Sportswear maker, Under Armour, has revealed plans to revamp its operations and revive demand for its brand in the United States, following a surprising fall in sales for the year. The company's CEO, Kevin Plank, announced a series of strategic measures, including inventory control and job cuts, to streamline operations and restore growth.

In an effort to address operational inefficiencies and optimize resources, Plank emphasized the need to narrow down the company's product strategy. "Too many areas of our product strategy have been designated as priorities. This has caused a strain on resources, which has diluted our ability to have a consumer-centric point of view," said Plank, who recently resumed the position of CEO in April after leaving in 2019.

Under Armour's announcement comes amidst disappointing forecasts shared by industry peers Nike and Lululemon Athletica, as weak discretionary spending continues to impact the demand for sportswear in the U.S. To counter the challenging retail landscape, Under Armour plans to add more premium price points in its direct-to-consumer channel, aiming to rekindle brand appeal. It also intends to reduce its style count by approximately 25% over the next 18 months.

Analysts have hailed Under Armour's proposed changes as a significant overhaul. "The changes being made are the most aggressive we have seen to overhaul Under Armour, showing management is willing to forego the short-term for the long-term health of the brand," commented Telsey Advisory Group analyst Cristina Fernandez.

As part of the restructuring plan, Under Armour anticipates incurring pre-tax charges of up to $90 million, which includes costs related to employee severance. The company's fiscal 2025 revenue is projected to decline at a low double-digit percentage rate, in contrast to earlier LSEG estimates speaking to a 2.1% rise. Additionally, Under Armour expects its annual adjusted earnings to range between 18 cents and 21 cents per share, falling short of estimates of 59 cents.

Under Armour's bold strategy shift indicates a commitment to reposition the brand for long-term sustainability. While short-term challenges may lie ahead, the company remains determined to navigate the current retail landscape and regain momentum in the sportswear industry.