Under Armour on Monday announced it would close one of its primary distribution centers, in Rialto, California, as part of a broader restructuring plan. The retailer plans to exit the facility by March 2026 and incur an additional $70 million in restructuring charges as a result, according to a company press release.
Under Armour first introduced the restructuring plan in May, with an initial cost target of between $70 million and $90 million. With the distribution center closure, the projected charges associated with the plan have now basically doubled, to between $140 million and $160 million. That number includes $37 million in employee severance and benefit costs, though the company wouldn’t confirm to Retail Dive back in May how many employees were being laid off.
The retailer anticipates about two-thirds of the total charges to be incurred by the end of the current fiscal year -- and lowered its full-year outlook as a result. Operating loss, which was already expected to land between $194 million and $214 million for the year, will now hit $220 million to $240 million. Projected loss per share for the year also worsened.
"We continue to proactively identify opportunities to optimize our business to help create a better and stronger Under Armour," Chief Financial Officer David Bergman said in a statement on the news. "As we work to reconstitute our brand and increase our financial productivity over the long term – optimizing our supply-chain network will make us a more efficient, uncomplicated, and agile company."
In another aim at simplifying the business, CEO Kevin Plank in May said the brand would cut its SKU count by a quarter over the following year and a half, trim down on its use of outside consultants and agencies, and reorganize its product and marketing teams. Plank took back the chief executive spot in April, barely a year after former CEO Stephanie Linnartz had started in the role, and has since talked extensively about how to get the brand back on track.
That includes significant investments in marketing and product development, with Plank in the brand’s latest quarter admitting the brand had begun “selling on the logo and a price tag” instead of telling a more impactful brand story. Revenue in the most recent quarter was down 10%, and the retailer swung to a $305 million net loss.
The retailer has also revamped a meaningful amount of executive positions, including naming a new chief product officer, head of the Americas, executive vice president of brand strategy and vice president of commercial for EMEA in this year alone. Last year, the company also tapped John Varvatos as chief design officer, among other changes.
