Under Armour Stock Slips as FY2025 Restructuring Deepens
Under Armour, Inc. (NYSE: UA) traded lower before the opening bell after the company outlined fresh details on its fiscal year 2025 restructuring. The update centers on tightening and simplifying its supply chain—moves the company says are key to lifting overall performance, even if they come with near-term costs.
What the New Plan Changes—and What It Costs
The headline change: Under Armour plans to close its primary distribution facility in Rialto, California by March of the upcoming year, a decision tied to about $70 million in charges. With that, the company now expects total pre-tax restructuring charges of $140 million to $160 million across fiscal years 2025 and 2026.
The revised total blends cash and non-cash items. On the cash side, the company earmarked $30 million for employee severance and benefits and $45 million for transformational initiatives. Non-cash charges are expected to reach up to $85 million, including $7 million in severance benefits and $78 million in asset impairments.
How This Differs From May’s Plan
Back in May, Under Armour projected $70 million to $90 million of restructuring costs for fiscal year 2025. By June 30, it had already booked approximately $34 million of related charges, spanning both cash and non-cash items.
With the scope now larger, the company still expects the bulk of the impact to arrive soon: roughly two-thirds of the updated total charges should be recognized by the end of fiscal year 2025.
Guidance: Adjusted Profits vs. GAAP Losses
Looking ahead, Under Armour reaffirmed an adjusted operating income outlook of $140 million to $160 million. The company also guided to adjusted earnings per share (EPS) of $0.19 to $0.22, a touch below the current analyst consensus of $0.24.
At the same time, expectations for operating losses have increased, with losses now estimated at $220 million to $240 million, alongside a revised loss per share range of $0.58 to $0.61. The contrast underscores the gap between adjusted metrics and reported results during the restructuring phase.
Recent Results and Market Reaction
In August, Under Armour reported a 10.1% year-over-year decline in first-quarter sales to $1.183 billion. Even so, the company topped estimates, and adjusted EPS of $0.01 beat the consensus for a loss of $0.08 per share.
As of the latest checks, Under Armour’s stock (UA) is down about 2.37% in premarket trading, at $7.01. The move reflects a cautious read on the near-term costs and uncertainty tied to the expanded restructuring.
Management’s Focus During the Transition
Chief Financial Officer David Bergman emphasized sharpening the supply chain to make the business more efficient, straightforward, and agile. The aim is long-term: a cleaner operating model to support the brand and financial productivity over time—even if the path there is bumpy.
Frequently Asked Questions
Why did Under Armour’s stock move lower before the open?
Investors reacted to the company’s updated restructuring plan, which adds sizable pre-tax charges and raises near-term uncertainty.
What total restructuring charges is Under Armour now expecting?
The company projects pre-tax restructuring charges of $140 million to $160 million across fiscal years 2025 and 2026, with roughly two-thirds expected by the end of fiscal year 2025.
What specific costs are included in the revised estimate?
Cash charges include $30 million for employee severance and benefits and $45 million for transformational initiatives. Non-cash charges are expected to be up to $85 million, including $7 million in severance benefits and $78 million in asset impairments.
How does the guidance look on profits and losses?
Under Armour still guides to adjusted operating income of $140 million to $160 million and adjusted EPS of $0.19 to $0.22. It also expects an operating loss of $220 million to $240 million and a loss per share of $0.58 to $0.61.
What did the most recent quarter show?
First-quarter sales fell 10.1% year over year to $1.183 billion, but results beat expectations. Adjusted EPS came in at $0.01, better than the consensus for a loss of $0.08 per share.
