Under Armour will lay off 600 people as part of a pandemic restructuring. Read the CEO's memo to staff.

  • Under Armour will lay off around 600 people, according to a memo from CEO Patrik Frisk obtained by Business Insider.
  • This news comes five months after the company announced it would furlough 6,600 employees in retail locations and distribution centers.
  • Since then, Under Armour has struggled to overcome the effects of the pandemic, with sales dropping by more than 40% in the second quarter.
  • Frisk positioned the layoffs as part of a long-planned restructuring effort and thanked those who lost their jobs.
  • Visit Business Insider's homepage for more stories.

Sporting goods giant Under Armour announced today that it would eliminate around 600 jobs as a result of business challenges stemming from the pandemic. At the end of 2019, Under Armour said it employed 16,400 people. 

CEO Patrik Frisk announced the news in an email sent to some employees this afternoon that was obtained by Business Insider. The memo is reprinted in its entirety below.

An Under Armour representative declined to comment beyond an 8-K filing. 

The company furloughed thousands when the pandemic hit and sales dropped

The news comes after Under Armour saw overall revenue drop more than 40% in the second quarter due to the pandemic. In April, the company said it would furlough 6,600 employees at retail locations and distribution centers.

An Under Armour employee with direct knowledge of the situation said today's layoffs included executives up to the vice president level and followed months of delays. This person said staff expected a round of  layoffs in May but that Frisk had previously announced they would be delayed until August.

This was only the latest in a series of such moves, the person, said, with layoffs often classified under names like "Operation Excellence," which referred to an earlier round that affected the company's Baltimore headquarters in 2019.

In his memo, Frisk wrote that the company would "shift to a DTC-first business."

The 8-K document states that the company agreed on the terms of the restructuring and listed $550 million to $600 mill lion in anticipated expenses, including $30 million in severance and benefit costs "related to a reduction of approximately 600 employees primarily in its global corporate workforce."

According to the document, the restructuring project should be complete by the end of 2020.

Read the full memo below:

Dear Teammates, 

In February, we communicated that we would be undertaking a company-wide restructuring plan and that it would involve personnel reductions for corporate teammates. I am writing today to provide more details on this very difficult decision to eliminate certain corporate teammate positions. We do not take these decisions lightly and we have tried very hard to keep this number as small as possible.

This plan is part of an ongoing transformation that began three years ago. Over the past year, we have changed the structure of our operations and composition of our leadership team. We are taking these steps to make us stronger, as we continue to deliver innovative products, solutions and experiences that make Focused Performers better.

On top of the challenges we were already facing, we have watched over the past several months as COVID-19 has had an unprecedented impact on the world and our business. The pandemic has put pressure on us, like many companies, to be more agile, leaner, tighter, and focus on working smarter as we continue to create high value results.

Navigating these challenges, we have been doing everything possible to prioritize teammates while protecting the business. This includes cutting non-employee costs wherever possible and deferring capital expenditures, but unfortunately these cost reductions are not enough.

As part of our restructuring efforts, we've made the difficult decision to part ways with approximately 600 members of our global workforce. We have begun notifying our corporate teammates that their roles have been eliminated as part of this restructuring effort. Teammates who are impacted by these reductions will be notified by leaders, in partnership with HR. The reduction in our workforce will vary by business unit and region, with the majority of the teammate notifications taking place this week. I also want you to know that we are providing those leaving with severance, healthcare and career transition support as described here, and of course, we will treat everyone with empathy and respect. 

Also, members of your leadership team will connect with teammates whose role or reporting relationship (manager, department, etc.) will be changing as we shift to our new operating model.

We acknowledge that this is difficult news and that our restructuring plan has taken longer than we expected, but these are the necessary steps we must take as a company to propel our business forward, especially in today's challenging environment.

We must rebuild our brand with our target consumer, the Focused Performer, at the center of everything we do, evolve our operating model to simplify the way we work and collaborate, and shift to a DTC-first business.

It is also important to remember that our brand remains strong and exciting. We are still the leader in delivering solutions for Focused Performers and the best at introducing new and innovative products that truly deliver better performance from athletes. Additionally, while everyone in the retail space continues to navigate the challenges presented by the pandemic, we are moving forward with improvements in the digital realm to cater to the new preferences of our consumers. 

Simply put, we are making difficult decisions to streamline our organization now, so that we can emerge from this crisis stronger and better positioned in this dynamic consumer environment. That's what fighting on together is all about. In the coming weeks, we will provide additional updates on our global operating model and long-term strategies and on Tuesday, October 13th, I will host a Global Town Hall.

This week, Business Unit and Regional leaders will also be sending everyone on their teams further information about impacts to their respective functions and will be hosting all-hands meetings this month to take teammates through their function's specific operating model changes.

To close this note, I want to address those parting ways with us by saying thank you for your talent, commitment, and contributions to making Under Armour better.

I'm truly humbled and honored to lead this team and hope you all continue to be safe. 

Take care, 

Patrik

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