Under Armour to lay off 600 as pandemic hurts business
The company expects $550 million to $600 in restructuring charges
The NPD Group chief retail analyst Marshal Cohen on how retailers are being impacted by the coronavirus, specifically missing out on the back-to-school shopping season, which used to be the second-biggest retail period of the year for many brands.
Under Armour will lay off about 600 employees from its global workforce as part of cost-cutting measures related to the coronavirus pandemic, the struggling retailer said in an 8-K filing on Tuesday.
The company expects to incur $550 million to $600 million in charges during its restructuring in fiscal 2020, up $75 million compared to its previous estimates. The sum includes approximately $235 million in charges related to employee contract terminations, severance packages and lease terminations.
BROOKS BROTHERS BUYER EXPLAINS UNLIKELY BET ON RETAIL
The majority of costs related to its restructuring plan are expected to occur before the end of 2020, the filing said. Under Armour said it “expects significant long-term cost savings as a result of its 2020 restructuring plan,” including roughly $40 million to $60 million in pre-tax benefits.
National Retail Federation president and CEO Matthew Shay says consumer confidence is still extremely high, despite the pandemic, and he's encouraged to see growth as the economy continues to reopen.
Under Armour has struggled to maintain sales in recent years amid a shift toward e-commerce and a consumer preference for athleisure over performance-based apparel.
ROBINHOOD TO STOP SHARING APP'S POPULAR STOCKS
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| UAA | UNDER ARMOUR INC. | 9.80 | +0.23 | +2.46% |
The company first announced plans to restructure its business in April, days after the worsening pandemic forced retailers around the country to a near-complete halt. The initial plan was developed prior to the pandemic and company officials said they would need to adjust their projections in order to account for the unexpected interruption to business.
CLICK HERE TO READ MORE ON FOX BUSINESS
Under Armour furloughed 600 workers at its U.S.-based distribution centers in April. At the time, CEO Patrik Frish said the pandemic had resulted in a “significant decline in revenue.”