London (CNN Business)Under Armor’s accounting practices are under investigation in the United States, heaping pressure on the struggling company as itseeks to reverse years of lackluster sales.
The sportswear maker acknowledged in a statement Sunday that it faces probes from the US Department of Justice and the US Securities and Exchange Commission.
“The company began responding in July 2017 to requests for documents and information relating primarily to its accounting practices and related disclosures, and the company firmly believes that its accounting practices and disclosures were appropriate, “said a spokesperson for Under Armor.
Shares inUnder Armor(UA)dropped 14% in premarket trade on Monday to near $ 18. 10. The company was worth more than $ 50 per share in late 2015. Under Armor is scheduled to report its third quarter results before the opening bell on Monday.
TheWall Street Journal was first to reporton the investigations into the company’s accounting practices. According to the Journal, the Department of Justice is conducting a criminal inquiry into whether Under Armor shifted sales from quarter to quarter to make the company appear healthier. The *** Department of Justice declined to comment.
Under Armor announced last month that founder Kevin Plank is stepping down as CEO. He will be replaced by chief operating officer Patrik Frisk on January 1, 2020. Plank will become executive chairman and brand chief.
The management shuffle comes after the company suffered from weaker sales and lost ground to rivals includingNike() NKE)andAdidas(ADDDF). Smaller brands such as Fila and Puma are also thriving.
-— Jessica Schneider and Josh Girsky contributed reporting.
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