Sportswear maker Under Armour said that it will cut roughly 2% of its workforce as part of a restructuring plan to regain its footing at a time when sporting goods chains are closing and shoppers increasingly want to browse for goods online.
Under Armour said Tuesday that its directors have given a green light to a plan that will end leases, and offer severance and benefits totalling $15 million to workers affected by the job eliminations. The plan is expected to cost between $110 and $130 million this year.
In the wake of the news, shares plunged more than 10% and the stock closed at $16.23, down $1.89 a share.
Under Armour had become a fierce competitor to sneaker and sportswear stalwart Nike, more than doubling its revenue since 2014 to $4.8 billion. But it has floundered in recent months with revenue flatlining and its Steph Curry sneaker line failing to match the heat of Nike’s iconic Air Jordans, named for basketball legend Michael Jordan.
The company also became enmeshed in controversy when founder and CEO Kevin Plank called President Donald Trump an “asset to the country” because of his support for the business community. That statement, criticized by Curry, a star NBA player for the Golden State Warriors, and some other high profile Under Armour athletes, led Plank to take out an ad in The Baltimore Sun clarifying his comments and emphasizing that he disagreed with Trump administration proposals, such as a travel ban on certain countries.
The company posted a loss of $12 million, or 3 cents earnings per share in the second quarter. It has now lowered its revenue projections for 2017, to between 9% and 11% vs. Its previous forecast of 11% to 12%.
Instinet analyst Simeon Siegel said in a note to investors that Under Armour’s loss exceeded Instinet’s forecast by a penny. He added that the sportswear company’s reduced guidance and restructuring effort “furthers our belief that the company is shifting from a focus on growth to a focus on health as it matures.”.
But Plank expressed optimism that its increasingly streamlined structure, its evolution from a U.S. To a more globally focused company, and roll out of new products, including the first training shoe associated with NFL quarterback Cam Newton, and another Curry sneaker dubbed the “Curry Four,” will help to make it more competitive.
“2017 is a unique moment in time for retail,” Plank acknowledged. But “we still believe we remain a growth company.”.