Under Armour (UAA -10%) is experiencing a decline after updating its FY25 restructuring plan. While UAA reaffirmed its FY25 adjusted EPS outlook at $0.19-0.22, it also increased its pre-tax restructuring and related charges, which are not included in the adjusted EPS.
- UAA identified approximately $70 million in additional charges, mainly due to its decision to exit a primary distribution facility in Rialto, California, by March 2026. The company now anticipates $140-160 million in pre-tax restructuring and related charges for FY25 and FY26.
- Kevin Plank, UAA's founder, will return as CEO effective April 1, 2024. Investors reacted negatively to this announcement, possibly due to concerns over Plank's previous tenure from 1996 to 2019.
- Plank replaces Stephanie Linnartz, who was CEO for just over a year and had been making positive changes, including new leadership in product, design, consumer, supply chain, and communications teams, as well as streamlining business operations.
- Investor sentiment suggests a preference for retaining Linnartz or hiring an outsider to bring a fresh perspective.
UAA's stock surged in early August after reporting a surprise profit in Q1 (Jun). However, the latest news is dragging the stock down. Although the adjusted EPS outlook remains unchanged, the increased charges are disappointing investors, raising doubts about UAA's ability to manage the restructuring effectively and turn the brand around.
