Amidst news that Urban Outfitters is planning a major expansion via its impending Lifestyle Center in Pennsylvania, a group of plaintiffs have filed suit against the hip fast fashion chain. According to the class action lawsuit that was filed in the United States District Court, Eastern District of Pennsylvania, Urban Outfitters isn't doing so well and is being sued by individuals who purchased Urban Outfitters, Inc. stock between March 12, 2013 and September 9, 2013.
The complaint asserts that Urban "issued materially false and misleading statements regarding the Company's financial performance" and "failed to disclose the following adverse facts: (a) that sales growth had significantly declined; and (b) as a results of declining sales, it was forced to offer an additional 30% off all clearance items during Labor Day weekend 2013, something it had not been forced to do during the prior year Labor Day weekend," among other not-so-pleasant things.
The strongly-worded complaint was filed by the Law Offices Bernard M. Gross, P.C. (a Philadelphia-based firm specializing in complex class action lawsuits) after Urban Outfitters' September 9, 2013 disclosure of its second quarter financial results. According to its report, Urban's growth was reported as 5.2%, "far less than the 9% defendants' comments had led the investment community to expect."
The complaint further alleges that "during the Class Period, Company insiders sold millions of Urban Outfitters shares at artificially inflated prices, realizing insider trading proceeds, including President and CEO Richard Hayne, who sold over $50 million worth of shares and COO Freeman Zausner, who sold over $13.8 million worth of shares." More to come ...