In a regulatory filing, Under Armour said its Board of Directors on September 2 approved a $75 million increase in its 2020 restructuring plan and indicated that it plans to lay off 600 employees as part of its overall 2020 restructuring plan

The $75 million increase will result in the company expecting to absorb total estimated pre-tax restructuring and related charges this year in the range of $550 million to $600 million.

On April 3, 2020, Under Armour announced a 2020 restructuring plan outlining its expectations of incurring approximately $475 million to $525 million of estimated pre-tax restructuring and related charges during 2020. The charges covered

Impairment expenses related its decision to forego opening its New York flagship store in the former FAO Schwartz location, restructuring and employee severance costs were cited among the charges although the number of employees being laid off was never revealed.

As previously disclosed, the restructuring plan was developed prior to the company assessing the potential impacts of COVID-19, and the company stated that it would continue to evaluate necessary actions in response to the pandemic. Under Armour said in its new regulatory filing that it anticipated that these additional $75 million increases in restructuring and related charges would include up to:

  • Approximately $60 million of additional cash charges consisting of up to $40 million in contract termination and other restructuring costs, $15 million in facility and lease termination costs and $5 million in employee severance and benefit costs; and
  • Approximately $15 million of additional non-cash charges consisting of intangibles and other asset-related impairments.

Following these increases, within the updated approximately $550 million to $600 million of total estimated pre-tax restructuring and related charges, the company now expects to incur up to:

  • Approximately $235 million of cash charges including up to approximately $135 million of contract termination and other restructuring costs, $70 million of facility and lease termination costs and $30 million in employee severance and benefit costs related to a reduction of approximately 600 employees primarily in its global corporate workforce; and
  • Approximately $365 million of non-cash charges consisting of a $291 million impairment related to its New York City flagship retail store recognized during the three months ended March 31, 2020 and up to approximately $74 million of intangibles and other asset-related impairments.

Under Armour said it currently anticipates that the majority of the remaining restructuring and related charges would occur by the end of 2020. Through the six months ended June 30, 2020, the company had incurred approximately $340 million in restructuring and related charges ($326 million in non-cash and $14 million in cash related charges). The company anticipates significant long-term cost savings as a result of its 2020 restructuring plan. Given the timing of this announcement within the current fiscal year and expected timing of the realization of additional benefits, the company continues to expect approximately $40 million to $60 million in pre-tax benefits during 2020.

As of December 31, 2019, Under Armour  had approximately 16,400 employees, including approximately 11,300 in its brand and factory house
stores and approximately 1,500 at its distribution facilities. Approximately 7,000 of employees were full-time.

Photo courtesy Under Armour