Selloff or Market Correction? Either Way, Here's What to Do NextSee Overvalued Stocks

Under Armour to pay $9 million to settle SEC charges

Published 05/03/2021, 04:47 PM
Updated 05/03/2021, 05:35 PM
© Reuters. FILE PHOTO: Customers exit an Under Armour store in New York
UAA
-

By Katanga Johnson

WASHINGTON (Reuters) -U.S. sports apparel maker Under Armour Inc (NYSE:UAA) has agreed to pay $9 million to settle Securities and Exchange Commission (SEC) charges that it misled investors about its revenue growth, the agency said on Monday.

The SEC found that Under Armour (NYSE:UA) failed to disclose to investors that it employed a sales tactic to accelerate or "pull forward" a total of $408 million in existing orders in the second half of 2015 after a warm winter began to hurt sales of the company's higher-priced cold weather apparel that customers had requested be shipped in future quarters.

Maryland-based Under Armour did not admit to or deny the SEC's charges, the regulator said in its order.

"This settlement relates to the company's disclosures and does not include any allegations from the SEC that sales during these periods did not comply with generally accepted accounting principles," Under Amour said in a statement.

For six consecutive quarters beginning in the third quarter of 2015, the SEC found that Under Armour misleadingly attributed its revenue growth to various factors without disclosing to investors material information about the impacts of its pull forward practices. It also found that the company's use of pull forwards raised significant uncertainty as to whether it would meet its revenue guidance in future quarters.

The company has agreed to cease and desist the practice, which is a violation of U.S. antifraud provisions, the SEC said.

© Reuters. FILE PHOTO: Customers exit an Under Armour store in New York

"When public companies describe how they achieved financial results, they must not misstate any information that is material to investors," said Kurt Gottschall, who leads the SEC's Denver regional office.

"By using pull forwards for several consecutive quarters to meet analysts' revenue targets while attributing its revenue growth to other factors, Under Armour created a misleading picture of the drivers of its financial results and concealed known uncertainties concerning its business," he added.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.