Maurice Blackburn is working on a class action against Woolworths with the backing of litigation funder IMF Bentham.
The two firms are encouraging “aggrieved shareholders” to register through an online portal for the class, which will bring a claim “that could well exceed $100m” against the retail giant.
Andrew Watson, the principal lawyer of the class action, said that though investigations are still being conducted, “it was clear” Woolworths maintained its profit guidance until February 2015 despite supposedly knowing that it was significantly behind profit projections as early as October 2014.
Woolworths’ alleged breach of the Corporation Act caused massive losses for investors, as the revision of the profit guidance sent Woolworths’ stock tumbling 13.7% in just two days, the class action argues.
Maurice Blackburn said that on 29 August 2014, Woolworths projected its net profit after tax to increase 4% to 7% for fiscal 2015. The company was then aware by 8 October that year that there were “significant risks” to the forecast, according to the law firm.
“Forecast that there would be a variance on budget for gross profit before freight for the Woolworths Supermarkets business, for the half year to 31 December 2014, in the amount of approximately $53 million,” Woolworths even told the Australian Competition and Consumer Commission, the law firm said.
By 21 November, an internal effort to mitigate risks to not meeting targets was led by the company’s commercial director, and by 27 November, the guidance was “emphatically reaffirmed” at the Woolworths annual general meeting.
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