In a decisive move to address recent performance setbacks, Under Armour has announced a significant reduction in product offerings and a restructuring plan that includes layoffs, aiming to refocus the brand and drive future growth.
Strategic Restructuring
Under Armour is embarking on a comprehensive restructuring plan, which is expected to incur costs between $70 million and $90 million. This initiative includes staff layoffs, although specific numbers and affected business areas have not been disclosed. The restructuring is part of a larger effort to streamline operations and reduce complexity within the organization.
Product Portfolio Optimization
The company has set a goal to reduce its SKU count by 25% over the next 18 months, targeting products that fall short of brand standards. This move is aligned with a broader strategy to enhance product quality and innovation. Under Armour’s recent financial reports indicate a 5% revenue decline in Q4 and a 3% decrease for the full year, with significant drops in net income. The brand anticipates a challenging outlook for 2025, with revenue expected to decline by double digits, including a potential 17% decrease in North America.
Revitalizing the Brand
Under Armour’s founder, Kevin Plank, who has resumed the CEO role, criticized the company’s recent performance and identified internal issues such as siloed operations and leadership turnover as obstacles to agility and decisiveness. Plank’s strategy for revitalization includes reducing reliance on external agencies and consultants, cutting down on corporate distractions, and refocusing on core revenue categories. The brand aims to shift away from heavy discounting, halving promotional days on its website, and enhancing brand storytelling.
Under Armour is prioritizing men’s apparel once again, without neglecting the women’s and footwear segments. The company plans to introduce exclusive products for its direct-to-consumer business and revamp product descriptions and tags. However, new product lines are not expected to hit stores until the fall-winter collection of 2025.
Looking Ahead
Despite the anticipated challenges, Plank remains optimistic about Under Armour’s potential to rebuild a winning culture. The brand’s focus on innovation and streamlined operations is seen as crucial to its turnaround, with management committed to making difficult decisions to reposition the brand for success.
