Under Armour puts NYC flagship store on ice, restructures

FILE- This March 5, 2017, file photo shows a closeup of Under Armour cleats are seen before a drill at the 2017 NFL football scouting combine in Indianapolis. Under Armour says it's considering a restructuring plan and anticipates the virus outbreak in China dragging first-quarter sales down by $50 million to $60 million. The athletic clothing company moved to a loss of 3 cents per share in the fourth quarter. Its adjusted profit was 10 cents per share, meeting the expectations of analysts polled by Zacks Investment Research. Revenue of $1.44 billion was below the $1.46 billion Wall Street predicted. (AP Photo/Gregory Payan, File) (Copyright 2018 The Associated Press. All rights reserved.)

BALTIMORE, Md. – Under Armour's shares plummeted Tuesday after the company said it anticipates a big financial hit from the viral outbreak in China.

It also said it may need to book hundreds of millions of dollars in charges as it restructures its business.

The athletic gear maker expects the outbreak in China to drag its first-quarter sales down by $50 million to $60 million. It's also looking at pre-tax charges this year of between $325 million to $425 million related to restructuring.

Included in those charges would be $225 million to $250 million related to Under Armour possibly foregoing the opening of a flagship store in New York. The store had been slated for the former Fifth Avenue location of toy seller FAO Schwarz, another retailer that fell on hard times.

Shares in Under Armour Inc. closed Tuesday down $3.03, or 16.7%, at $15.12.

After years of unbridled success, the Baltimore company is now facing significant headwinds. It must contend with intensifying competition from Nike and Lululemon, both of which have created trendier athletic clothes that cater to younger shoppers. Under Armour executives also acknowledged on a conference Tuesday call that the heavy discounting 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 company is facing weak demand in North America for goods that are not being put on sale at the same time that its substantial cost structure has prevented it from spending aggressively to market its brand.

Under Armour swung to a loss of $15.3 million in the final quarter of 2019, or 3 cents per share. Its adjusted profit was 10 cents per share, meeting the expectations of analysts polled by Zacks Investment Research. But its revenue of $1.44 billion was just short of Wall Street projections.