Press release from Business Wire
Robbins Geller Rudman & Dowd LLP Files Class Action Suit against Family Dollar Stores, Inc.
Thursday, February 21, 2013
Robbins Geller Rudman & Dowd LLP Files Class Action Suit against Family Dollar Stores, Inc.16:01 EST Thursday, February 21, 2013 NEW YORK (Business Wire) -- Robbins Geller Rudman & Dowd LLP (“Robbins Geller”) (http://www.rgrdlaw.com/cases/familydollar/) today announced that a class action has been commenced on behalf of an institutional investor in the United States District Court for the Western District of North Carolina on behalf of purchasers of Family Dollar Stores, Inc. (“Family Dollar”) (NYSE:FDO) common stock during the period between October 3, 2012 and January 2, 2013 (the “Class Period”). If you wish to serve as lead plaintiff, you must move the Court no later than 60 days from today. If you wish to discuss this action or have any questions concerning this notice or your rights or interests, please contact plaintiff's counsel, Samuel H. Rudman or David A. Rosenfeld of Robbins Geller at 800/449-4900 or 619/231-1058, or via e-mail at firstname.lastname@example.org. If you are a member of this class, you can view a copy of the complaint as filed or join this class action online at http://www.rgrdlaw.com/cases/familydollar/. Any member of the putative class may move the Court to serve as lead plaintiff through counsel of their choice, or may choose to do nothing and remain an absent class member. The complaint charges Family Dollar and certain of its officers and directors with violations of the Securities Exchange Act of 1934. Family Dollar operates a chain of approximately 7,500 general merchandise retail discount stores in 45 states, which sell consumables, home products, apparel and accessories, and seasonal and electronics products. The complaint alleges that during the Class Period, defendants issued materially false and misleading statements regarding Family Dollar's then-present sales demand, profitability and financial results for the first quarter of 2013, ended November 24, 2012, and for December 2012. As a result of defendants' false statements, Family Dollar's stock traded at artificially inflated prices throughout the Class Period, reaching a high of $71.20 per share by November 30, 2012. Meanwhile, Family Dollar's senior executives cashed in, selling their own Family Dollar stock at artificially inflated prices, including its Chief Executive Officer who sold more than $15.6 million worth of his Family Dollar stock during the Class Period. Then, on January 3, 2013, before the markets opened, Family Dollar issued a press release disclosing that sales in the Company's first quarter 2013 – which had ended November 24, 2012 – had significantly underperformed, with significant increases in sales of lower margin consumables rather than higher margin discretionary products, that the Company's soft holiday sales in December had required significant discounting, that the Company's inventory had become bloated, and that, as a result, defendants were slashing the Company's 2013 financial guidance. The price of Family Dollar stock dropped on this news, falling $8.30 per share – or approximately 13% – to close at $55.74 per share on January 3, 2012. According to the complaint, the true facts, which were known by the defendants but concealed from the investing public during the Class Period, were as follows: (a) the Company's intentional efforts to increase sales of lower margin consumables, such as cigarettes, Pepsi drinks, gift cards, magazines and other high-turnover merchandise, in order to increase foot traffic and better compete against chains such as Dollar General Corp and Wal-Mart Stores Inc., had significantly diminished profits in the first quarter of 2013 and in December 2012; (b) significant price cuts undertaken in an attempt to move unsalable inventory had also significantly diminished profits in the first quarter of 2013 and in December 2012; (c) Family Dollar's sales of more profitable discretionary items such as toys and other household goods had significantly underperformed expectations in the first quarter of 2013 and during December 2012; (d) bloated inventories in Family Dollar's stores would significantly weigh down 2013 profitability; and (e) based upon the above, defendants lacked a reasonable basis for their positive statements about the Company's sales and profitability during the Class Period, in particular their first quarter and fiscal 2013 guidance. Plaintiff seeks to recover damages on behalf of all purchasers of Family Dollar common stock during the Class Period (the “Class”). The plaintiff is represented by Robbins Geller, which has expertise in prosecuting investor class actions and extensive experience in actions involving financial fraud. Robbins Geller represents U.S. and international institutional investors in contingency-based securities and corporate litigation. With nearly 200 lawyers in nine offices, the firm represents hundreds of public and multi-employer pension funds with combined assets under management in excess of $2 trillion. The firm has obtained many of the largest recoveries in history and has been ranked number one in the number of shareholder class action recoveries in MSCI's Top SCAS 50 every year since 2003. According to Cornerstone Research, the firm's recoveries have averaged 35% above the median for all firms over the past seven years (2005-2011). Please visit http://www.rgrdlaw.com for more information. Robbins Geller Rudman & Dowd LLPSamuel H. Rudman, 800-449-4900David A. Rosenfelddjr@rgrdlaw.com