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IPFS News Link • Business/ Commerce

Under Armour Approves Restructuring, Warns Of Collapse In Clothing Demand As Buyback...

• https://www.zerohedge.com, by Tyler Durden

Under Armour CEO Kevin Plank needs to spend long weekends at his thoroughbred horse breeding farm in steeplechase country in upper Baltimore County to reflect on what has happened to the sportswear company over the past decade. Once a star of the apparel industry, UA is now undergoing a restructuring as its share price plunged to 2010 levels. 

Let's skip the fourth quarter fiscal 2024 report and focus on the restructuring plan and the dismal outlook for the year. 

UA's Board of Directors approved a restructuring plan estimated to cost about $70 million to $90 million - including employee severance and benefits costs. 

Up to $50 million in cash-related charges, consisting of approximately $15 million in employee severance and benefits costs, and $35 million related to various transformational initiatives, and

Up to $40 million in non-cash charges comprised of approximately $7 million in employee severance and benefits costs and $33 million in facility, software and other asset-related charges and impairments.

This year's fiscal outlook is beyond bleak and outright horrible, with demand expected to implode across the North American segment.

Here are the highlights of the outlook:

Revenue is expected to be down at a low-double-digit percentage rate. This includes an expected 15 to 17 percent decline in North America as the company works to meaningfully reset this business following years of heightened promotional activities, particularly in its DTC business and a low-single-digit percent decline in its international business due to more conservative macro consumer trends and actions to protect the brand strength it has built.

Gross margin is expected to be up 75 to 100 basis points compared to the prior year, driven by a material reduction in promotional and discounting activities in the company's direct-to-consumer business and product costing benefits.


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