Under Armour Revamps Restructuring Strategy and Outlook
Under Armour Enhances Its Restructuring Plan for Future Growth
Under Armour, Inc. (NYSE: UAA) has recently announced significant updates to its restructuring plan for fiscal year 2025, prioritizing the optimization of its supply chain capabilities and overall business performance. The company aims to build a more effective operational framework as it moves towards a stronger future.
New Financial Projections and Charge Estimates
Under Armour's previous projections suggested pre-tax restructuring and related charges ranging from approximately $70 million to $90 million. However, following a deeper review, the company now estimates approximately $140 million to $160 million in pre-tax charges for both fiscal year 2025 and fiscal year 2026. This adjustment is mainly attributed to the decision to exit one of its major distribution centers by 2026.
Restructuring Charges Breakdown
Breaking down the anticipated charges, Under Armour expects up to $75 million in cash-related charges. This includes around $30 million for employee severance and benefits, alongside $45 million tied to various transformational initiatives. Additionally, the company foresees $85 million in non-cash charges, with $7 million attributed to employee severance and benefits and $78 million for facilities and asset-related impairments.
Aiming for Greater Efficiency and Productivity
During the three months ending June 30, 2024, the company incurred about $34 million of restructuring charges, which comprised $19 million in cash and $15 million in non-cash expenses. As Under Armour continues to optimize its strategies, it expects to realize more than two-thirds of the restructured expenses by the end of fiscal year 2025. This proactive approach is designed to strengthen the company's financial productivity and operational capabilities.
Leadership Statements on the Restructuring
In light of these updates, Under Armour's Chief Financial Officer, David Bergman, emphasized the importance of identifying opportunities for optimization. He stated, "We continue to proactively identify opportunities to optimize our business to help create a better and stronger Under Armour. By enhancing our supply-chain network, we aim to evolve into a more efficient, uncomplicated, and adaptable company." This statement reflects the company's direction towards more streamlined operations.
Updated Fiscal 2025 Expectations
As part of the restructuring adjustments, Under Armour also revised its fiscal 2025 outlook. The company’s anticipated operating loss is projected to be between $220 million and $240 million, a notable revision from previous estimates. Adjusted operating income is expected to land between $140 million and $160 million, excluding anticipated restructuring charges and litigation expenses.
Projected Loss Per Share
For fiscal 2025, Under Armour forecasts a diluted loss per share in the range of $0.58 to $0.61. However, when adjusted for restructuring impacts, the forecasted diluted earnings per share sits between $0.19 and $0.22. These adjustments signify a shift in the company's financial outlook as it takes bold steps moving forward.
Understanding Non-GAAP Financial Adjustments
It's important to note that Under Armour's financial announcements include “adjusted” projections excluding non-recurring charges from operations, such as litigation reserving and impacts from the restructuring plan. The management emphasizes that these non-GAAP financial measures are critical for assessing the ongoing operations of the company accurately.
About Under Armour, Inc.
Headquartered in Baltimore, Maryland, Under Armour, Inc. stands as a leading innovator in performance sports apparel, footwear, and accessories. With a commitment to enhancing human performance, the brand continues to create innovative products aimed at making athletes better. For additional insights about the company, further information is available on their official channels.
Frequently Asked Questions
What are the key changes in Under Armour's restructuring plan?
The key changes include an increase in anticipated restructuring charges to between $140 million and $160 million and a focus on optimizing supply chain efficiencies.
What is Under Armour's revised outlook for fiscal year 2025?
The revised outlook indicates an expected operating loss of $220 million to $240 million and adjusted operating income of $140 million to $160 million.
Who is the Chief Financial Officer of Under Armour?
The Chief Financial Officer of Under Armour is David Bergman, who highlighted the company's efforts toward optimization and productivity.
How much has Under Armour incurred in restructuring charges so far?
As of June 30, 2024, Under Armour has incurred approximately $34 million in restructuring charges.
What is Under Armour's stock ticker symbol?
Under Armour's stock ticker symbol is UAA, listed on the New York Stock Exchange.
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