Kirby McInerney LLP today announced it has filed a class action lawsuit against Crocs . The lawsuit, filed in the U.S. District Court for the District of Colorado, represents all persons who acquired publicly traded securities of the company between July 21 and October 31 this year.
The complaint alleges that CROX violated the Securities Exchange Act of 1934 by issuing false and misleading statements, omitting information it should have disclosed. According to a press release, the complaint accuses the company of not reporting the following:
- Experiencing significant distribution problems in Europe after moving distribution facilities
- Experiencing problems regarding a third-party distributor in Japan, resulting in the equity's loss of tens of millions of dollars in sales
- Experiencing a negative impact on sales from seasonal conditions
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- Record-high inventory levels regardless of weather-related depletion of sales
The report concludes that, based on the aforementioned allegations, Crocs lacked a reasonable basis for the positive statements about the company, its earnings and prospects.
The lawsuit was filed in the wake of Crocs' third-quarter earnings report, released October 31. The less-than-expected earnings of the trendy shoe company triggered the stock to decline from $75.21 to $47.74, a massive 37% drop overnight. Since the plummet, CROX only recently broke resistance from its 10-day moving average.
Though the security is facing litigation, Wall Street seems to think the shoe maker will bounce back; analysts polled by Zacks currently give it 4 strong buy ratings, 1 buy rating, 3 hold ratings, and no sell or strong sell ratings.
As of 3:24 p.m., CROX is trading at $42.21, up almost 4.5%.