BALTIMORE (WJZ) — Baltimore-based fitness apparel retailer Under Armour is defending its disclosures and accounting practices amid a report it borrowed from future quarters to hide slowing demand.
As first reported by The Wall Street Journal, the company could face a criminal investigation into the ways former executives used a variety of tactics to make sales numbers appear better than they were.
On October 22, the company’s founder and CEO Kevin Plank announced he was stepping down at the beginning of 2020.
“As we have stated previously, we firmly believe that our disclosures and our accounting practices have been entirely appropriate,” the company said in a statement to WJZ Friday afternoon. “Our management and board of directors have reviewed this matter extensively over the past two and a half years and stand by the Company’s financial reporting.”
The company said it cannot comment further, citing an ongoing investigation.
Under Armour’s full statement reads:
“We are aware of recent media coverage concerning Under Armour’s business practices. As we have stated previously, we firmly believe that our disclosures and our accounting practices have been entirely appropriate. Our management and board of directors have reviewed this matter extensively over the past two and a half years and stand by the Company’s financial reporting. Because the investigation is ongoing, we are constrained in our response and cannot address every allegation raised in the media or by anonymous sources cited in the news.
“When Under Armour speaks, we always communicate our best understanding as to the market and the Company’s prospects. For many years, quarterly shifts in wholesale revenue related to timing of shipments based on financial goals; customer requests; year-to-year seasonal variance; different fiscal calendar alignments; product availability; logistics; and numerous other dynamics have been, and continue to be, part of the normal course of business practices in the apparel, footwear and retail sector. In this respect, our process for recognizing revenue and recording returns and other allowances has not changed and has always been in compliance with generally accepted accounting principles. Indeed, as reported by certain media outlets, analysts and accounting experts agree that such end-of-quarter practices are generally permitted under accounting rules.
“Under Armour has become one of the world’s largest athletic performance brands through industry-defining innovation, ambitious and driven leadership, and a culture that holds itself to the highest standards of integrity including operating within standard industry business practices and always in compliance with generally accepted accounting principles.”