Under Armour’s strong numbers drowned out by investigation
The investigation involves whether the retailer shifted sales from quarter to quarter to make results appear stronger
BALTIMORE – A strong quarter from Under Armour is being overshadowed by federal investigations into the company’s accounting practices.
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 co-operating 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.
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 US$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.