It is unclear how many Under Armor employees will be laid off as part of the restructuring, but the plan is expected to cost between $70 million and $90 million, some of which will be used for severance and employee benefits. The company declined to share more information with CNBC about its restructuring.
Shares fell about 10% in premarket trading.
Here’s how the sportswear retailer performed in its fiscal fourth quarter compared to what Wall Street expected, based on a survey of analysts by LSEG:
- Earnings per share: 11 cents adjusted against 8 cents expected
- Income: $1.33 billion versus $1.33 billion expected
The company’s reported net income for the three months ended March 31 was $6.6 million, or 2 cents per share, compared with $170.6 million, or 38 cents per share, a year earlier. . Excluding one-time items, the company reported earnings of 11 cents per share.
Sales fell to $1.33 billion, down about 5% from $1.4 billion a year earlier.
During the quarter, sales in North America fell 10% to $772 million, worse than the $780 million analysts expected, according to StreetAccount.
The company said it expects its sales to continue to deteriorate in North America. The company expects a decline of between 15 and 17 percent in the current fiscal year.
“Due to a confluence of factors, including a decline in demand from wholesale channels and inconsistent execution across our business, we are seizing this critical moment to make proactive decisions to build a premium positioning for our brand, which will put pressure on our bottom line and results in the short term. term,” founder and CEO Kevin Plank said in a statement.
“Over the next 18 months, there is a significant opportunity to rebuild the strength of the Under Armor brand by doing more, doing less and focusing on our core fundamentals,” he added.
For Under Armor’s overall business, the company expects revenue to decline “at a double-digit rate” in the current fiscal year, while analysts expected sales growth by 2.1%, according to LSEG.
The company plans to reduce promotions and discounts, which is expected to increase its gross margin by between 0.75 and 1 percentage point for the fiscal year.
It expects diluted earnings per share to be between 2 cents and 5 cents and adjusted diluted earnings per share to be between 18 cents and 21 cents for the year. Analysts were expecting earnings per share of 52 cents, according to LSEG.
Under Armour’s tough quarter comes about two months after the retailer announced that former Marriott executive Stephanie Linnartz would step down as CEO after barely a year on the job and that Plank would once again take the helm. company he founded in 1996.
Linnartz was the second CEO the company had in less than two years.
She was hired with a bet that her experience building Marriott’s popular Bonvoy loyalty program and driving digital revenue for the hotel giant would make up for her lack of experience in the retail industry. Before her departure, she managed to overhaul Under Armour’s C-suite and grow its loyalty program. She was attempting to pivot the brand’s assortment toward a more athleisure-focused offering with sleeker options for women.
Ultimately, she was ousted before those plans could become a reality. Following the announcement of Linnartz’s departure, a number of analysts downgraded Under Armor and lowered their price targets. The company’s shares were down about 23% year to date as of Wednesday’s close.
Read the full earnings release here.
News Source : www.cnbc.com
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