Under Armour will pay $9 million to settle with the U.S. Securities and Exchange Commission following a multi-year investigation into past accounting practices.
The matter involved so-called “pull forward” sales for the third quarter of 2015 through the fourth quarter of 2016.
Under the terms of the settlement, the Baltimore-based athletic company said it will pay a civil monetary penalty of $9 million, in addition to other non-monetary settlement terms. “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 Armour said.
In its statement today, the SEC said it found that for six consecutive quarters beginning in the third quarter of 2015, Under Armour accelerated, or “pulled forward,” a total of $408 million in existing orders that customers had requested be shipped in future quarters. The SEC said the company “misleadingly” attributed its revenue growth during this period to various factors without disclosing the impact of its pull-forward practices.
“The order finds that Under Armour failed to disclose that its increasing reliance on pull forwards raised significant uncertainty as to whether the company would meet its revenue guidance in future quarters. Using these undisclosed pull forwards, Under Armour was able to meet analysts’ revenue estimates,” the SEC statement said.
Under Armour said in its statement it neither admitted nor denied the SEC’s charges, but noted the settlement resolves all outstanding claims. “The SEC staff has confirmed that it does not intend to recommend that any enforcement action be taken against the company’s executive chairman [Kevin Plank], CFO [David Bergman] or any other member of management in connection with this investigation,” Under Armour said.
The brand said last July that the SEC had sent Wells Notices to the company, as well as Plank and Bergman. These letters indicated that Under Armour could face civil-enforcement action regarding the use of “pull forward” sales.
In its statement today, Under Armour also said it had been responding to requests for documents and information from the Department of Justice. Under Armour noted it has not received any requests from the DOJ since the second quarter of 2020.