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As the company seeks to target Millennial and Generation Z cohorts, analysts warn against neglecting the value these groups place on business ethics and transparency . While the downgrade may seem drastic, industry expects note the particular vulnerability sports apparel players have to reputational risk, given the prominence of company logos on products. Facing a Class-Action Lawsuit As if Under Armour needed a cherry on top of its woes, shareholders have sued the company over a planned stock split . In a class-action lawsuit on Friday, Plank and Under Armour have been accused of intentionally misleading shareholders about the firms financial health. Despite outward votes of confidence and assurances to plaintiff and the rest of the investing public that Under Armour would continue as a force in the sports retail market, defendantsand Plank in particularwere aware of the decreasing growth margins and over surplus of unsold inventory, said the lawsuit, which was filed in the U.S. District Court in Baltimore. Facing Competition In comparison to peers Nike and Lululemon Athletica Inc. ( LULU ), Under Armour has failed where its rivals succeeded in grasping the high-growth segment between mass market and high-end. A crowded market facing competitive pressure from the likes of Adidas, drove Under Armours inventories up 17% on a year-over-year (YOY) basis in the most recent quarter.

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