Under Armour announced a comprehensive restructuring plan on Thursday, following a significant decline in sales within its largest market, North America. The athletic apparel retailer reported a 10% drop in North American sales and forecasted that this negative trend will worsen throughout the current fiscal year.

The company's fiscal fourth-quarter profits plummeted by more than 96% compared to the same period last year, highlighting the severe financial challenges it faces. Although Under Armour has not specified the number of employees that will be laid off as part of this restructuring, the plan is expected to cost between $70 million and $90 million. These costs will partly cover employee severance and benefits. The company declined to provide further details to CNBC about the restructuring specifics.

After the earnings report was released, Under Armour’s shares initially plunged in pre-market trading but later rebounded following an earnings call with Wall Street analysts. The shares closed more than 1% lower.

For the fiscal fourth quarter, Under Armour's performance compared to Wall Street’s expectations, based on a survey of analysts by LSEG, was as follows:

- Earnings per share: 11 cents adjusted vs. 8 cents expected

- Revenue: $1.33 billion vs. $1.33 billion expected

The company's reported net income for the quarter ending March 31 was $6.6 million, or 2 cents per share, compared to $170.6 million, or 38 cents per share, a year earlier. Excluding one-time items, Under Armour reported earnings of 11 cents per share. Sales dropped to $1.33 billion, a decline of about 5% from $1.4 billion a year ago.

During the quarter, North American sales declined 10% to $772 million, worse than the $780 million analysts expected according to StreetAccount. Under Armour projected that North American sales would continue to decline between 15% and 17% in the current fiscal year.

CEO and founder Kevin Plank attributed the decline to several factors, including lower demand in the wholesale channel and inconsistent execution across the business. He emphasized the need for proactive decisions to build a premium positioning for the brand, despite short-term pressures on revenue and profitability.

Plank announced plans to cut promotions and discounting, expecting this strategy to boost the gross margin by between 0.75 and 1 percentage point for the fiscal year. The company forecasted a decline in overall revenue "at a low-double-digit percentage rate" for the current fiscal year, contrary to analysts' expectations of a 2.1% growth. The company also revised its expected diluted earnings per share to be between 2 cents and 5 cents, with adjusted diluted earnings per share between 18 cents and 21 cents, significantly lower than the 52 cents analysts anticipated.

This tough quarter comes on the heels of significant leadership changes at Under Armour. About two months ago, former Marriott executive Stephanie Linnartz announced her departure as CEO after a brief tenure of less than a year. Plank has resumed his role as CEO, marking the second CEO transition in less than two years.

During a call with analysts, Plank candidly discussed the issues leading to Under Armour’s current struggles, pointing to inconsistent leadership as a primary challenge. He mentioned that ongoing turnover among critical leaders, including several CEOs and heads of product, marketing, and North America, has hampered the company’s agility and decisiveness.

Linnartz, during her short tenure, made substantial changes, including overhauling the C-suite and initiating a pivot towards a more athleisure-focused product line aimed at women. However, Plank is now refocusing the brand on its core men’s apparel business, which he believes has been neglected, leading to a decline in the brand’s perception and an increase in promotional activity.

As part of the restructuring, Plank aims to reduce the number of product styles by approximately 25% over the next 18 months and shorten the product development cycle from 18 months to between 6 and 12 months. This streamlined approach is intended to make Under Armour more competitive.

The full restructuring plan includes simplifying the business, reducing internal silos, and ensuring that all staff efforts are directly aligned with the company’s primary objective: selling more apparel and footwear. Plank emphasized the need for a focused strategy to reconstitute the brand and achieve clear, defined success.

Under Armour's restructuring efforts are aimed at turning around its fortunes in a highly competitive athletic apparel market, ensuring it can regain its market position and improve its financial performance. The company’s focus on core products, efficient operations, and a clear strategic direction are critical components of this turnaround plan.