Updates Reflect Impact of Reduction in Global Workforce
Source: Under Armour Updates 2018 Restructuring Plan And Full Year 2018 Outlook
I look to write something about UA everyday. When I find something dope I write about it. Unfortunately I have to make up most of my posts because there simply isn’t enough information about the good that UA is accomplishing that is present on their own website. Every time information arrives about Under Armour in mainstream media it’s bad and it’s lately been about layoffs. When I see restructuring I return to one moment, or to be specific one move by UA:
Under Armour Layoffs and Why Connected Fitness Was a Mistake | 2nd Quarter 2017
I am not an analyst and I don’t pretend to be as fluent on the financial aspects of a business, but I do know business and I know the sneaker industry. More important I understand digital. The work Under Armour started 4 years ago when they turned into a tech company by acquiring all of the digital assets which fell under the Connected Fitness division, was the wrong play. Where Nike doubled down and built out what became known as their CDO, Consumer Direct Offense, a strategy that is built primarily on native digital products… keyword NATIVE; Under Armour made the mistake of building from the outside-in. The restructuring plan is presented as:
Previously, the company expected to incur total estimated pre-tax restructuring and related charges of approximately $190 million to $210 million in connection with its 2018 restructuring plan. Following further evaluation, the company has identified approximately $10 million of cash severance charges related to an approximate 3 percent reduction in its global workforce. Accordingly, it now expects approximately $200 million to $220 million of pre-tax restructuring and related charges to be incurred in 2018. The reduction in workforce is expected to be completed by March 31, 2019 and represents the final component and update to the company’s 2018 restructuring plan.
According to Statista UA employs around 16000 people. This means around 400 people will be out of work by next March. My honest opinion is that this won’t fix the problem.
@IBD_elow Breaks that Stores are ‘Canceling’ Under Armour Orders
In the article above I stated, “The company has been stagnant after stating last year during Q3 2016 that they would ramp up marketing expenses which would hinder margins. They have yet to ramp up marketing and Wall Street is taking notice that the brand is basically relying on their past growth to convey that they will turn the corner again.” Since I wrote this UA has done very little to repair their issues. They have been cutting and cutting. As chefs slice onions they begin to cry. As they continue cutting, they stop crying because their eyes get comfortable with the gas. Soon the onion is diced to the point where it’s gone. Under Armour has fixed a lot of the issues I thought were wrong, but they have yet to do the one thing Kevin Plank said he would do, invest in marketing. I know it sounds simple, but there is a team of people in UA who have created these amazing campaigns and instead of building that division and promoting those campaigns UA doesn’t, or it least that’s what it looks like to me.
Use the source link to read the news release.
