Investing.com - Under Armour (NYSE:UAA) shares surged more than 31% Thursday after the company lifted its profit outlook for its current fiscal year, as the athletic apparel maker works through a pricey overhaul of its operations.
Baltimore-based Under Armour previously announced a plan to focus its operations on its core business, with Chief Executive Kevin Plank arguing that a host of company initiatives had strained its resources.
As part of the changes, the group slashed promotional activity, scaled down its inventory and reduced headcount. It has also moved to increase sales of higher-margin items like men's apparel.
Yet the shift -- and a decision to exit a distribution facility in Rialto, California in particular -- has pushed up pre-tax restructuring charges to a range of $140 million to $160 million in its 2025 and 2026 fiscal years, the company said in September. The prior forecast for these costs stretched from almost $70 million to $90 million.
As of the quarter ended on Sept. 30, Under Armour said it already booked $28 million in impairment charges and $11 million in other "related transformational expenses" related to the turnaround effort.
Still, Under Armour has raised its projected range for annual adjusted per-share income to between $0.24 to $0.27, versus an earlier estimate of $0.19 to $0.21.
Revenue, meanwhile, is seen declining in at a "low double-digit percentage" pace, which Under Armour said is partly a reflection of the business reset in North America and ongoing economic pressures in its Asia-Pacific weighing on its international division.
In its second quarter, net revenue fell by 11% to $1.40 billion, just outpacing expectations, while operating income jumped by 19% versus the year-ago period to $173.1 million.
"We are a fundamentally stronger business today with increasingly better execution across key dimensions," Plank said in a statement.