Adam Jeffery | CNBC
The retailer’s shares were plunging more than 15% in premarket trading, on the heels of a Wall Street Journal report from Sunday evening that said Under Armour was facing a federal criminal investigation over accounting practices allegedly used to make its finances look healthier.
Here’s what Under Armour reported for its third quarter ended Sept. 30 compared to what analysts were expecting, based on Refinitiv estimates:
*Earnings per share: 23 cents vs. 18 cents expected
*Revenue: $1.43 billion vs. $1.41 billion expected
Under Armour said it now expects revenue to be up roughly 2% in fiscal 2019, compared to a prior range of up 3% to 4%.
Over the weekend, Under Armour confirmed it has been cooperating with the U.S. Securities and Exchange Commission and the U.S. Department of Justice investigations, regarding a probe into its accounting practices.
A spokesperson for the company told CNBC in an email: “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.”
Word of the federal probe comes after CEO Kevin Plank, in a surprise move, announced he will step aside from the chief executive role on Jan. 1, to be succeeded by COO Patrik Frisk. Plank is expected to transition to executive chairman and brand chief.
The athletic apparel and sneaker maker has been struggling to grow sales on its home turf, in a crowded market with Nike, Adidas, Lululemon, and others. Ahead of Monday’s earnings report, it was still calling for sales to decline slightly in North America in 2019. Last quarter, North American sales dropped 3%.
Under Armour shares as of Friday’s market close are up about 19.6%. The stock, which once hovered around $50, closed Friday at $21.14. The company is valued at roughly $9.5 billion. Nike shares are up about 20% this year, while Lululemon shares have surged 65%.