Under Armour (NYSE: UA) has announced a comprehensive restructuring plan primarily due to a 10% decline in sales in its largest market, North America, with further deterioration expected for the current fiscal year. The sportswear retailer saw its profits plummet by over 96% year-on-year in the fourth quarter. While the exact number of layoffs is yet to be clarified, restructuring costs are anticipated to be between $70 million and $90 million, with a portion allocated for employee severance and benefits.

Following the release of the financial report, Under Armour's stock price experienced a significant drop, but it rebounded somewhat after a conference call with Wall Street analysts, ultimately closing down over 1%. The company reported earnings per share of 11 cents for the fourth quarter, surpassing the expected 8 cents, with revenue at $1.33 billion, meeting expectations. Net income was $6.6 million, a substantial decrease compared to the previous year.

Sales in the North American market declined by 10% to $772 million, below analysts' expectations of $780 million. Under Armour anticipates a further 15% to 17% decline in North American sales for the current fiscal year. Founder and current CEO Kevin Plank attributed this to reduced demand in wholesale channels and inadequate communication within management, foreseeing further declines in future demand. The company aims to make proactive decisions in the short term to enhance brand positioning, targeting revenue and profit growth in the near future.

To improve gross margin, Under Armour plans to reduce promotions and discounts, expecting this to increase gross margin by 0.75 to 1 percentage point. The company anticipates diluted earnings per share for the current fiscal year to be between $0.02 and $0.05, with adjusted diluted earnings per share between $0.18 and $0.21, lower than analysts' expectations of $0.52.

After just one year with former Marriott executive Stephanie Linnartz as CEO, Plank has reassumed the CEO position. Linnartz had advocated for a transition of the brand towards casual athletic wear, but Plank believed this overlooked the core men's apparel business, resulting in damage to the brand image. He plans to reduce the number of styles by approximately 25% over the next 18 months and shorten the product development timeline from the current 18 months to 6 to 12 months.

This restructuring plan reflects Under Armour's proactive adjustment of its strategy to address changing market demands and competitive pressures. The company hopes to regain market share and improve brand profitability through these adjustments.