Under Armour Facing Federal Criminal Investigation Over Accounting Practices
BALTIMORE (WJZ/AP) — Under Armour is facing a possible federal criminal investigation over how the sportswear maker records their revenue.
The investigation was first reported by The Wall Street Journal, which said the probe involves whether the retailer shifted sales from quarter to quarter to make results appear stronger.
Under Armour Inc. told The Associated Press that it has been cooperating with the U.S. Securities and Exchange Commission and the U.S. Department of Justice on their investigations for two years.
The company said it firmly believes its accounting practices and disclosures were appropriate.
Investigators have reportedly questioned people in Baltimore, where the company is based, as recent as up to last week.
The probe is examining whether Under Armour shifted sales from quarter to quarter to appear healthier, the report said.
Under Armour responded to the coverage with a statement of cooperation in regards to the investigation.
"Under Armour is cooperating with the U.S. Securities and Exchange Commission and the U.S. Department of Justice investigations. 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." a company spokesperson said.
The athletic gear maker reported better than expected profit and revenue for the third quarter Monday, but shares are down 11% before the opening bell.
Quarterly profit reached $102.3 million, or 23 cents per share. That tops Wall Street per-share projections of 18 cents, according to Zacks Investment Research.
Revenue, at of $1.43 billion, just edged out expectations.
Under Armour founder Kevin Plank stepped down as CEO last month. The company has had three chief financial officers since 2016, when its extraordinary sales growth began to flatline.
Under Armour reported explosive sales numbers, including 26 straight quarters with more 20% sales growth.
In the final quarter of 2016, however, the Baltimore company shocked investors when it fell short of most sales projections and cut its expectations for growth the following year.
Under Armour announced the departure of its chief financial officer the same day though he had been with the company for less than a year.
The company has cut jobs and is reducing costs in a broad restructuring effort.
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