Under Armour Investigation Hits Wall Street (BBJ Story)
Wall Street analysts wanted to know why they are just now learning about a federal investigation into Under Armour Inc.'s accounting practices that has been going on for more than two years.
Jonathan Komp, an analyst for Baird, asked Under Armour executives that question during a conference call Monday to discuss the sportswear maker's third-quarter financial results. He also asked how much of an internal distraction the federal probe revealed in a Wall Street Journal story on Sunday has been for Under Armour. The Wall Street Journal reported that the U.S. Department of Justice and the Securities and Exchange Commission have been investigating whether Under Armour played with its quarterly sales numbers to make the company appear healthier. Public companies do not usually comment on ongoing litigation or investigations. In a move that deviated from Under Armour's usual policy, CFO David Bergman confirmed the Baltimore-based sportswear maker began responding to inquiries from the federal agencies in July 2017 and has been "fully cooperating" with the probe. The inability to answer questions about the probe and Under Armour's North American sales outlook caused the company's stock price to get hammered.