Woolworths Group Limited (ASX:WOW) is slammed with $100 million class action on the allegation that supermarket giant has failed to disclose a shock profit downgrade to its profit outlook in 2015 that has seen plunge in the value of the shareholder’s investment.
Law firm Maurice Blackburn has filed a case against Woolworths Group in the Federal Court on 10 September 2018, seeking $100 million payout to aggrieved investors on the breach of continuous disclosure obligations and misleading the investors by giving such profit guidance that could not be met.
This action stems from Woolworths announcement made on February 27, 2015 which told its shareholders that the company would not be able to meet its expected 2015 net profit after tax growth of between 4 and 7 percent, which was previously reaffirmed by then-chief executive Grant O'Brien and then-chairman Ralph Waters on August 29, 2014.
Following this announcement Woolworths’ share price nosedived almost 14% over two days, posting the stock from $33.95 to $29.29 on March 2, 2015.
Later in the same year company disclosed that it has been using the incorrect metrics to measure its price competitiveness in the grocery market, which again dragged down the stock by 7% over two days to $27.57 in early May 2015.
Since then, i.e. May 2015, Woolworths’ shareholder returns have underperformed the ASX200, at 19.5% versus 34.5%. Currently, Woolworths’ share price has edged up 1.062% to $28.540 as at 11 September 2018 (7:14 PM AEST). The stock has seen a negative performance change of 18.52% over the past five years.
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