A Massive Clothing Company Is Now Planning Layoffs

May 16, 2024

A massive clothing company is now planning layoffs while cutting back on promotion and shifting its focus toward innovation.

Under Armour is laying off an unspecified amount of staff as it focuses on streamlining the business.

Under Armour’s job cuts come as part of a larger restructuring plan, which will cost between $70 million and $90 million, including millions in employee severance costs.

Unfortunately, the company declined to comment on how many positions will be impacted and in what areas of the business, per Retail Dive.

The announcement comes on founder Kevin Plank’s first earnings call after taking back the CEO spot in March.

The executive also said Under Armour is eliminating products that don’t meet its standards, with an aim of cutting SKU count by 25% over the next 18 months, and reprioritizing innovation.

Under Armour reported a 5% revenue decline in Q4, to $1.3 billion, with revenue down 3% for the full year, to $5.7 billion.

Net income for Q4 was $6.6 million, down 96% year over year, and for the year was $232 million, down 38%.

Under Armour expects revenue to be down by double digits in 2025, including an expected drop of up to 17% in North America.

“This is not where I envisioned Under Armour playing at this point in our journey,” Plank said on the call, which included widespread critiques of Under Armour’s strategy and execution over the last few years.

Among his comments, Plank said the retailer is “overly siloed and bureaucratic,” has competing internal agendas and that ongoing turnover in leadership has been “central to our inability to stay agile and decisive.”

In addition to streamlining internal operations, Plank said the brand is cutting agencies, consultants and other outside experts, which have grown to “unacceptable levels,” and reducing meetings and other distractions at the corporate level.

The brand is searching for a new chief marketing officer, has consolidated its global and North American marketing teams and is reorganizing its product and marketing teams around its largest revenue categories as it looks to improve brand storytelling and shift away from discounts.

Under Armour has become too promotional, especially in North America, according to Plank, and the retailer will cut the sitewide promotional days on its website by 50% this year.

The company’s new head of North America, Kara Trent, will simplify that business to focus on digital, premium wholesale partners and team sports.

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Other Economy News Today

Applications for unemployment benefits now surge to new highs, a sign that the white-hot labor market is starting to cool off.

First-time applications for unemployment benefits rose last week to 231,000, the highest level since August, per CNN.

Thursday’s data also showed that the number of continuing claims, or applications from people who have filed for unemployment for at least one week, was 1.78 million.

That’s an increase of 17,000 from the prior week, according to the Bureau of Labor Statistics.

The latest numbers come less than a week after the monthly jobs report showed the US economy added just 175,000 positions in April, less than economists expected and a steep drop-off from prior months.

US employers have now added an average of 245,500 jobs per month, versus 2023’s 251,000-per-month average.

Still, hiring remains strong.

Although the unemployment rate ticked up to 3.9% last month, it’s the 27th consecutive month that the jobless rate has held under 4%, matching a streak last seen in the late 1960s.

Weekly jobless claims data tends to be volatile but, while one week’s worth of data “does not a trend make,” said Chris Rupkey, chief economist at Fwdbonds.

“We can no longer be sure that calm seas lie ahead for the US economy if today’s weekly jobless claims are any indication.”

“Company layoffs are picking up, hinting at caution on the part of companies as they weigh the outlook for the second half of the year,” he wrote in a note Thursday.

The Federal Reserve has been battling inflation by raising its key lending rate in the hopes of slowing the economy.

While the labor market has so far resisted those efforts, remaining white hot for the past 18 months despite 11 rate hikes from the central bank, Fed Chair Jerome Powell said last week that demand has “cooled from its extremely high level of a couple of years ago.”

Ian Shepherdson at Pantheon Economics said in a note Thursday: “We’d need to see at least a month of elevated readings to convince us that the trend really has turned.”

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Also Read: A Giant Company Now Announces Unexpected Layoffs in Virginia

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