Under Armour is navigating significant financial downturns amidst restructuring efforts, triggering a substantial operating loss.
- The company reported a 10% year-on-year revenue drop, amounting to $1.2 billion, with significant declines in North American sales.
- Wholesale and direct-to-consumer revenues also suffered setbacks, reflecting the broader challenges faced by the brand.
- Founder Kevin Plank returned as CEO, expressing optimism about the brand’s strategic reorientation and future prospects.
- Despite the challenges, Under Armour is committed to maintaining its premium brand positioning and improving operational efficiencies.
Under Armour has faced a challenging financial quarter, reporting an operating loss of $300m (£235m) for its first fiscal quarter ending 30 June 2024. Key contributors to this downturn include a 10% reduction in revenue year-on-year, which now stands at $1.2bn (£940m). North American sales, crucial to the brand’s overall performance, fell by 14% to $709m (£555m), while international sales saw a smaller decline of 2%, reaching $473m (£370m).
The company’s wholesale revenue experienced an 8% drop to $68m (£53m), paralleled by a 12% decrease in direct-to-consumer revenue, which now totals $480m (£376m). Specific product lines were similarly affected, with apparel revenue down 8% to $758m (£594m), footwear plummeting by 15% to $31m (£24m), and accessories declining by 5% to $9m (£7m).
In light of these figures, the company undertook comprehensive restructuring plans disclosed last May, which included potential job losses. Thus far, Under Armour has recognised $25m (£19m) in restructuring and impairment charges, alongside $9m (£7m) related to other transformation expenses. The firm anticipates additional charges to be realised within fiscal 2025.
Despite these setbacks, Under Armour has updated its fiscal outlook for 2025, predicting revenue declines at a low double-digit percentage rate. This forecast includes an expected 14% to 16% decrease in North American sales as the company strives to significantly recalibrate its business operations.
Kevin Plank, the founder and now CEO once again, has expressed a positive outlook towards the company’s future. He noted early progress in revitalising Under Armour’s premium market position and mentioned improvements that surpassed initial expectations. “Our renewed energy and alignment are proving to be critical enablers as we work to deliver superior products and storytelling while driving efficiencies and reducing complexity,” Plank stated.
Under Armour remains steadfast in its efforts to align the brand with a premium positioning despite current financial challenges.
