Under Armour, a Maryland-based sports apparel company, was experiencing rapid growth at the turn of the last decade.
In April 2016, Under Armour reported first-quarter earnings, marking its 24th consecutive quarter of over 20% revenue growth.
The company also predicted strong sales growth in the upcoming quarters.
However, in January 2017, Under Armour announced disappointing quarterly earnings and the unexpected resignation of its CFO, causing the stock to drop by more than 25% in just one day.
Shortly after, shareholders filed a lawsuit, claiming the company misled them about its financial health and revenue growth.
Under Armour recently agreed to pay a massive $434 million settlement to investors to resolve the lawsuit. Affected investors can now file a claim to receive the payout.
Overview
During Under Armour, Inc. (NYSE:UAA) expansion phase, the company claimed it could sustain a 20% revenue growth for a long time. However, it later emerged that management hid issues with meeting these expectations due to declining demand and used questionable accounting practices to cover up the company’s struggles. These claims were also backed by a separate investigation from the Securities and Exchange Commission. After years of legal disputes, the company has agreed to pay $434 million to affected shareholders over this situation.
Background
“Our first quarter revenues grew 30%, with the growth coming from every facet of our business. And to be clear, that 30% number was no accident. When Stephen Curry decided to average 30 points this season to take the scoring title while wearing the number 30, we thought that putting up 30% growth on our end was the best way for us to demonstrate our pride and support of Stephen and the Warriors.” – Kevin Plank (Q1 2016 earnings call)
Kevin Plank, the company’s founder, served as the CEO during this growth phase of the company. The growth of the company was fueled by sportswear, which …
Full story available on Benzinga.com