Welcome to Extreme Investor Network, where we bring you the latest and most valuable insights into the world of business news. Today, we’re taking a deep dive into the recent restructuring plan announced by Under Armour, a well-known athletic apparel retailer.
Under Armour revealed a broad restructuring plan as it reported a 10% decline in sales in its largest market, North America. The company also saw profits plummet by over 96% during the fourth fiscal quarter compared to the same period last year. This has led to a significant shake-up within the organization, with plans to lay off employees and incur restructuring costs between $70 million and $90 million.
Investors reacted to the news by causing shares to drop approximately 10% in premarket trading. However, let’s take a closer look at how Under Armour performed in its fourth fiscal quarter compared to Wall Street’s expectations:
– Earnings per share: 11 cents adjusted vs. 8 cents expected
– Revenue: $1.33 billion vs. $1.33 billion expected
Despite beating analyst expectations on earnings per share, Under Armour reported a net income of $6.6 million, or 2 cents per share, down from $170.6 million, or 38 cents per share, a year earlier. Sales also declined to $1.33 billion, a 5% drop from the previous year.
Looking ahead, Under Armour anticipates further sales declines in North America, projecting a drop of 15% to 17% in the current fiscal year. CEO Kevin Plank expressed the need to make proactive decisions to strengthen the brand’s positioning, with a focus on core fundamentals.
The company plans to cut down on promotions and discounting, aiming to increase gross margins by 0.75 to 1 percentage point for the current fiscal year. However, analysts are less optimistic, with expectations for revenue to decline at a “low-double-digit percentage rate.”
This restructuring comes on the heels of former CEO Stephanie Linnartz stepping down from her role after just a year. Under Armour is facing challenges in finding stability in its leadership and navigating a rapidly changing retail landscape.
Stay tuned for more updates on Under Armour and other trending business news on Extreme Investor Network. Subscribe to our newsletter to receive exclusive insights and analysis straight to your inbox.