Billabong investors have taken a class action against the Australian surfwear retailer which could be worth hundreds of millions of dollars.
Shareholders are arguing Billabong misrepresented its earnings forecasts which led to a massive share price fall from $8.51 to $1.70 in 2011.
One Melbourne retail investor, Newstart 123, had its $30 million investment in Billabong halved in just over a month.
The federal court was told Billabong had an “inadequate” system to analyse its global performance and therefore had no ability to estimate its likely earnings accurately.
In February 2011 the retailer forecast a steady full year profit but then downgraded its forecast in August and December.
Billabong said it “wholly rejects and intends to vigorously defend the claim, which focuses on market disclosures that occurred in 2011, nearly four years ago.”
“The applicants are seeking declarations and unquantified damages,” the surfwear retailer said.
“The Billabong Board and Management team remain resolutely focused on the ongoing turnaround of the Company’s operations globally.”
Billabong has appointed Dr Sally Pitkin to chair a subcommittee of the Board to address the matter.
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