An Under Armor storefront is seen on November 4, 2019 in Sunrise, Florida.
Joe Raedle | fake pictures
Shares of Under Armor fell on Monday after the company disclosed that it received notice of possible enforcement action from the Securities and Exchange Commission related to the accounting treatment of sales it booked between the third quarter of 2015 and the fourth 2016 quarter.
The retailer’s shares fell approximately 4% in premarket trading.
On July 22, Under Armor, in addition to two executives, Kevin Plank, its former CEO and current CEO, and David Bergman, its current CFO, received notifications from Wells of the SEC related to an investigation previously disclosed by the agency, said the company. in an 8K presentation.
The SEC investigation was investigating the timing of the Under Armor sales. A Wells notice does not necessarily mean that the company or executives violated the law. However, it does indicate that the agency is considering a compliance action.
“SEC staff have not alleged any revenue recognition or other violations of generally accepted accounting principles in relation to that or any other period,” the company said in the filing. “Wells’ Notices informed the Company and the Executives that SEC staff have made a preliminary determination to recommend that the SEC file a compliance action against the Company and each of the Executives alleging certain violations of federal law. of values. ”
Under Armor said it maintains that its actions were “appropriate” and that it intends to “work toward a resolution of this matter” with the SEC.
Last November, the company confirmed that it was the subject of federal investigations by the Department of Justice and the SEC about its accounting practices. Under Armor began responding in July 2017 to requests for documents and information related to its accounting practices and related disclosures, a company spokesperson said at the time.
Meanwhile, Under Armor has faced turmoil in its executive ranks. The company went through three CFOs in the period between 2016 and 2017, and Plank quit his job earlier this year, to be succeeded by then-COO Patrik Frisk.
Shares of Under Armor have fallen nearly 50% this year, and the company has a market capitalization of $ 5 billion.
It is slated to report quarterly earnings the Friday before the bell.
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