After markets closed on Friday, Under Armor (UAA) announced it would pay $434 million to settle a lawsuit.
The lawsuit, filed in 2017, was for investors who purchased Under Armor Class A and Class C shares between Sept. 16, 2015 and Nov. 1, 2019. It claimed that founder and CEO Kevin Plank gave a false impression of how much demand there was for Under Armor products from the third quarter of 2015 to the fourth quarter of 2016, misleading investors and violating the law.
This agreement will resolve all claims against the company and Kevin Plank, once approved by the court.
Under Armor has admitted no wrongdoing and insists its sales practices and financial disclosures were appropriate. Stifel analyst Jim Duffy said the deal is aimed at avoiding a lengthy legal battle and focusing on the business.
“This agreement hurts the balance sheet and puts the company in debt, which limits its financial flexibility,” Duffy explained.
This is another setback for the struggling brand. Earlier this year, Kevin Plank ousted CEO Stephanie Linnartz to regain her position. The decision to allow Plank to return, despite his control over the company, raises questions about the board’s judgment.