Under Armour stock is down 17 percent today after CNBC and The Wall Street Journal reported the Baltimore-based athletic apparel company is being investigated by the Justice Department and Securities and Exchange Commission over its accounting practice.
The company’s stock was trading at $17.45 per share by mid-day Monday after previously closing at $21.14.
According to The Wall Street Journal, the federal agencies are looking into whether the company shifted sales from one quarter to another to make business look more robust.
Under Armour representatives said the company is complying with the investigation.
“The company began responding in July 2017 to requests for documents and information relating primarily to its accounting practices and related disclosures,” the company said in a statement to the newspaper. “The company firmly believes that its accounting practices and disclosures were appropriate.”
The news arrived shortly before Under Armour released its third-quarter earnings report showing that revenue was flat. As a result, the company slightly downgraded its forecast for 2019 revenue, from 3 to 4 percent growth to 2 percent.
Last month, Under Armour founder Kevin Plank announced he was stepping down as CEO of the company he built from the ground up. President and COO Patrik Frisk will take over CEO duties on Jan. 1, with Plank staying on as chairman of the board.
Plank said at the time the move frees him up to chart a long-term vision for his business.
“This really elevates me, it elevates Patrick, and puts us both in a position to really be able to drive this global brand, which we have a massive opportunity with.”
