Under Armour has agreed to pay £342 million ($434 million) to settle a class action lawsuit made in 2017. The sportswear giant was accused of misleading shareholders to believe it had stronger revenue growth to meet Wall Street forecasts.
The proposed settlement, subject to court approval, comes prior to a scheduled trial on 15 July in Baltimore federal court, according to CNN.
The shareholder lawsuit said that CEO Kevin Plank intentionally mislead them about the company’s financial health.
Back in 2021, the sportswear retailer agreed to pay £7 million ($9 million) to settle Securities and Exchange Commission (SEC) charges that it misled investors about its revenue growth.
During the investigation, it was revealed that Under Armour failed to disclose to investors that it employed a sales tactic to accelerate or “pull forward” a total of £321 million ($408 million) in existing orders in the second half of 2015.
Though Under Armour has consistently denied the accusations it said it intends to pay the settlement amount of $434 million through cash on hand as well as by drawing on its $1.1 billion revolving credit facility. In addition, in a regulatory filing the company agreed to continue to separate the roles of the Chair and the CEO for at least three years.
In May, Under Armour revealed its revenues and profits dipped for the fourth quarter and full-year fiscal 2024, ending 31 March 2024. This was due to a “lower wholesale channel demand and inconsistent execution across [the] business”.
Revenue was down 5% to £1 billion ($1.3 billion). However, it increased by 10% in the EMEA region.
