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Under Armour (UAA -10%) is heading lower after providing an update on its previously announced FY25 restructuring plan last night. On the one hand, it was good to see UAA reaffirm its FY25 adjusted EPS outlook at $0.19-0.22. However, the company also raised its outlook for pre-tax restructuring and related charges, which are not included in adjusted EPS.

• Following further evaluation, it identified approximately $70 mln of additional charges, largely related to its decision to exit one of its primary distribution facilities located in Rialto, California, by March 2026. Accordingly, UAA now expects approximately $140-160 mln of pre-tax restructuring and related charges to be incurred in FY25 and FY26.
• Recall that UAA reinstated founder Kevin Plank as CEO, effective April 1, 2024. The stock gapped lower on the announcement as apparently investors were not too happy to see Plank back at the helm of the struggling athletic brand. He founded Under Armour in 1996 and served as CEO from 1996 to 2019.
• He replaced Stephanie Linnartz, who was CEO for just over a year and had been seen as making some positive changes. She brought in new people to lead UAA's product, design, consumer, supply chain, and communications teams. She also streamlined its business to be more responsive, including its marketing functions.
• Based on the stock reaction, it seems investors would have preferred to keep Linnartz or perhaps an outsider would have been a better choice to offer a fresh look.

The stock popped higher in early August when UAA reported a surprise profit in Q1 (Jun). However, last night's news is weighing on the stock today. While adjusted EPS did not see a change, we suspect investors are disappointed to see the higher charges. And that's not just for the increased costs, but we think it also reduces confidence that UAA is on top of everything. It spurs questions as to whether UAA has a good handle on what needs to be done to turn the brand around.