Under Armour has reached a settlement agreement to address a lawsuit from 2017.
- The lawsuit accused the company of misleading shareholders about revenue growth.
- Under Armour has agreed to pay $434 million to resolve the claims.
- The settlement is subject to approval by a Baltimore federal court.
- Under Armour aims to move past litigation and focus on strategic priorities.
In a significant legal development, Under Armour has reached a settlement to resolve a class action lawsuit initiated in 2017. The crux of the lawsuit was the accusation that the company, along with its CEO Kevin Plank, misled shareholders regarding its financial health. This alleged misinformation was reportedly aimed at aligning the company’s performance with Wall Street expectations.
Under Armour has agreed to a $434 million settlement to conclude these claims. The settlement, while substantial, is strategic in nature as it is designed to avert a trial scheduled for 15 July in Baltimore federal court. By opting for this settlement, Under Armour aims to eliminate the uncertainties and distractions that come with protracted litigation.
The financial logistics of the settlement involve utilizing cash reserves, supplemented by the company’s $1.1 billion credit facility. This approach is indicative of Under Armour’s resource allocation to manage the financial impact of the settlement.
Chief Legal Officer Mehri Shadman stated, “We firmly believe that our sales practices, accounting practices and disclosures were appropriate, and deny any wrongdoing in this case.” Despite the denial of these allegations, the decision to settle highlights Under Armour’s focus on continuity and avoiding litigation distractions.
History reflects that this is not the first time Under Armour has faced scrutiny over its financial disclosures. In 2021, the company paid $9 million to settle charges by the Securities and Exchange Commission (SEC) related to similar issues of alleged revenue misrepresentation. This past settlement adds context to the current resolution attempt.
Should the court approve the current settlement, it will conclusively resolve all claims against Under Armour and other defendants in this case. The approval would symbolise a closure to a seven-year-old matter, allowing the company to channel its efforts towards strategic business objectives.
The settlement allows Under Armour to bypass further litigation, refocus on strategic goals, and provide stability for its operations.
