Sportswear manufacturer Under Armour, Inc. UAA is facing a federal investigation into its accounting practices, The Wall Street Journal reported on Sunday.
What Happened
The Justice Department is conducting a criminal inquiry into whether the company fudged its sales numbers to show healthy financial growth. Civil investigators at the Securities and Exchange Commission (SEC) are aiding it in the probe, according to WSJ.
Under Armour confirmed the federal probe in a statement on Sunday. The company affirmed its innocence and said it has been aiding the investigators since July 2017.
“The company began responding in July 2017 to requests for documents and information relating primarily to its accounting practices and related disclosures,” Under Armour said in the statement. “The company firmly believes that its accounting practices and disclosures were appropriate.”
What's Next
Under Armour has seen frequent changes in its top management over the last three years, as it continues to underperform. The company changed its Chief Financial Officer twice between 2016 and 2017.
Patrik Frisk will take over the reins from Kevin Plank to become the CEO in January 2020.
Under Armour’s sales decelerated dramatically in the fourth quarter of 2016, from 22.2% annual growth to 11.7%. The company’s sales dropped by 4.48% in the third quarter of 2017.
Under Armour is expected to announce its third-quarter revenue for 2019 on Monday.
Price Action
Under Armour traded at 2.37% gain at closing time on Friday. The stock was down more than 12% in Monday's early pre-market trading.
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