Under Armour to Cut Jobs, Product Mix

Under Armour announced a broad restructuring plan on Thursday as it said sales in its largest market, North America, plunged 10 percent and predicted the trend will get worse throughout its current fiscal year. The athletic apparel retailer also saw profits sink by more than 96 percent during its fiscal fourth quarter, compared with the year-ago period. It’s unclear how many employees Under Armour will lay off as part of the restructuring, but the plan is expected to cost between $70 million and $90 million, a portion of which will be used for employee severance and benefits costs. Founder and CEO Kevin Plank announced plans to reduce its style counts by roughly 25 percent over the next 18 months and cut down the amount of time it takes to get a product from an idea to a showroom floor.

Total Retail's Take: During a call with analysts, Plank was open about Under Armour's current struggles and the factors that he believes have led to them. "With several CEOs and heads of products, marketing and North America over the past half decade, ongoing turnover of critical leadership has been central to our inability to stay agile and decisive," he said.

In addition to leadership volatility, Plank believes that Under Armour has strayed too far from its core brand product — men's apparel. This has resulted in Under Armour becoming more "promotional and commoditized,” according to Plank.

“We are simply doing too much stuff," Plank told the analysts. "There are too many products, too many initiatives, too much of too much.”

Under Armour is set to begin a period of reorganization and belt tightening. The priority will be on driving men's apparel sales, including footwear, and re-establishing a premium position for the brand. This is what Plank and his leadership team are tasked with. The plan is to endure short-term pains in return for long-term gains.