Under Armour, the major sportswear brand, has agreed to pay $434 million to settle a 2017 class action lawsuit accusing the company of defrauding shareholders about its revenue growth. The settlement comes after Under Armour reached a separate agreement in 2021 to pay $9 million to settle charges by the Securities and Exchange Commission (SEC) that it misled investors about its revenue growth. The lawsuit alleged that Under Armour and CEO Kevin Plank intentionally misled shareholders about the company's financial health. The settlement will avoid a scheduled trial in Baltimore federal court [ce80c9cd].
This settlement adds to the challenges faced by Under Armour, which recently announced a broad restructuring plan due to declining sales in North America. The company reported a 10% decrease in North America sales and a 5% dip in worldwide revenue during its fiscal fourth quarter. Under Armour is expected to lay off workers as part of the restructuring, with the exact number of layoffs still unknown. The company estimates that the restructuring will cost between $70 million and $90 million. Additionally, Under Armour plans to reduce promotions and discounting, as well as decrease its style count by 25% [a9dc6442].
The settlement of the class action lawsuit is seen as a significant development for Under Armour, as it resolves legal uncertainties and allows the company to focus on its restructuring efforts. The lawsuit settlement also highlights the importance of accurate sales disclosures and transparency in financial reporting for companies, particularly in the sportswear industry. The settlement amount of $434 million reflects the magnitude of the allegations and the potential impact on shareholders. With this settlement, Under Armour aims to move forward and rebuild its reputation in the market [ce80c9cd].
In a separate development, Warner Bros. Discovery, formed in 2022 from the merger of AT&T's WarnerMedia and Discovery Communications, has agreed to pay $125 million to settle a shareholder lawsuit over the deal. The lawsuit alleged that AT&T misled shareholders about the financial benefits of the merger. The settlement will resolve the legal uncertainties surrounding the merger and allow Warner Bros. Discovery to focus on its operations. The $125 million settlement reflects the significance of the lawsuit and its potential impact on shareholders [a5e96e88].
Meanwhile, Disney+ has settled a breach of contract lawsuit in New York, setting a new auction record. The settlement involves a dispute over the streaming rights to the film 'New Yorker'. The lawsuit was filed by the film's producer, who claimed that Disney+ had violated the terms of their agreement. The settlement amount was not disclosed. The previous auction record in New York was set in 2019 for the sale of a painting by Jeff Koons. The settlement marks a significant development in the ongoing battle between streaming platforms and traditional film distributors [1d58b79a].