Under Armour
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United States SEC Fines Under Armour $9 Million for Misleading Investors on Revenue Growth in 2015

5th May 2021 | Hong Kong

The United States Securities and Exchange Commission (SEC) has charged and fined popular American sports apparel company Under Armour $9 million for misleading investors on its revenue growth and failing to disclose known uncertainties concerning its future revenue prospects.  Under Armour has agreed to pay $9 million to settle the action.

” Under Armour has agreed to pay $9 million for United States SEC Charges “


Under Armour Fail to Disclose “Pull Forwards of Revenue”

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Georgia Lorraine Ellenwood, Canadian Athlete

By the second half of 2015, Under Armour’s internal revenue and revenue growth forecasts for 2015 Q3 and Q4 began to indicate shortfalls from analysts’ revenue estimates.  The company was not meeting internal sales projections for North America, and warm winter weather was negatively impacting sales of Under Armour’s higher-priced cold weather apparel.

For 6 consecutive quarters beginning in Q3 2015, Under Armour brought forward a total of $408 million in existing orders that customers had requested be shipped in future quarters.

Under Armour misleadingly attributed its revenue growth during this period to various factors without disclosing to investors material information about the impacts of its pull forward practices.   Using these undisclosed pull forwards, Under Armour was able to meet analysts’ revenue estimates.


United States SEC Violation

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Under Armour

Under Armour violated the antifraud provisions of Section 17(a)(2) and (3) of the Securities Act of 1933, as well as certain reporting provisions of the federal securities laws. Without admitting or denying the findings in the SEC’s order, Under Armour agreed to cease and desist from further violations and to pay a $9 million penalty.

The SEC’s investigation was conducted by L. James Lyman, Jeffrey Lyons, and Donna Walker, with assistance from Gregory Kasper and Nicholas Heinke of the Trial Unit, and supervised by Ian Karpel, Jason Burt, and Kurt Gottschall.


Director of the United States SEC’s Denver Regional Office, Kurt Gottschall:

“When public companies describe how they achieved financial results, they must not misstate any information that is material to investors.

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.”


Under Armour, Kevin Plank

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Kevin Plank, founder of Under Armour and Sir Richard Branson, founder of Virgin Group

Under Armour was founded in 1996 by the-then 24 year-old Kevin Plank, who came up with a lightweight sweat-absorbing shirt.  In 2005, Under Armour became listed on New York Stock Exchange.  Today, Under Armour is a leading inventor, marketer and distributor of branded athletic performance apparel, footwear and accessories.

In 2020, Under Armour reported revenue of $4.5 billion and net loss of $549 million.  It is listed on New York Stock Exchange and has a market capitalization of around $10 billion (5/5/21).

Kevin Plank stepped down as CEO of Under Armour in 2019 and remains as Chairman.  He is a billionaire and has an estimated net worth of more than $2 billion.

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