Under Armour shares whacked as feds probe accounting practices
Fox Business Briefs: Under Armour says it will cut about 474 jobs as part of a restructuring plan; Nike has reportedly sold 61 percent more merchandise since the controversial ad campaign featuring Colin Kaepernick.
Under Armour reported better-than-expected third-quarter results, but shares were under pressure after the company confirmed a federal probe into its accounting practices.
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| UA | UNDER ARMOUR INC. | 6.59 | +0.04 | +0.61% |
However, the results overshadowed news the company's accounting practices are being looked at by federal investigators. Under Armour confirmed on Sunday that it has been cooperating with both the Department of Justice and Securities and Exchange Commission for two years as they have looked into the company's bookkeeping.
"Under Armour is cooperating with the U.S. Securities and Exchange Commission and the U.S. Department of Justice investigations," a company spokesperson told FOX Business. "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."
The athletic-apparel maker booked a profit of $102.3 million, or 23 cents per diluted share, as revenue fell 1 percent to $1.43 billion. Those numbers were better than the 18 cents and $1.41 billion that analysts surveyed by Refinitiv were expecting.
Fox News senior judicial analyst discusses the Department of Justice’s investigation into Under Armour for alleged accounting malpractices.
North American revenue slid 4 percent to $1 billion while international sales rose 5 percent to $368 million. Business was particularly strong in Europe, the Middle East and Africa, where revenue was up 13 percent versus a year ago.
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“As we make the turn into 2020, we are confident in our ability to deliver our fourth-quarter targets while proactively supporting higher levels of strategic marketing investments that will further fuel the Under Armour brand," outgoing CEO Kevin Plank said in a press release.
Also, Under Armour cut its fiscal year 2019 revenue outlook. The company now sees sales up 2 percent, down from its previous outlook of 3 percent to 4 percent, due to lower excess inventory, continued traffic and conversion challenges in its direct to consumer business and negative impacts from foreign exchange.
On Oct. 22, founder and CEO Kevin Plank announced he was stepping down at the end of the year. Plank founded the company in 1996. President and COO Patrik Frisk will become CEO while Plank will shift to the role of executive chairman and brand chief beginning Jan. 1, 2020.
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Under Armour shares were up 19.6 percent this year through Friday.