Under Armour Layoffs: 600 To Lose Jobs As Company Suffers Coronavirus Impact

Under Armour announced it will let go 600 of its furloughed employees as it wages a desperate battle against the business-killing effects of the COVID-19 pandemic.

CEO Patrik Frisk announced the impending layoffs Tuesday in a memo to the company's more than 16,000 employees. Of this total, some 6,600 employees in retail stores and distribution centers have been on forced leave since March. Among those to lose their jobs are executives all the way up to vice-president.

"We are taking these steps to make us stronger, as we continue to deliver innovative products, solutions and experiences that make Focused Performers better," Frisk told the survivors in a memo obtained by Business Insider. A "Focused Performer" is the company's term to describe its target customer.

Frisk admitted the pandemic "has put pressure on us" and forced Under Armour "to be more agile, leaner, tighter and focus on working smarter" while resorting to a series of cost-reduction measures. He added "unfortunately these cost reductions are not enough" to save 600 employees in its global workforce.

Over the past five months, Under Armour has been fighting to offset a massive 41% plunge in sales during the second quarter. Laying off people will cost the company $30 million in severance and benefit costs related to a reduction of 600 employees primarily in its global corporate workforce" according to the company's 8-K document.

In his memo, Frisk thanked employees who had lost their jobs and said the layoffs are part of a long-planned restructuring plan. He also said the company intends to focus on a Direct-To-Customer model to restore sales and profitability. The painful restructuring process, which will see more employees fired, is scheduled to conclude by the end of the year.

"We must rebuild our brand with our target consumer, the Focused Performer, at the center of everything we do, evolve our operating model to simplify the way we work and collaborate, and shift to a DTC-first business," said Frisk.

In late July, Under Armour reported a $183 million loss in Q2 and a 41% plunge in sales due to the pandemic, exceeding the worst estimates by analysts. It suffered to a $590 million loss in Q1 and a 24% plunge in sales.

Analysts said Under Armour's Q2 loss was more than 10 times larger than the year-ago period. This loss came to $141 million, adjusting for the restructuring plan announced earlier in the year. After its ghastly Q1 numbers, Under Armour warned sales might plummet as much as 60% in Q2.