American sportswear company Under Armour has announced an agreement in principle to settle a securities class action litigation that has been ongoing since 2017.
The lawsuit, filed in the US District Court for the District of Maryland, accused the company of improper sales and accounting practices.
Go deeper with GlobalData
Under Armour, while consistently denying the allegations, has chosen to settle to avoid the costs and risks of continued litigation.
The settlement is not an admission of fault or wrongdoing.
The company will pay $434m to claimants who purchased Under Armour’s publicly traded shares between 16 September 2015 and 1 November 2019.
The brand has also agreed to implement two governance changes for a specified period.
How well do you really know your competitors?
Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.
Thank you!
Your download email will arrive shortly
Not ready to buy yet? Download a free sample
We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form
By GlobalDataIf the court approves the settlement, it will resolve all claims against Under Armour and other defendants.
Under Armour chief legal officer and corporate secretary Mehri Shadman said: “We firmly believe that our sales practices, accounting practices and disclosures were appropriate, and deny any wrongdoing in this case.
“Today’s announcement allows us to move past this more than seven-year-old matter so we can avoid the ongoing distraction of litigation and provide certainty to the business at a time when we are executing on important strategic priorities.”
The settlement depends on the completion of definitive documentation and the final approval of the court.
Under Armour plans to fund the settlement using its cash reserves and, if necessary, by drawing on its $1.1bn revolving credit facility.
As of 31 March 2024, the company reported having $859m in cash and equivalents.
Under Armour had previously set aside a $100m litigation reserve for the case, but with the new agreement, the expected total accrual for the settlement will reach $434m in the first quarter of the fiscal year 2025.
Post-settlement, the company anticipates ending fiscal 2025 with around $500m in cash and cash equivalents and no outstanding borrowings under its credit facility.
