BALTIMORE - Under Armour, Inc. (NYSE: NYSE:UAA, UA) has announced revisions to its Fiscal 2025 restructuring plan, which now includes exiting a primary distribution facility in Rialto, California, by March 2026. The sportswear company expects to incur pre-tax restructuring and related charges of approximately $140 million to $160 million during Fiscal 2025 and Fiscal 2026, an increase from the previously anticipated $70 million to $90 million.
The updated charges comprise up to $75 million in cash-related charges, including around $30 million for employee severance and benefits, and $45 million for transformation initiatives. Non-cash charges are estimated up to $85 million, with around $7 million for employee severance and benefits, and $78 million for facility, software, and asset-related charges and impairments.
As of June 30, 2024, Under Armour had already incurred approximately $34 million in restructuring charges ($19 million in cash and $15 million in non-cash). The company anticipates that about two-thirds of the revised plan's charges will be recorded by the end of fiscal year 2025.
Under Armour's Chief Financial Officer, David Bergman, commented on the update, stating the company is proactively seeking ways to optimize its business to enhance its brand and financial productivity. He emphasized the importance of improving supply chain efficiency to streamline the company's operations.
In light of these changes, Under Armour has also revised its fiscal 2025 outlook. The operating loss is now projected to be between $220 million and $240 million, compared to the earlier estimate of $194 million to $214 million. The adjusted operating income, excluding restructuring charges and litigation reserve expense, is expected to be $140 million to $160 million. Diluted loss per share is forecasted to be $0.58 to $0.61, with an adjusted diluted earnings per share of $0.19 to $0.22.
The press release clarified that the adjusted financial measures exclude litigation reserve expenses and the impact of the restructuring plan and related charges. These non-GAAP financial measures are intended to provide additional insights into the company's operations but should not be considered in isolation from the GAAP results.
Under Armour, a leader in performance athletic wear, aims to empower athletes through innovative products and experiences. This announcement is based on a press release statement and reflects the company's efforts to enhance its long-term strategies amid a changing economic landscape.
In other recent news, Under Armour, Inc. has delivered a strong fiscal performance that beat expectations in its first quarter. The company reported an adjusted earnings per share (EPS) of $0.01, outperforming the anticipated loss of $0.08, primarily due to increased sales in North America and Europe, as well as improved gross margins. BofA Securities has responded to these developments by raising its price target for Under Armour from $8.00 to $9.00, while maintaining a neutral rating on the shares.
For the fiscal year 2025, Under Armour has reiterated its sales guidance, predicting a low double-digit decline, but has slightly raised its EPS forecast to a range of $0.19-0.22. This includes second-quarter EPS guidance of $0.18-0.20. Despite a 10% decrease in first-quarter revenue, totaling $1.2 billion, and an operating loss of $300 million, the company has highlighted a gross margin improvement and a robust cash position of $885 million.
Under Armour is also implementing changes in marketing strategy, focusing on full-price selling and storytelling to boost brand affinity. The company is expanding its influencer marketing and collegiate partnerships, including a new agreement with USA Football. Operational enhancements are underway with a focus on supply chain modernization and direct-to-consumer improvements. These are the recent developments as the company continues to navigate current challenges and strengthen its market position.
InvestingPro Insights
As Under Armour, Inc. (NYSE: UAA, UA) navigates through its restructuring plan, investors and analysts are closely monitoring the company's financial health and stock performance. According to recent data and analysis from InvestingPro, there are several key metrics and insights that could be particularly relevant for stakeholders:
InvestingPro data shows that Under Armour's market capitalization stands at approximately $3.09 billion. While the company has struggled with profitability in the last twelve months, analysts predict a turnaround, forecasting profitability for the current year. This optimistic outlook is bolstered by the fact that Under Armour's liquid assets exceed its short-term obligations, indicating a degree of financial stability.
The company's price-to-earnings (P/E) ratio is currently negative at -39.68, reflecting past challenges in generating net income. However, when adjusted for the last twelve months as of Q1 2025, the P/E ratio improves to 16.53, suggesting better earnings relative to the stock price. This is further supported by a PEG ratio of 0.32 during the same period, indicating potential for growth relative to earnings expectations.
InvestingPro Tips highlight that Under Armour's stock price movements have been quite volatile, which may be a point of consideration for investors seeking stability. However, it's noteworthy that 19 analysts have revised their earnings estimates upwards for the upcoming period, which could signal growing confidence in the company's financial prospects. Moreover, Under Armour does not pay a dividend, which may influence investment decisions for those focused on income-generating stocks.
For investors seeking more in-depth analysis and additional InvestingPro Tips, Under Armour's profile on InvestingPro includes a total of 7 tips that can provide further insights into the company's financial performance and stock valuation.
These insights and metrics from InvestingPro offer a snapshot of Under Armour's current financial position and market sentiment, which are critical as the company implements its restructuring plan and aims to enhance its brand and financial productivity amidst a dynamic economic environment.
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