In a statement, Under Armour Inc. announced that its restructuring program will cost more than the company previously expected, in both jobs and dollars, and raised the lower end of its fiscal 2018 earnings forecast.
Under Armour plans to cut nearly 400 jobs, about 3% of its global workforce, by March 31, 2019, according to SGB Media — the final step in its restructuring plan. The company attributes the 2018 restructuring plan update to an organizational and process redesign intended to optimize the company’s strategic growth initiatives and overall business performance.
Previously, the company expected to incur total estimated pre-tax restructuring and related charges of approximately $190 million to $210 million in connection with its 2018 restructuring plan, according to Under Armour. Now, the company says cutting will 3% of its workforce will cost approximately $10 million in cash severance charges. Thus, UA now expects approximately $200 million to $220 million on pre-tax restructuring and related charges to be incurred in 2018.
“In our relentless pursuit of running a more operationally excellent company, we continue to make difficult decisions to ensure we are best positioned to succeed,” said Under Armour Chief Financial Officer David Bergman, in a statement. “This redesign will help simplify the organization for smarter, faster execution, capture additional cost efficiencies, and shift resources to drive greater operating leverage as we move into 2019 and beyond.”
Updated Fiscal 2018 Outlook
Based on the operational efficiencies driven by this action, the company updated the following expectations for its full year 2018 outlook:
- Operating loss is now expected to be approximately $60 million versus the previous range of $50 million to $60 million. Excluding the impact of the restructuring plan, adjusted operating income is now expected to be $140 million to $160 million versus the prior expectation of $130 million to $160 million.
- Excluding the impact of the restructuring efforts, adjusted diluted earnings per share is now expected to be in the range of $0.16 to $0.19 versus the previously expected range of $0.14 to $0.19.
Source: Under Armour