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Under Armour's Restructuring to Improve Supply Chain, Long-Term Growth
Under ArmourUnder Armour(US:UAA) ZACKSยท2024-09-10 14:10

Core Insights - Under Armour, Inc. has revised its fiscal 2025 restructuring strategy, increasing pre-tax restructuring expenses from an estimated range of $70-$90 million to $140-$160 million [1][2] Restructuring Strategy - The adjustment includes phasing out a primary distribution center in Rialto, CA, by March 2026, aimed at streamlining operations and refining the supply chain [2] - The restructuring plan is expected to increase short-term costs but aims to position the company for long-term agility and financial strength [2] Financial Impact - Cash-related charges are projected to reach up to $75 million, with $30 million for severance and employee benefits, and $45 million for transformation initiatives [4] - Non-cash charges are anticipated to be nearly $85 million, including $7 million in severance-related costs and $78 million in asset impairments [5] - By the end of Q1 fiscal 2025, Under Armour incurred $34 million in restructuring costs, with $19 million in cash-related charges and $15 million in non-cash expenses [5] Updated Financial Projections - The company now forecasts an operating loss of $220-$240 million, up from the previous estimate of $194-$214 million [6] - Loss per share is now estimated to be between 58 cents and 61 cents, an increase from the earlier range of 53-56 cents [7] - Adjusted operating income, excluding restructuring charges, is projected to be between $140 million and $160 million [6] Long-term Outlook - Despite the immediate financial impact, Under Armour aims to create a more agile and efficient business for sustained profitability and growth in the future [8]