Why Under Armour Slumped Today

Core Viewpoint - Under Armour's shares fell 9.6% due to increased restructuring costs and a revised outlook for operating losses in fiscal 2025, indicating challenges in its transformation strategy [1][2][3] Financial Performance - Under Armour's operating profits have turned to losses in 2024 for the first time since the pandemic, with projected operating losses for fiscal 2025 now estimated between $220 million to $240 million, up from an initial estimate of $194 million to $214 million [2][3] - The increase in projected losses is attributed to additional restructuring opportunities, including the closure of a distribution facility in Rialto, California, leading to an extra $70 million in restructuring charges by March 2026 [2] Restructuring and Transformation - The company plans to incur $140 million to $160 million in restructuring charges over the next two years, which includes severance and other investments [3] - Despite the increased charges, the forward outlook for non-GAAP (adjusted) operating income remains unchanged at $140 million to $160 million for the coming fiscal year [4] Market Reaction - Investors reacted negatively to the lowered profit outlook, resulting in a significant drop in stock price, although the long-term investment thesis may not have fundamentally changed [3][4] - Under Armour's current market cap is $2.8 billion, with the stock trading around 20 times the forward adjusted profit guidance, suggesting a valuation that is neither particularly cheap nor expensive [4]