Woolworths reacts to $100m class action
Woolworths has announced that a potential $100m class action from Maurice Blackburn Lawyers will be “thoroughly defended”.
The class action, brought by lawyers Maurice Blackburn, alleges that Woolworths breached continuous disclosure obligations and engaged in misleading conduct by giving profit guidance that couldn’t be met.
In a statement Woolworths said that a proposed class action by off-shore litigation funder IMF Bentham and Maurice Blackburn was previously announced on 11 April 2017.
However, after discussions with Woolworths, IMF Bentham announced on 24 January 2018 that it had decided not to proceed with funding the claim as “it considered that the proposed class action did not meet its investment criteria”. Woolworths claimed that it received no further correspondence since that time.
Woolworths investors suffered losses following an announcement from the group in February 2015 that its sales and profit growth would be below guidance, something that had previously been given and reaffirmed, as well as the revelation in May 2015 that it had been using the wrong metrics in relation to price competitiveness and stock availability in the second half of 2014 and until January 2015.
Maurice Blackburn class actions principal Andrew Watson said: “Cases such as this reinforce the need to increase and enhance transparency and proper disclosures from large listed companies, and to ensure they are held to account if they fail to provide the market with accurate information.”
Lead plaintiff Norman Wills said that while he was aware of the natural volatility of the share market, he was shocked to learn about the disclosure issues of what he considered to be a well-run operation.
“It turns out that what I thought was one of the most reliable companies on the ASX with good businesses at its core, looks like it has failed to inform the market of what was going on within the company.” Wills said.