Sportswear maker Under Armour cut its full-year sales forecast due to weak demand for its products in North America, and launched a restructuring plan that involves closing facilities and leases as well as job cuts.
The company, which makes Stephen Curry basketball gear and Bandit running shoes, will cut 277 jobs across its operations, half of which will be at the company’s headquarters in Baltimore, Under Armour spokeswoman Diane Pelkey said.
The once-red-hot sports gear company now expects full-year revenue growth of only 9-11 percent, compared with its previous forecast of 11-12 percent, and also expects earnings per share will come in around 37-40 cents, rather than the 42 cents consensus estimates.
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Under Armour closed 33 factory outlets and 23 Under Armour branded stores in the 12 months to June, and consequently expects charges of about $110-130 million in its 2017 fiscal year, largely related to facility and lease terminations and severance costs.
The company, which had been a stock market darling with its explosive growth until last year, has been battling intense competition from Nike and a revived Adidas. Its revenue rose only 8.7 percent to $1.09 billion in the June quarter, continuing a recent trend of dramatically slowing growth. It also reported a net loss of $12.3 million in the three months to June, compared with a loss of $52.7 million a year earlier. Te loss was narrower than the market had expected, but the cut in guidance drove the company’s shares down by as much as 7.6 percent in premarket trading.
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CEO Kevin Plank styled the restructuring as a necessary rationalization after years of rapid growth.
“More than doubling our business over the last three years has required significant investments and resources to build our brand,” Plank said. “We are utilizing 2017 to ensure that operations across our diverse portfolio of sport categories, distribution channels and geographies are optimized as we are building a stronger, faster and smarter company.”