Probe pierces Armour

Sales shift alleged

Federal law-enforcement officials are investigating Under Armour accounting practices in a probe examining whether the sportswear maker shifted sales from quarter to quarter to appear healthier, according to people familiar with the matter.

As part of the probe, which hasn’t been made public, investigators questioned people in Baltimore, where the company is based, as recently as last week, one of the people said.

Justice Department prosecutors are conducting a criminal inquiry into the matter, and coordinating with civil investigators at the Securities and Exchange Commission, another person said.

A rep for Under Armour, which reports third-quarter results Monday, had no immediate comment. Spokespeople for the Justice Department and SEC declined to comment.

When examining what are known as revenue-recognition practices, authorities generally focus on whether companies record revenue before it is earned or defer the dating of expenses to make earnings appear stronger, among other possible infractions.

The company has been restructuring its operations and struggling with weak sales in the past two years. Until then, it had been among the fastestgrowing apparel makers, riding 26 straight quarters of at least 20 percent year-overyear revenue growth.

That streak ended abruptly when Under Armour missed its sales targets in the final quarter of 2016. On Jan. 31, 2017, the company’s shares plunged after it reported sales growth of only 12 percent in the holiday quarter and cut its growth forecasts for the next year. That day, Under Armour also said its then-finance chief was leaving after a year on the job.

At the time, founder, Chief Executive Kevin Plank attributed the slowdown to fewer store visits by shoppers, the company’s product assortment and changes in the sportswear industry, including retailer bankruptcies such as Sports Authority. Plank moved to restructure the operations, cutting jobs and hiring an outsider, Patrik Frisk, as president.

Under Armour had three chief financial officers from 2016 to 2017. Brad Dickerson, who had served as CFO since 2008, left the company in February 2016. Chip Molloy, an exPetSmart exec, took over but stayed a year on the job. Under Armour at the time cited unspecified personal reasons for his departure.