Under Armour (NYSE: UAA) reportedly borrowed business from future quarters to hide slowing demand in 2016, sending its shares
The Wall Street Journal reported Thursday that Department of Justice and Securities and Exchange Commission have been investigating the Baltimore-based company over its accounting practices. The two probes were confirmed by UAA in early November, but the company has said that it has been cooperating with investigators since July 2017.
In 2016, Under Armour leaned on retailers to take goods early, former executives in sales, logistics, merchandising and finance told the Journal. Sportswear intended for factory stores would be sent to off-price chains in order to book sales in the final days of a quarter, according to the Journal.
Some of the executives told the Journal that such moves were common in the retail industry.
A source told the Journal that federal investigators are examining emails that show that Under Armour’s founder and CEO Kevin Plank knew about the efforts. Plank is stepping down as chief executive Jan. 1, but will remain with the company as executive chairman. President and Chief Operating Officer Patrik Frisk will replace him as CEO
Under Armour said in a statement that the ongoing investigation constrains the company from addressing every allegation in the media.
Under Armour’s management and board of directors say they stand by the financial reporting.
Shares in UAA gained 21 cents, or 1.2%, to $17.33. The stock has fallen 3% since the start of the year. It has a market value of $7.7 billion.
