Under Armour cuts 400 more jobs in turnaround push
today Sep 20, 2018
Sportswear maker Under Armour Inc will cut about 400 jobs, or 3 percent of its global workforce, as part of efforts to cut costs in its struggle to compete with Nike and Germany’s Adidas in North America.
The company's shares, up nearly 30 percent this year, rose almost 4 percent to $19.48 in early trading on Thursday as it used the same statement to tighten its guidance for annual earnings per share to the top end of an earlier range.
Under Armour's sales in North America have risen only once in the past four quarters as it faced up to new sales pushes by its bigger rivals, and it expanded its cost-cutting programme in February.
Initial signs from channel checks and online sales are that Nike is also set to get a boost from a controversial ad campaign, launched earlier this month, featuring former NFL player Colin Kaepernick.
"The restructuring at Under Armour will certainly help them improve the bottom line," said Neil Saunders, managing director of GlobalData Retail.
"However, cutting costs does not address all of Under Armour's problems...It has nowhere near the clarity and power of Nike or Adidas."
In February, Under Armour said it expects "at least $75 million in savings annually beginning in 2019 and beyond" from restructuring plans in 2017 and 2018.
This is the second round of job cuts for the Baltimore-based company, which cut 277 jobs last year as part of a 2017 restructuring plan.
Under Armour said it expects between $200 million and $220 million in expenses related to the latest rejig, which would be the final update to its 2018 restructuring programme, slightly higher than an earlier estimate.
The company had about 15,800 employees at the end of last year, and the workforce cuts are expected to be completed by March 2019.
Under Armour now expects annual adjusted earnings of 16 to 19 cents per share, compared with a previous estimate of 14 to 19 cents. Analysts on average are expecting 16 cents per share, according to Thomson Reuters I/B/E/S.
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