Lawyers are preparing a $100 million class action against Woolworths based on an unexpected a profit downgrade.
Andrew Watson of Maurice Blackburn says there’s reason to believe Woolworths did not have a reasonable basis for providing its original profit guidance for 2015 and was misleading between November 2014 and February 2015.
“It is one thing for supermarket giants to drive down the prices on their shelves, but when they take actions that drive the share price down and they don’t make timely information available to shareholders about that, then they’ve got a problem.” says Watson.
“There are only five shareholder class actions in this country that have settled for in excess of $100 million, and we have run all of them. We believe this case has the very real potential to be in that upper echelon if it is supported by aggrieved shareholders, who can register their interest from today.”
The action is being backed by global litigation funder IMF Bentham. An online registration portal has been setup for aggrieved shareholders to register.
Woolworths says it hasn’t been served with proceedings.
“Woolworths considers that it has, at all times, complied with its continuous disclosure obligations,” the company said in a statement to the ASX.
In 2016, Woolworths posted a full year net loss of $1.23 billion. The worse than expected loss was a stark contrast to the $2.146 billion profit of 2015.
Brad Banducci was appointed CEO in 2016 with a supermarket group struggling with flat profit growth and growing competition from new discount players including Aldi.
He replaced Grant O’Brien. In June 2015, the company downgraded its full year profit forecast to flat from a 1.8% increase.