Under Armour has extended its restructuring plan

Under Armour has extended its restructuring plan

US sportswear retailer Under Armour is to cut around 600 corporate jobs as it extends a restructuring plan it laid out in April.

In a filing on Tuesday (8 September), the company said that following a further review, it had identified further opportunities, and earlier this month the board approved a US$75m increase to the restructuring plan, bringing total costs to between $550m to $600m.

As a result of the increases, Under Armour said it now expects to incur up to approximately $235m of cash charges, including up to approximately $135m of contract termination and other restructuring costs, $70m of facility and lease termination costs, and $30m in employee severance and benefit costs related to a reduction of approximately 600 employees, primarily in its global corporate workforce.

Around $365m of non-cash charges consisting of a $291m impairment related to its New York City flagship retail store will also be realised, and up to approximately $74m of intangibles and other asset related impairments.

Under Armour laid out its 2020 restructuring plan in early April, with expectations of incurring up to $525m in costs. The plan, however was developed prior to the company assessing the potential impacts of the Covid-19 pandemic and, at the time, said it would continue to evaluate necessary actions in response to the pandemic.

In its second-quarter, Under Armour experienced a significant decline in revenue across all markets. Revenue was down 41% in the three months to 30 June to $708m. Net losses, meanwhile, widened to $183m from $17.4m a year earlier.

"The company currently anticipates that the majority of the remaining restructuring and related charges will occur by the end of 2020," Under Armour said in its latest filing.

Through the six months ended 30 June 2020, the company had incurred approximately $340m in restructuring and related charges.

Under Armour anticipates significant long-term cost savings as a result of its 2020 restructuring plan. Given the timing of the announcement within the current fiscal year and expected timing of the realisation of additional benefits, the company said it continues to expect approximately $40m to $60m in pre-tax benefits during 2020.