FY25.
Despite the increased restructuring charges, Under Armour maintains its adjusted operating income outlook of $140 million to $160 million and adjusted EPS outlook of $0.19 to $0.22 (versus consensus of $0.24). However, the company has updated its operating loss expectations to be $220 million to $240 million, compared to the previous estimate of $194 million to $214 million. Similarly, the loss per share is projected to be $0.58 to $0.61, higher than the prior expectation of $0.53 to $0.56.
Under Armour Chief Financial Officer David Bergman stated, “As we work to reconstitute our brand and increase our financial productivity over the long term – optimizing our supply-chain network will make us a more efficient, uncomplicated, and agile company.”
In August, the company reported a first-quarter sales decline of 10.1% year-over-year to $1.183 billion, exceeding the analyst consensus estimate of $1.140 billion. Adjusted EPS of $0.01 also surpassed the $0.08 consensus loss.
UA shares are down 2.37% at $7.01 premarket at the last check Tuesday.
