Under Armour has joined an expanding list of brands and retailers that have resorted to furloughs, as its business struggles to cope with the impact of the novel coronavirus.
The company on Friday said it would temporarily layoff associates at its full-price and Factory House outlet stores, as well as roughly 600 people at its U.S.-based distribution centers, starting April 12. Eligible employees will receive full health benefits for two months, while distribution center workers will receive bonuses as they continue to work during the health crisis.
“While we’re thankful for the meaningful balance sheet improvements we’ve driven over the past two years — and we are seeing some early signs of recovery in our APAC region — this unanticipated shock to our business has been acute, forcing us to make difficult decisions to ensure that Under Armour is positioned to participate in the eventual recovery of demand,” president and CEO Patrik Frisk said in a statement. “We do not take these decisions lightly and are doing all we can to minimize the impact on our teammates during this time.”
A majority of the sportswear giant’s stores globally remain closed in an effort to halt the spread of COVID-19, which has now infected more than a million people worldwide. To support the business, the Baltimore-based company’s board of directors will be taking a 25% cut to their compensation, while all EVP-level leaders and top executives will see their salaries reduced by 25%.
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Under Armour, which noted a “significant decline in revenue” across its business, also announced the board’s approval of a restructuring plan developed before the pandemic struck its home turf. It expects to incur $475 million to $525 million in pre-tax charges as it terminates leases and cuts back on employee severance and benefits costs. It also anticipates $300 million of restructuring charges related to its New York flagship store.
As it continues to navigate coronavirus-related uncertainties, the company has withdrawn its first-quarter and full-year 2020 guidance. It did not offer an updated outlook.
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