Under Armour stock is plummeting so rapidly, not even the stardom of Stephen Curry can save it.
On Tuesday, the sports apparel company announced that it’d be laying off 2 percent of their 15,000 employees following the revelation of a second-quarter loss. The three-month period saw a loss of three cents per share. In 2016, Under Armour announced a total loss of 12 cents per share.
Like any halfway-decent CEO, in the announcement via a conference call, CEO Kevin Plank almost managed to make the downsizing sound like a good thing:
Under Armour has experienced extraordinary growth over the last three years where we have more than doubled our revenue from $2.3 billion to $4.8 billion and our teammate headcount from 8,000 to 15,000 worldwide. Amid a rapidly changing global retail landscape, we evaluated several areas of our business where we could improve efficiency and ensure increased agility to continue to deliver best-in-class product to serve the needs of today’s consumer. As a result, we are streamlining all aspects of our organization to improve our business operations and deliver against our long-term strategic goals. As a part of this new alignment, a workforce reduction will impact approximately 2 percent of our global workforce. As we execute against these difficult and necessary steps to evolve from good to great operations, our vision remains the same—making all athletes better through passion, design, and the relentless pursuit of innovation.
Under Armour’s rise to one of the top sportswear companies in the world was rapid. But Plank warned investors to no longer expect the ridiculous growth they’d gotten used to seeing.
“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,” he said on Tuesday, according to CNBC.
Stephen Curry is by far the biggest star under the Under Armour banner. The weak sales of his signature shoes haven’t helped the company’s situation.
“Our success in basketball hasn’t been without its learning,” Plank said on an earnings conference call in April. “As we launched the Curry 3 late last year, our expectations continued to run high. And while the 3 played very well on court for Stephen Curry and our athletes, a sluggish signature market and a warm consumer reception led to softer-than-expected results.
“This has created an inventory imbalance that we are working through. One that, yes, is baked into our full-year outlook which hasn’t changed and, most importantly, yielded lessons we’re applying ahead with the Curry 4 and beyond.”