Under Armour has come under scrutiny by the federal authorities in US as there are concerns over its accounting practices.
The news comes as a blow to the company and its CEO Kevin Plank, just as he prepares to hand over the struggling company to current COO Patrik Frisk.
Frisk earlier corroborated to analysts that the company is not allowed to elaborate on the subject further.
Notably, Kevin Plank will be staying on as Under Armour’s executive chairman and brand chief.
The company has stated that it is cooperating fully with the investigations being conducted by the Securities and Exchange Commission and Justice Department.
The probe has been on-going for the past 2 years as they try to look at whether the company inflated sales from quarter to quarter. The company’s employees were questioned at the Baltimore headquarters in line with the investigation.
Shares of the athletic gear company tumbled 15 per cent in early trading.
The federal investigation overshadowed the news of strong quarterly results from Under Armour, with the company lowering its full-year revenue forecast while reporting better-than-expected profit and revenue for the third quarter.
