Stumbling sportswear company Under Armour faces US accounting probe
‘Criminal inquiry’ and SEC investigation latest blow for business suffering years of falling sales
Struggling sports clothing company Under Armour is facing an investigation in the US over its accounting practices.
The beleaguered business is under pressure from years of below par sales, losing ground to rivals such as Nike and Adidas.
The company confirmed yesterday that it faces probes from the US Department of Justice and the US Securities and Exchange Commission.
"The company began responding in July 2017 to requests for documents and information relating primarily to its accounting practices and related disclosures,” said a spokesperson for Under Armour. “The company firmly believes that its accounting practices and disclosures were appropriate."
The Wall Street Journal said the US Department of Justice is conducting a criminal inquiry into whether Under Armour shifted sales from quarter to quarter to make itself appear healthier.
In its latest quarterly report on Monday, Under Armour said sales were flat in the third quarter and it lowered its revenue forecast for the rest of the year. Sales decreased 4 per cent in North America.
Last month the business said that founder Kevin Plank is stepping down as CEO. He will become executive chairman and brand chief. Chief operating officer Patrik Frisk will become CEO on January 1 next year.
In 2015 shares in Under Armour were trading at more than $50. In premarket trading today, they dropped 14 per cent to $18.10.