Under Armour lowers outlook, cutting about 280 jobs

Under Armour is cutting approximately 280 jobs from its global workforce and lowering its full-year revenue outlook, overshadowing a strong second-quarter and extending woes for companies in the retail sports sector.

Shares declined more than 5 per cent in premarket trading Tuesday.

A board-approved restructuring plan will come with about $110 million to $130 million in related charges this year. That includes approximately $15 million in employee severance and benefits costs.

Under Armour Inc. now expects full-year revenue growth of 9 per cent to 11 per cent, down from a previous outlook of 11 per cent to 12 per cent growth. The chain foresees full-year adjusted earnings between 37 and 40 cents per share.

For the quarter ended June 30, the sports clothing and accessories company lost $12.3 million, or 3 cents per share. That compares with a loss of $52.7 million, or 12 cents per share, a year earlier.

That’s better than the loss of 6 cents per share expected by analysts, according to a poll by Zacks Investment Research.

Revenue for the Baltimore company climbed to $1.09 billion, from $1 billion, squeaking by Wall Street projections.

Anthony Riva, an analyst with GlobalData Retail, said in a client note that even though Under Armour’s results were an improvement, there’s still some disappointment because revenue growth in North America seems to be stalling and interest in fitness-related gear is softening.

Riva says there also seems to be confusion among consumers about what Under Armour stands for and what parts of the sports market it specializes in.

“This is partly a consequence of Under Armour wanting to ‘own’ many different segments of the sports performance category, but in a softer demand environment where consumers are more selective about what they buy, such a lack of focus is harmful,” he wrote.