US footwear, sports, and casual apparel brand Under Armour are in trouble on multiple fronts. The Baltimore Headquartered company, going through an administrative transition with a new CEO set to take over, has witnessed a 16% fall in its stocks over the reports of a federal probe into its accounting practices.
Under Armour is reportedly being probed by federal investigators for more than two years over-inflated sales figures.
The US Securities and Exchange Commission and US Department of Justice people have been questioning people at the Under Armour headquarters in Baltimore to find out whether the company has inflated sales figures in its quarter to quarter reports, the Wall Street Journal has reported.
The company in a statement on Sunday last has confirmed the investigation by the US Securities and Exchange Commission and the US Department of Justice. The company has further stated that it was cooperating with the investigators.
“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,” Under Armour said in the statement, which since has seen a 16% spike in the Under Armour share value.
The company’s stocks had also taken up to 23% tumble in July when the company had allayed fears that its revenue would decline in North America.
Under Armour is going through tough times when it is battling intense competition amidst internal challenges. Company’s first CEO Kevin Plank has resigned from his position. His replacement, found within the company, Patrik Frisk is scheduled to assume office from January.
There are fears that the company might report a 2% fall in the third quarter revenue amidst trouble on various counts. Not a good scenario for the brand which in the first quarter of 2016 had reported a 30% growth in its sales.