Under Armour has resolved a significant legal challenge by agreeing to a $434 million settlement, a move designed to sidestep further courtroom battles.
- In 2017, the US sportswear giant was accused of misleading shareholders regarding its revenue growth, a charge it has now moved to settle out of court.
- The proposed settlement awaits approval, aiming to prevent a trial initially set for July 15 in Baltimore.
- The brand reaffirmed its stand on appropriate sales and accounting practices, despite agreeing to the settlement.
- Execution of strategic priorities is now the company’s focus, as it seeks to put the lengthy litigation behind it.
Under Armour, a prominent name in the sportswear industry, has opted to settle a class action lawsuit by agreeing to pay $434 million. This lawsuit dates back to 2017 and centered around accusations that the company, along with its CEO, Kevin Plank, misinformed shareholders about its financial state in efforts to align with Wall Street expectations. The proposed resolution of this legal matter is pending court approval and is aimed at avoiding a scheduled trial on July 15 in Baltimore’s federal court.
The settlement funds will be sourced from Under Armour’s cash reserves and its substantial $1.1 billion credit facility. Despite agreeing to the settlement, Under Armour’s Chief Legal Officer, Mehri Shadman, asserts, “We firmly believe that our sales practices, accounting practices and disclosures were appropriate, and deny any wrongdoing in this case.” The decision to settle, as stated by the company, is to avoid prolonged litigation distractions and to provide business certainty as they execute key strategic priorities.
Should the court approve this agreement, Under Armour will have resolved all claims associated with this case, which involves several defendants. Previously, in 2021, Under Armour settled with the Securities and Exchange Commission by paying $9 million to address similar allegations of misleading revenue growth reporting.
This settlement marks a step for Under Armour to mitigate legal distractions and refocus on essential strategic objectives, ensuring the company can move beyond a lengthy litigation period that has spanned over seven years.
The settlement signifies Under Armour’s strategic move to resolve the long-standing legal dispute and concentrate on future business initiatives.
