Under Armour faked 26 quarters of growth — pulling $408M in orders forward

Under Armour's defining story for investors was 26 consecutive quarters of 20%-plus year-over-year revenue growth — a streak that took the brand from under $1 billion in sales to over $5 billion and made it the number-two sportswear company in the United States. The streak was the stock's entire narrative.

Beginning in 2015, as organic demand slowed, Under Armour began pulling forward orders from future quarters to keep the streak alive. The SEC found that the company shipped roughly $408 million in orders ahead of schedule, booking revenue in the current quarter that belonged to the next, without disclosing the practice to investors. When the streak finally broke in late 2017, the stock fell 19.6% in a single day.

In May 2021, Under Armour paid $9 million to settle SEC charges of disclosure failures. A separate securities-fraud class action recovered $434 million for shareholders — a record-setting settlement for the company. By then the brand had slipped from number two to outside the top five in US sportswear, behind Nike, Adidas, New Balance, Puma and Lululemon. The growth that investors had priced in had been borrowed from the future, and the future arrived.