Under Armour (NYSE:UAA) shares were deep in negative territory in Thursday’s premarket trading as the company’s failure to manage inventories, disappointing promotional campaigns, and strategic missteps resulted in disappointing results for FQ4, and profit guidance for FY25 that was significantly below Wall Street’s expectations.
The company earned an adjusted profit of $0.11 per share which was three cents above expectations, but down 39% a year ago on a 5% decline in revenue. Wholesale revenue was down 7%, while DTC revenue was flat. By category, apparel sales dropped 1%, accessory sales fell 7%, and footwear revenue was down 11% from a year ago.
With the help of lower freight costs, the company’s gross margin improved 170 basis points to 45%.
By region, North American sales were down 10% while international sales were up 7%, bolstered by strength in Latin America (+20%), followed by EMEA (+10%), and Asia/Pacific (+1%).
In recognition of the challenges facing the company, Under Armour (UAA) said it will undertake a restructuring plan that will result in pre-tax charges of approximately $70M to $90M including up to $50M in cash-related charges consisting of employee severance and $40M in non-cash charges.
“Due to a confluence of factors, including lower wholesale channel demand and inconsistent execution across our business, we are seizing this critical moment to make proactive decisions to build a premium positioning for our brand, which will pressure our top and bottom line in the near term,” CEO Kevin Plank said.
