Australia-based supermarket Woolworths is facing a $100m lawsuit in the Federal Court.
According to the lawsuit lodged by Maurice Blackburn Lawyers, the supermarket chain breached continuous disclosure obligations and misled investors by issuing and reaffirming false profit guidance in 2015.
International Litigation Funding Partners (ILFP) is funding the lawsuit.
Maurice Blackburn’s class actions principal Andrew Watson said: “Cases such as this reinforce the need to increase and enhance transparency and proper disclosures from large listed companies, and to ensure they are held to account if they fail to provide the market with accurate information.”
On 27 February 2015, the retailer announced that its guidance for net profit after tax (NPAT) growth of between 4% and 7% for the fiscal year (FY) ending 2015 would not be met.
Following the announcement, Woolworths’ investors suffered losses as its share price witnessed an overall decline of almost 14% from 27 February to 2 March 2015.
On 6 May 2015, the retailer admitted that it had been using flawed metrics in relation to price competitiveness and stock availability in the second half of 2014 and until January 2015.
After this revelation, the price of Woolworths’ shares witnessed a further overall decline of 7% between 6 May and 7 May 2015.
Lead plaintiff Norman Wills said: “It turns out that what I thought was one of the most reliable companies on the ASX with good businesses at its core, looks like it has failed to inform the market of what was going on within the company.
“I’m really disappointed in the way the company behaved and Woolworths needs to be held to account.”