Under Armour to Close SoCal Facility Amid Corporate Restructuring
The sportswear brand cut 111 jobs at the same distribution center in 2019
By Nick Trombola September 11, 2024 5:49 pm
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It appears that Under Armour is sweating its financial woes.
Amid a period of cost cutting and restructuring in the wake of waning consumer demand, Under Armour has now opted to close a 1.2 million-square-foot distribution facility in Southern California’s Inland Empire region. The company plans to close the property at 2510 West Walnut Avenue in Rialto, Calif., by 2026.
“As we work to reconstitute our brand and increase our financial productivity over the long term, optimizing our supply-chain network will make us a more efficient, uncomplicated, and agile company,” David Bergman, Under Armour’s chief financial officer, said in a statement.
Under Armour in May announced that it would cut promotions and certain inventory, and lay off employees as part of cost-cutting efforts, while focusing on higher-margin items. CEO Kevin Plank, who returned to his post earlier this year after stepping down in 2019, is overseeing the restructuring.
Ironically, cost cutting can be expensive. The company admitted earlier this week that its strategy would provoke between $140 million and $160 million in pre-tax restructuring costs in fiscal years 2025 and 2026, or roughly double its initial forecasted cost of $70 million to $90 million. The company’s exit from the Rialto facility is expected to cost $70 million, according to its announcement, hence the forecast bump.
Further, the company expects between $220 million and $240 million in operating losses in fiscal 2025, also up from its previous forecast of $194 million to $214 million.
Company share prices dropped about 10 percent Tuesday in the wake of the announcement, and have diminished by almost 22 percent this year.
It’s unclear how many jobs will be affected by the Rialto facility shutdown, but it wouldn’t be the first time that Under Armour has opted to cut some of its workforce there in recent years, nor is the current plan its first overall restructuring effort.
Back in 2017, financial troubles caused the brand to cut about 2 percent of its global workforce, followed by the laying off of 111 jobs at the Rialto warehouse in early 2019, according to the San Bernardino Sun at the time. That’s despite the opening of a similar 1.3 million-square-foot facility in its home state of Maryland, dubbed the Omni Distribution House, just a few months later.
Representatives for Under Armour did not immediately respond to a request for comment.
Nick Trombola can be reached at ntrombola@commercialobserver.com.
