Under Armour, a prominent player in the sportswear industry, faces a considerable upward revision in its full-year net loss expectations as it grapples with escalating restructuring costs. The company has revealed its anticipation of approximately $70 million in expenses primarily linked to the closure of a major distribution facility in California, which is slated for shutdown by March 2026.
This adjustment has led to a recalibration of the projected pre-tax and related charges stemming from the restructuring initiative, now estimated to be between $140 million and $160 million for fiscal years 2025 and 2026, substantially higher than the previous forecast of $70 million to $90 million. In terms of cash-related expenditures, Under Armour now estimates these costs could reach up to $75 million.
This figure includes $30 million earmarked for employee severance and benefits, alongside another $45 million attributed to various transformational initiatives. Notably, non-cash charges are anticipated to be as high as $85 million, incorporating $78 million related to facility, software, and other asset impairments. The sports apparel and footwear manufacturer has revised its projections concerning net losses to an estimated range of $0.58 to $0.61 per share for fiscal year 2025.
In contrast, the guidance issued just last month suggested a somewhat more optimistic outlook, forecasting a loss of $0.53 to $0.56 per share. Despite the increasing loss projections, the company has maintained its per-share adjusted earnings outlook within a narrower band of $0.19 to $0.22, indicating some resilience in its broader financial expectations despite headwinds. Current market analysis, as reflected in the consensus on Capital IQ, suggests a GAAP loss of $0.26 per share alongside a normalized earnings per share (EPS) of $0.23, signifying ongoing challenges ahead for the brand. Moreover, Under Armour is preparing for a substantial full-year operating loss of between $220 million and $240 million, a marked escalation from the earlier guidance of $194 million to $214 million.
Nevertheless, the adjusted operating income is still forecasted to reside in the range of $140 million to $160 million, reflecting a degree of operational stability amidst the financial turmoil. The one-time nature of these costs has enabled Under Armour to reaffirm its forecasts for full-year adjusted EPS and operating income, according to a note from Truist Securities sent to clients.
The brokerage noted, "While we have been encouraged by the company's strategic turnaround efforts and the readiness to 'rip the band-aid off' in pursuit of better brand positioning, we maintain our hold rating until more visibility emerges regarding brand enhancements." Under Armour's restructuring strategy was initiated in May, focused on uncovering financial and operational efficiencies within the organization.
During its fiscal first quarter, which concluded in June, the company incurred approximately $34 million in both cash and non-cash charges related to this strategic program. Management anticipates that roughly two-thirds of the new total expenses will be recorded by the conclusion of the current fiscal year, highlighting the ongoing commitment to rectifying its financial situation. Chief Financial Officer David Bergman underscored the company's proactive stance in identifying avenues for operational optimization.
He stated, "We continue to proactively identify opportunities to optimize our business to help create a better and stronger Under Armour. As we work to reconstitute our brand and increase our financial productivity over the long term, optimizing our supply-chain network will make us a more efficient, uncomplicated, and agile company." This sentiment encapsulates Under Armour's dedication to not only addressing immediate financial challenges but also establishing a robust foundation for future growth..