Lawsuits accuse Abercrombie & Fitch of misleading shareholders
Three lawsuits filed against Abercrombie & Fitch Co. accuse the casual clothing retailer of misleading stockholders about its profits
The suits in U.S. District Court allege the company violated securities laws by announcing sales increases without revealing that profit margins would be sharply lower than expected in the second quarter.
After the company announced that sales at stores open more than one year jumped 38 per cent in June, the stock reached a high of $74.10. In the week that followed the announcement, Chairman and Chief Executive Michael Jeffries sold 1.44 million shares for $104 million, according to regulatory filings.
The stock then lost value when the company announced last month that it had missed Wall Street expectations by 6 cents per share in the second quarter, earning 63 cents per share or $57.4 million.
The lawsuits, the first of which was filed last Friday, are seeking class-action status and unspecified damages for investors who bought Abercrombie stock between June 2 and Aug. 16.
Abercrombie spokesman Tom Lennox declined comment Wednesday.
Last year, Abercrombie settled two class-action lawsuits and a federal suit claiming the company discriminated on the basis of race and gender in hiring. The settlements cost the company about $50 million.
Jill Abrams, a partner at Abbey Gardy, a New York firm that announced it was filing suit Friday, said the office decided to take the case after being approached by a shareholder.
“Shareholders come to us because they feel duped in some way,” she said.
The complaint also names former Abercrombie President and Chief Operating Officer Robert Singer, Chief Financial Officer Michael Kramer and Jeffries as defendants.
