The struggling sportswear giant Under Armour confirmed on Sunday evening that it was assisting federal authorities conducting investigations into its accounting practices and related activities dating back to 2017.
“Under Armour is cooperating with the U.S. Securities and Exchange Commission and the U.S. Department of Justice investigations,” a spokesman for Under Armour said Sunday night. “The company began responding in July 2017 to requests for documents and information relating primarily to its accounting practices and related disclosures, and the company firmly believes that its accounting practices and disclosures were appropriate.”
The company was responding to reporting on Sunday from The Wall Street Journal, which said the authorities were looking into whether Under Armour had shifted sales from quarter to quarter to appear healthier.
Early Monday, Under Armour is scheduled to report its earnings for the third quarter.
The company built its reputation by making high-tech shoes and apparel for athletes. But its revenue has lagged in recent years behind rivals like Nike and Adidas, which were better positioned to take advantage of surging consumer demand for so-called athleisure wear.
About two weeks ago, the company said that its founder, Kevin Plank, would step down as chief executive at the end of the year, a role he has held since starting the company more than 20 years ago. Mr. Plank is to remain as executive chairman and brand chief while Patrik Frisk, the company’s president and chief operating officer, will become its chief executive on Jan. 1.
For years, Under Armour’s growth rate was astounding, with 20 percent or greater year-over-year revenue growth for 26 straight quarters. Those gains came to an abrupt halt, however, in late 2016. On Jan. 31, 2017, Under Armour’s stock plunged 23 percent in one day after the company said that it would miss revenue-growth expectations and that its chief financial officer was departing after 13 months “for personal reasons.”
It would get worse as the company’s once-robust profits turned into net losses of $46 million or more for each of the last two fiscal years. Under Armour’s stock peaked at around $52 in September 2015, but it is currently trading at around $21.
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