Under Armour has reinforced its management team with two appointments, but it has earmarked an enlarged budget for an estimated 400 extra layoffs this year.
Under Armour already announced a round of 277 staff cuts last year to shift its resources to more productive areas, such as international expansion and online retailing, and to compete more efficiently with Nike and Adidas. The latest cuts should be completed by the end of March, representing the final component and update to Under Armour's restructuring program. In February, the company said it expected at least $75 million in annual savings from this plan, starting from next year.
Among the latest appointments is Alessandro de Pestel, who has joined as chief marketing officer. He takes over from Adrienne Lofton, who has left Under Armour and is reportedly headed to Nike. De Pestel has been in marketing for more than two decades, most recently as executive vice president of marketing, communications and consumer insights at Tommy Hilfiger. Prior to that, he was international communications director for Christian Dior Parfums in France and vice president of global marketing for Omega Watches in Switzerland. Working from Under Armour's head office in Baltimore, De Pestel has become a member of its executive team and he reports directly to Patrik Frisk, president and chief operating officer.
The second recruit is Ann Funai, Under Armour's new senior vice president for engineering. She previously held senior functions in system architecture, quality assurance and development operations, among others. Her latest assignment was as chief technology officer at People Admin. Funai has been placed in charge of the engineering function across Under Armour's digital ecosystem, including fitness applications and global ecommerce. She is based in Austin, Texas, and she will report to Paul Fipps, chief digital officer.
Under Armour announced earlier that its restructuring plan would lead to pre-tax restructuring and related charges of $190 million to $210 million this year. But the company said in September that it has identified about $10 million of cash severance charges related to a reduction of about 3 percent of its staff. This raises the projected pre-tax charges for the program to a range of about $200 million to $220 million.
The extra costs have led to an update in Under Armour's guidance for the full year. It predicts that it will end the year with an operating loss of about $60 million, compared with the previous range of $50 million to $60 million. Excluding the impact of the restructuring plan, adjusted operating income is projected to reach between $140 million and $160 million, narrowed down from the previous range of $130 million to $160 million. While adjusted diluted earnings per share were previously projected to end up between $0.14 and $0.19, the forecast has again been narrowed to a range of $0.16 to $0.19.
