Under Armour Is Cutting 2% of Its Workforce
A world-renowned brand of athletic footwear, apparel, and accessories, Under Armour Inc (NYSE:UAA), has announced that the company is laying off about 280 employees as part of its restructuring plan.
Under Armour Inc has confirmed that half of these layoffs will be taking place at its headquarters in Baltimore, Maryland.
The layoffs account for roughly two percent of Under Armour’s global workforce of about 15,000 employees.
The job cuts were announced in the company’s latest quarterly earnings call, when the retailer reported another dismal quarter of losses. Although the reported numbers beat Wall Street’s estimates, they were disappointing when compared to its rivals Nike Inc (NYSE:NKE) and Adidas AG (ETR:ADS).
Under Armour CEO Kevin Plank has now undertaken a restructuring effort to turn the business around. As part of his plan, the company is closing underperforming stores and cutting employee costs through job cuts.
Store Closures Due to Online Competition
In the last 12 months alone, Under Armour is reported to have closed 33 factory outlets and 23 Under Armour-branded stores.
Like all other American retailers, Under Armour is also facing a shift in consumer trends. It is vividly obvious now that American millennials, who are equipped with digital devices and fast-speed Internet, are choosing to conduct shopping and related activities online.
In particular, social media trends—many of which are found to be taking off from celebrity endorsements on “Instagram” and “Snapchat”—are playing a significant role in forming consumer tastes.
Meanwhile, Amazon.com, Inc. (NASDAQ:AMZN) has also emerged as a big threat to traditional retailers for offering customers cheaper buying options.
This has forced retailers to reevaluate their business strategies and increase their digital presence.
Under Armour has turned its focus towards improving its online business and speeding up product deliveries to the market. The company is also aggressively investing in technology, particularly its smartphone apps to attract consumers.
Following the earnings release, Plank said in a statement, “We are utilizing 2017 to ensure that operations across our diverse portfolio of sport categories, distribution channels and geographies are optimized as we are building a stronger, faster and smarter company.”
Plank is also making an effort to change the brand’s image from a sports-focused brand to a lifestyle brand in order to reach out to a bigger target market.
“Under Armour shares fall as retailer cuts 2% of its workforce, trims 2017 sales outlook,” CNBC, August 1, 2017.