Under Armour may have reported a better than expected loss on Tuesday in its earnings report, as well as a restructuring plan, but it was something else that may have been responsible for dragging shares lower.
The sports apparel company announced that it would be cutting 2% of its workforce and put out a dismal outlook. It also revealed that it had closed 33 factory outlets and 23 Under Armour-branded stores over the course of the 12 months ended June 30.
Shares of the stock fell over 8% in pre market trading alone after the news before gaining back some of the losses.
Under Armour reported a loss of 4 cents for its earnings per share, adjusted. The Street had been looking for a loss of 6 cents.
Revenue was reported at $1.088 billion. The Street had called for $1.077 billion.
Looking ahead, the company has forecast earnings for the full year to be within 37 and 40 cents a share. Analysts had forecast 42 cents a share. Revenue is forecast to grow between 9 to 11% when previously the company had expected 11 to 12%.
Jefferies analyst Randal Konik remains optimistic about th e company and wrote, “UAA is one of the few brands that matter in the athletic space.”
According to Konik, the company has a significant opportunity to scale its North American segments further, specifically in women’s wear and footwear.
“We believe this brand is here to stay,” Konik said.
It was in March that Kohls began selling Under Armour products. Under Armour CEO Kevin Plank remarked back then about the partnership, “The female consumer is [in Kohl’s], she’s shopping and she’s buying. We think there is a big opportunity.”
As the company restructures, it will result in job cuts. A spokeswoman from the company told CNBC that the restructuring will result in cutting 2% of Under Armour’s workforce around the world. This is about 280 jobs. According to the spokeswoman, most of them will be at the company’s Baltimore headquarters.
“After 6½ years of more than 20 percent top-line growth that ended in the fourth quarter of last year, we are clearly operating in a different environment, particularly in our largest market [of] North America,” Plank said on Tuesday.
“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,” he added.
Disclaimer: We have no position in Under Armour Inc Class A (NYSE: UAA) and have not been compensated for this article.