Pomerantz LLP announces that a class action lawsuit has been filed against Under Armour, Inc. (“Under Armour” or the “Company”) and certain of its officers. The class action, filed in United States District Court, District of Maryland, and docketed under 17-cv-00452 is on behalf of a class consisting of investors who purchased or otherwise acquired Under Armour securities, seeking to recover compensable damages caused by defendants’ violations of the Securities Exchange Act of 1934.
Under Armour, Inc. develops, markets, and distributes branded performance products for men, women, and youth. The Company designs and sells a broad offering of apparel and accessories made of synthetic microfibers.
The Complaint alleges that throughout the Class Period, Defendants made materially false and misleading statements regarding the Company’s business, operational and compliance policies. Specifically, Defendants made false and/or misleading statements and/or failed to disclose that the Company’s revenue and profit margins would not be able to withstand the heavy promotions, high inventory levels and ripple effects of numerous department store closures and bankruptcy of The Sports Authority, even as Under Armour nevertheless purported to be a growth company that would continue to develop and market game-changing products.
Under Armour has historically touted its aspirations to continue growing 20% annually, having set a goal of $7.5 billion in annual revenue by 2018, however overall sales grew just 12% in the fourth quarter of 2016, with revenues in North American only growing 6%, the weakest increase in the past eight years. Despite continued guidance from April 21, 2016 through October 25, 2016, that the Company would maintain its trend of greater than 20% sales growth, none of these statements had any basis in fact and were false when made.
On January 31, 2017, Under Armour revealed its lower-than-anticipated fourth-quarter revenues and announced the unexpected resignation of Chief Financial Officer (“CFO”) Chip Molloy. Roughly $2.7 billion or one fifth of Under Armour's market capitalization disappeared on January 31, 2017 after Under Armour said its quarterly revenue growth dropped more than 20% for the first time in 26 quarters and that it was replacing its CFO after only 13 months.
On this news, Under Armour’s Class A share price fell $7.45, or 25.74%, to close at $21.49, while the Company’s Class C share price fell $5.87, or 23.4%, to close at $19.22 on January 31, 2017.