Under Armour Financial Information Misled 11 Executives Were Prosecuted By Investors

Before announces the second quarter of fiscal 2018, Under Armour received a complaint from investors.

In July 24th, two investors named Brock Andersen and Balraj Paul filed a lawsuit in the federal court of Maryland. The defendants were 11 current or former Under Armour executives, including the founder and CEO Kevin Planck (Kevin Plank).

In 2016, retail sales in North America came from electricity suppliers and fast sellers.

Many sports retailers, including Sports Authority and City Sports, have declared bankruptcy, and Under Armour has become one of the most battered companies.

In the lawsuit, investors accused the executives of deliberately downplaying their potential impact on the company before and after the bankruptcy of the cooperative retailers, and "making false and misleading statements about the vitality, sustained growth and income of Under Armour" in order to preserve the company's share price.

In fact, Under Armour suffered another similar lawsuit in February 2017.

Many investors who bought enough shares of the company initiated a class action lawsuit, accusing them of misleading statements in terms of revenue and profit margins.

At present, the lawsuit is still fruitless.

"This lawsuit is similar to that in early 2017," said Under Armour spokesman. "Although we do not comment on the ongoing litigation, the company considers these allegations groundless, and we will try our best to defend them."

The latest lawsuit pointed out that Under Armour issued a large number of press releases and financial information for investors during the period from July 24, 2014 to April 21, 2016. Although there were early signs that the Sports Authority business was in a predicament, Under Armour still claimed that the company was expected to achieve rapid growth and continued strong financial position.

In June 2014, Moodie lowered the rating of Sports Authority from stability to negative and warned of its debt default.

This retailer is Under Armour in North America.

One of the main partners.

Until April 2016, Sports Authority declared bankruptcy protection because of its heavy debts.

At that time, the US sporting goods chain owed $47 million 900 thousand and $23 million 200 thousand in debt to Nike and Under Armour, and the store gradually closed down.

Nevertheless, Under Armour continues to reiterate its optimistic expectations for this year. In its April 2016 earnings report, the company raised its annual revenue forecast from $4 billion 925 million to $5 billion, which means a 26% increase over the 2015 fiscal year, and operating profit is expected to rise from $440 million to 445 million to $507 million.

However, many factors such as channel damage, product innovation and Sports Authority default make Under Armour less profitable than expected.

In 2016, its annual operating income was only $4 billion 800 million, and its operating profit was $420 million, far below the expected level.

The lawsuit also alleges that because of artificially raising the share price, a senior executive has made profits from misleading statements.

Between April 26, 2016 and April 29th, Kevin Planck had sold about $88 million of stock, and was at the time of Sports Authority's intention to liquidate its stores.

At that time, Under Armour's share price was around $46, and today its price is about $25, or nearly half.

On the evening of July 26th Beijing time, Under Armour will issue its second quarter earnings report.

Analysts expect sales to grow 5.7% to $1 billion 150 million over the same period last year, up from $1 billion 90 million in the same period last year.