Under Armour is the official outfitter of two SEC teams, the Auburn Tigers and South Carolina Gamecocks. However, they are not on friendly business terms with the most-powerful SEC team, the one in Washington, D.C.
On Sunday, the Wall Street Journal reported that Under Armour was under investigation by the SEC and DOJ for their accounting practices, where they manipulated numbers to make the company seem healthier.
This news comes less than a month after CEO Kevin Plank decided to step down from the company he founded in 1996.
Under Armour grew from humble beginnings as an athletic undershirt maker into a multi-faceted American apparel giant. The company hit its peak in 2015 with Under Armour athletes Stephen Curry (NBA), Cam Newton (NFL), Bryce Harper (MLB – National League), and Carey Price (NHL) winning the Most Valuable Player awards in their respective sports. Additionally, golfer Jordan Speith won the PGA and PGA Tour Player of the Year awards, capping off a season where he won The Masters, U.S. Open, and FedEx Cup. Under Armour hoped to continue the momentum in 2016 by signing a deal to become the official outfitter for Major League Baseball starting in 2020, and by adding entertainer Dwayne The Rock Johnson to its roster. By all accounts, no pun intended, Under Armour was primed to take on Nike for the sports apparel crown.
However, things rapidly began to change. The Curry 2’s were a dud and are known for the countless dad shoe memes. Bryce Harper, Cam Newton, and Carey Price did not continue the momentum of their MVP seasons. Multiple executives left. Tom Brady’s (another Under Armor endorsee) most talked about product was not a football cleat, but instead $200 recovery pajamas.
Under Armour and Wall Street were unaware of something that the coveted affluent fashionistas knew from the start: Under Armour wasn’t cool.
CEO Kevin Plank tried to shift the perception of the company, but efforts failed. Plank managed to make things worse by angering Curry and Dwayne “The Rock” Johnson – two of Under Armour’s most significant endorsers – by stating that President Donald Trump was an “asset” to the United States. Along with consistent stock decreases, Under Armour backed out of its deal with Major League Baseball, opening the door for Nike to take over. While Nike continued to assert dominance and Adidas embarked on a comeback into the spotlight, Under Armour slid. The company was never able to sustain its success and eventually fell off, hard. Revenues did not meet predictions as they lost market share, and stock prices dipped more than half from its peak in 2015.
The Baltimore-based company, known for its click-clack commercials and HeatGear undershirts, now faces the U.S. Government for faulty accounting methods. If CEO Kevin Plank’s departure means anything, it may mean that Under Armour is in significant trouble going forward. With declining financials, it will be interesting to see where Under Armour goes forward.