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According to the complaint, Under Armour is engaged in the manufacturing, development, marketing and distribution of sportswear, performance and casual apparel, footwear and accessories.
The complaint alleges that, in a January 31, 2017 8-K press release, Kevin A. Plank (“Plank”), Chief Executive Officer of Under Armour, stated that: “we are incredibly proud that in 2016, we once again posted record revenue and earnings, however, numerous challenges and disruptions in North American retail tempered our fourth quarter results.” Lawrence P. Malloy (“Molloy”), the Chief Financial Officer of Under Armour at the time, stated in a January 31, 2017 earnings call that “starting with our fourth quarter, total Revenue was up 12 percent” and that “[r]evenues in 2016 grew 22% to $4.8 billion.” This was announced by Under Armour despite guidance in October 25, 2016 that “based on current visibility, the Company continues to expect 2016 net revenues of approximately $4.925 billion.” Finally, Under Armour announced on January 31, 2017, that Molloy would be unexpectedly stepping down as Chief Financial Officer due to “personal reasons” even though he was only at the position for approximately thirteen months.
Following this news, Under Armour’s shares dropped 28% in pre-market trading, and ultimately fell $7.41 per share from $28.90 to close on July 31, 2017 at $21.49 per share.
The complaint further alleges that the defendants and Plank in particular, were aware of the decreasing growth margins and over surplus of unsold inventory, and knew that would be the last of twenty-six consecutive quarters with greater than 20% revenue growth. According to the complaint, for this reason, Plank implemented a prearranged stock trading plan, and sold off 1.05 million shares in April 2016, to effectively shield his losses but to keep his voting power.
The complaint alleges that, throughout the Class Period, the defendants made false and misleading statements and failed to disclose that Under Armour’s revenue and profit margins would not be able to withstanding the heavy promotions, high inventory levels and ripple effects of numerous department store closures and bankruptcy of The Sports Authority, but nevertheless purported itself as a growth company that would continue to develop and market game-changing products.
If you are a member of the class described above, you may no later than April 10, 2017 move the Court to serve as lead plaintiff of the class, if you so choose.
A lead plaintiff is a representative party that acts on behalf of other class members in directing the litigation. In order to be appointed lead plaintiff, the Court must determine that the class member’s claim is typical of the claims of other class members, and that the class member will adequately represent the class. Your ability to share in any recovery is not, however, affected by the decision whether or not to serve as a lead plaintiff. Any member of the purported class may move the court to serve as a lead plaintiff through counsel of their choice, or may choose to do nothing and remain an inactive class member.
Kessler Topaz Meltzer & Check, LLP has not filed a complaint in this matter. If you wish to discuss this action or have any questions concerning this notice or your rights or interests with respect to these matters, please contact Kessler Topaz Meltzer & Check, LLP toll free at 1-888-299-7706 or 1-610-667-7706, or via e-mail at firstname.lastname@example.org.
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