Under Armour extends store closings, lays off hundreds of employees

By

Gabriella Lacombe

Published
Apr 6, 2020

Under Armour, Inc. has extended its store closures until further notice and has temporarily laid off over 600 U.S. employees, as part of a new series of actions to address the financial impact of the Covid-19 pandemic. 

The company, which first announced the two week temporary closure of all of its North American stores starting March 16, will make decisions to re-open on a country-by-country basis based on guidance provided by local health authorities.

In another update, the company will temporarily lay off employees that work in its U.S. full price and outlet stores starting April 12, as well as approximately 600 employees from its U.S.-based distribution centers. 

The company said it will begin paying premium bonuses to the distribution center employees who will continue to work. In addition, Under Armour will cover full health benefits for benefit-eligible employees for approximately two months during the temporary layoff period.

Effective immediately, the company's board of directors will be reducing its compensation by 25%, and all of the company's executive vice presidents and above will be taking a 25% salary cut through the duration of the crisis, the company said. 

In addition to new cut backs, Under Armour's board of directors has agreed on a new restructuring plan to further improve the company's future profitability and cash flow generation. In connection with this plan, the company said it expects to incur total estimated pre-tax restructuring and related charges in the range of $475 million to $525 million during 2020.

Broken down, the total charges include $175 million of cash-related restructuring charges, including up to $55 million in facility and lease termination costs; $25 million in employee severance and benefit costs; $95 million in contract termination and other restructuring costs; $350 million of non-cash charges comprised of an impairment of approximately $290 million related to the company's New York City flagship storeand $60 million of intangibles and other asset related impairments.

Under Armour noted that this restructuring plan was developed prior to assessing the potential impacts of the Covid-19 pandemic on the company's business, and the company is continuing to evaluate what future actions may be necessary.