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BUSINESS Wednesday 12 February 2020
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Under Armour puts NYC flagship store on ice, restructures

By MICHELLE CHAPMAN whether it may be better ery around the world in-
AND ANNE D'INNOCENZIO suited for someone else cluding potentially missed
NEW YORK (AP) — U nder at this time," Chief Finan- shipment and service win-
Armour's shares plummet- cial Officer Dave Bergman dows and the need for in-
ed Tuesday with the com- said. creased air freight and ad-
pany anticipating a big Numerous global compa- ditional measures at ports
financial hit from the viral nies have reported supply that could create unfore-
outbreak in China, and it line and staffing problems seen congestion," Frisk told
said separately that it may because of the outbreak industry analysts Tuesday.
need to restructure this of the coronavirus in Chi- Under Armour Inc. expects
year at a cost of hundreds na, and Under Armour was fiscal full-year revenue to
of millions of dollars. no exception. The com- be down at a low single-
The athletic gear maker pany anticipates shipping digit percent compared to
expects the outbreak in delays and challenges in a year ago. Earnings are
China to drag first-quarter getting fabric, packaging forecast between 10 cents
sales down by $50 million This March 5, 2017, file photo shows a closeup of Under Armour and other raw materials. and 13 cents per share.q
to $60 million. It's also look- cleats are seen before a drill at the 2017 NFL football scouting "We think it's reasonable
ing at pre-tax charges this combine in Indianapolis. to expect industry-wide
year of between $325 mil- Associated Press delays in terms of deliv-
lion to $425 million related
to restructuring. Included company is facing weak tations of analysts polled
in those charges would demand in North America by Zacks Investment Re-
be $225 million to $250 mil- for goods that are not be- search. But its revenue of
lion related to the flagship ing put on sale at the same $1.44 billion was just short of
store, which was slated to time that its substantial cost Wall Street projections.
open in the famed former structure has prevented The company said Tues-
location of FAO Schwarz, the company from spend- day that as important as
another retailer that fell on ing aggressively to market a New York flagship store
hard times. its brand. might be, its focus must
Shares tumbled 16%. The company swung to a remain with smaller, more
T he Baltimore company, loss of $15.3 million in the profitable stores and online
after years of unbridled final quarter of 2019, or 3 sales.
success, is now facing sig- cents per share. Its adjust- "The Fifth Avenue location
nificant headwinds. It must ed profit was 10 cents per is a premier retail loca-
contend with intensifying share, meeting the expec- tion, but we're considering
competition from Nike and
Lululemon, both of which
have created trendier
athletic clothes that ca-
ter to younger shoppers.
Under Armour executives
also acknowledged on a
conference Tuesday call
that the heavy discount-
ing it has used to generate
sales may have eroded the
willingness of customers to
pay full price for its brand.
CEO Patrik Frisk said the