A massive clothing brand is now closing a distribution center in California, part of a broader restructuring plan, the company confirmed.
Under Armour announced on Monday that it will close its primary distribution center in Rialto, California, as part of a comprehensive restructuring strategy.
The company plans to exit the facility by March 2026, resulting in an additional $70 million in restructuring charges, according to a press release.
The restructuring plan was first introduced in May, initially estimating costs between $70 million and $90 million.
However, with the closure of the distribution center, the projected charges have nearly doubled, now ranging from $140 million to $160 million.
This figure includes $37 million earmarked for employee severance and benefits, although the company has not disclosed how many employees will be affected.
Under Armour anticipates that about two-thirds of these charges will be incurred by the end of the current fiscal year, leading to a revised full-year outlook.
The company now expects an operating loss of $220 million to $240 million, a decline from the previous estimate of $194 million to $214 million.
Projected loss per share for the year has also worsened.
Chief Financial Officer David Bergman stated, “We continue to proactively identify opportunities to optimize our business to help create a better and stronger Under Armour.”
He emphasized that optimizing the supply chain will enhance the company’s efficiency and agility as it works to reconstitute its brand and improve financial productivity over the long term.
In an effort to simplify operations, CEO Kevin Plank announced in May that the brand would reduce its SKU count by 25% over the next 18 months, decrease reliance on external consultants, and reorganize product and marketing teams.
Plank returned to the CEO role in April, just a year after former CEO Stephanie Linnartz took the position, and has been vocal about strategies to realign the brand.
This includes significant investments in marketing and product development, as Plank acknowledged that the brand had begun to focus too heavily on selling based on logos and price tags, rather than conveying a compelling brand narrative.
The most recent quarter saw a 10% decline in revenue, resulting in a net loss of $305 million.
Under Armour has also made notable changes in its executive team, including appointing a new chief product officer and head of the Americas, as well as a new executive vice president of brand strategy and vice president of commercial for EMEA this year.
Last year, John Varvatos was brought on as chief design officer, among other leadership adjustments.
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Other Economy News Today
A massive rental company with 34k locations now shuts down its operations after filing for bankruptcy and 22 years in business.
Users of movie rental company Redbox were left saddened after it was announced that it would be shutting down operations.
The announcement comes after the rental company’s parent company, Chicken Soup for the Soul Entertainment, filed for Chapter 11 bankruptcy.
According to court documents obtained by the Washington Post, the Connecticut-based company claimed to be one billion dollars in debt.
As a result, Redbox, which was a staple of many grocery stores including Walgreens, and CVS will be shuttered.
Many fans took to social media to express how upset they were with the loss.
“I knew it was coming, sadly,” UltraVada wrote in a post on X, formerly Twitter.
“It was inevitable,” a second person mourned.
“I knew this would happen when I heard they filed for Bankruptcy but its still sad to hear. I have a lot of fun memories of Redbox,” a third person lamented.
“I still don’t think this will be or ever be the end of physical media as we do still get remasters of some movies in 4k/Bluray.”
One person revealed that they had forgotten the rental service had existed.
Some users were not surprised by the announcement.
“Not surprised since nobody really rents videos anymore with the rise of streaming and what not,” one user admitted.
“Also kinda remember getting into a feud with them on here.”
One user also pointed out that the last remaining Blockbuster, located in Bend, Oregon, managed to outlive Redbox.
Redbox was acquired by Chicken Soup for the Soul Entertainment (CSSE) in 2022 and became one of the company’s flagship video-on-demand streaming services.
At its peak, CSSE operated more than 20,000 DVD rental kiosks across the country.
The company’s filing means that the company’s more than 1,000 employees will be laid off, per The Wall Street Journal.
It was also reported by Deadline that many employees at CSSE hadn’t received their paychecks and had medical benefits cut in late June.
Also Read: This Massive Mall Retailer Is Now Closing In California
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