Investors file lawsuit against Under Armour amid stock drop
Two weeks after Under Armour shares dropped to a record low, investors filed a lawsuit against the Baltimore sports brand.
Under Armour, shareholders said that UA officials were giving out false and misleading information about the company's potential sales growth in the lawsuit they filed last Friday in the U.S District Court for Maryland.
Under Armour stock took a hit after they failed to meet their sales goal, seeing a 26% drop. Jan 31st, the stock was at $21.49 and seen a 52-week low at $20.64. This is a strong contrast from over a year ago when UA stock was sitting at $85.13 Feb 1st, 2016 and over $100 at the end of 2015.
The lawsuit represents investors who purchased class A and class C stocks. In 2015, Under Armour settled with shareholders after they were sued for trying to create a new class of stock without voting on it. UA was attempting to protect founder and CEO, Kevin Plank, control over the company while he sold his shares. At that time UA stock was $99.
According to the Baltimore Sun, a Georgia native and UA investor suggest that Kevin Plank was aware of and seen the "writing on the wall" and tried to get rid of his shares and keep full control without any individual losses.
Plank has been under scrutiny after he showed support for President Trump, calling Trump is a "great asset to the country" because of his business background. A Baltimore city councilman also criticized Plank for joining Trump's administration and calling his Port Covington project a form of "white supremacy.
Some of Under Amour's athlete endorsers also chimed on Plank's trump comments. Steph Curry, Dwayne "The Rock" Johnson, and Misty Copeland - three of UA's biggest athletes - all opposed Plank's comments.
Kevin Plank and Under Armour has been doing damage control since Plank's statements. Under Armour has released a statement trying to clean up the mess their CEO made, saying there are against the immigration ban. The brand also partnered with the Baltimore Ravens to provide free public transportation for Baltimore City public school students. Plank recently penned a letter to Baltimore to ensure locals that they are committed to the city.
For Under Armour, this is the first time that they have seen such hardship since becoming one of the most recognized sports brands on the planet. Under Armour has seen upwards of 20% growth in their sales of the last ten years. They're the goal is to be a $10 billion company by 2020, currently at $3.9 billion. Plank suggest that the competitive environment within the retail world and a slow holiday season are the reasons for the drop in sales, also saying that customer are looking for more a lifestyle brand. With performance being their main focus, Plank acknowledges that they will have to create better designs.