The layoffs were disclosed in a federal securities filing Tuesday in which the Baltimore-based company said it is increasing the cost of that plan by $75 million. Under Armour’s board approved the additional spending Sept. 2, bringing the cost of restructuring to about $550 million to $600 million, the filing said.
The sports apparel maker, already struggling prior to the coronavirus pandemic, had announced in April a $475 million to $575 million restructuring plan for this year.
“This restructuring plan was developed prior to [Under Armour] assessing the potential impacts of the COVID-19 pandemic and the Company stated that it would continue to evaluate necessary actions in response to the pandemic,” the company said in the latest filing with the Securities and Exchange Commission.
The updated plan adds $5 million to the previously disclosed $25 million in employee severance and benefit costs. That $30 million covers a global corporate workforce reduction of about 600 employees, the company said in the latest SEC filing.
Under Armour said it had no additional comment when asked about potential workforce reductions in the Baltimore area or say where job cuts have or would be made.
Besides the $5 million in employee severance costs, the additional cash charges include up to $40 million in contract terminations and other costs and $15 million in facility and lease termination costs. The updated restructuring plan includes another $15 million in non-cash charges.
About $365 million of non-cash charges will include a $291 million impairment related to its New York City flagship retail store, recognized during the first quarter. In 2016, just before its business took a turn for the worse, Under Armour announced plans to lease the former flagship FAO Schwarz store on Fifth Avenue for one of its Brand Houses.
Scheduled to open in 2019, the store has not yet opened.
The company said most remaining restructuring charges will occur by the end of the year. The company incurred about $340 million in restructuring and related charges during the first half of the year.
Under Armour said it expects the restructuring to bring significant long-term cost savings as it works to restore the brand’s luster.