Under Armour Shares Sink as Restructuring Costs Exceed Estimates

Under Armour (UAA) shares sank in intraday trading Tuesday, a day after the athletic apparel maker warned that the costs of its fiscal 2025 restructuring plan would be much more than initially thought.

Higher Expenses than Expected

The company originally estimated the pre-tax restructuring and related charges for its program would be in the range of $70 million to $90 million. However, upon “further evaluation,” Under Armour identified an additional $70 million in expenses to be incurred over fiscal 2025 and 2026. These expenses are largely related to the decision to exit one of its primary distribution facilities located in Rialto, California, by March 2026.

Through the three months that ended in June, Under Armour incurred about $34 million of those charges, and it anticipates that two-thirds of the revised total costs would be incurred by the end of the current fiscal year.

Impact on Full-Year Outlook

Due to the higher expenses, Under Armour has revised its outlook for its full-year loss per share. The company now expects a range of $0.58 to $0.61, compared to the previous estimate of $0.53 to $0.56. It also anticipates an operating loss of $220 million to $240 million, up from the earlier estimate of $194 million to $214 million.

These changes have negatively impacted investor sentiment, causing shares of Under Armour to sink 10% to $6.71 on Tuesday afternoon. The stock has declined nearly 24% so far this year.

Conclusion

Under Armour’s announcement of higher restructuring costs has raised concerns among investors and led to a decline in its share price. The company’s decision to exit one of its primary distribution facilities in California has resulted in additional expenses that were not initially accounted for. As a result, Under Armour has revised its full-year outlook, expecting a larger loss per share and operating loss.

Investors will be closely monitoring the company’s progress in implementing its restructuring plan and managing its expenses. Any further updates or changes to the plan could have a significant impact on Under Armour’s financial performance and stock price.

Disclaimer: The information provided in this article is for informational purposes only and should not be considered as financial or investment advice.

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