Press release from Business Wire
Lieff Cabraser Announces Class Action Litigation Against Tile Shop Holdings, Inc. - TTS
Wednesday, December 04, 2013
Lieff Cabraser Announces Class Action Litigation Against Tile Shop Holdings, Inc. - TTS09:00 EST Wednesday, December 04, 2013
SAN FRANCISCO (Business Wire) -- The law firm of Lieff Cabraser Heimann & Bernstein, LLP announces that class action litigation has been brought on behalf of purchasers of common stock and call options and sellers of put options of Tile Shop Holdings, Inc. (“Tile Shop” or the “Company”) (NasdaqGS: TTS) between August 22, 2012 and November 13, 2013, inclusive (the “Class Period”).
If you purchased common stock or call options or sold put options of Tile Shop during the Class Period, you may move the Court for appointment as lead plaintiff by no later than January 14, 2014. A lead plaintiff is a representative party who acts on behalf of other class members in directing the litigation. Your share of any recovery in the action will not be affected by your decision of whether to seek appointment as lead plaintiff. You may retain Lieff Cabraser, or other attorneys, as your counsel in the action.
Tile Shop investors who wish to learn more about the action and how to seek appointment as lead plaintiff should click here or contact Sharon M. Lee of Lieff Cabraser toll-free at 1 800 541-7358.
Background on the Tile Shop Securities Class Litigation
The complaint charges Tile Shop and certain of its officers and directors with violations of the Securities Exchange Act of 1934. Tile Shop is a specialty retailer of manufactured and natural stone tiles, setting and maintenance materials, and related accessories in the United States.
The complaint alleges that during the Class Period, defendants issued materially false and misleading statements regarding the Company's financial performance and future prospects and failed to disclose that, among other things, Tile Shop had been acquiring the vast majority of its product from China, paying below-market prices for product that contained dangerously high lead levels, and that Tile Shop had acquired a significant amount of its product from an undisclosed related party. The complaint also alleges that defendants concealed that Tile Shop had been using phantom suppliers to overstate inventories, understate the cost of sales, and overstate gross profits in its financial reports. As a result of defendants' material misrepresentations and omissions, Tile Shop was able to complete two secondary public stock offerings during the Class Period for total proceeds of over $39 million.
On October 30, 2013, Tile Shop announced its results for the third quarter of 2013. Tile Shop reported $0.08 per share in earnings for the quarter, compared to its earlier guidance of $0.10 per share. During a conference call with investors on the same day, defendants stated that the Company was increasing its fiscal year 2013 revenue guidance from $222 million to between $227 and $237 million, without simultaneously increasing its Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization (“EBITDA”) guidance, which allegedly demonstrated that the Company's profit margins were declining.
On November 14, 2013, research and investment firm Gotham City Research (“Gotham”) published a report disclosing that, unbeknownst to investors, Tile Shop had acquired material amounts of its product sold in fiscal years 2011, 2012 and 2013 from a Chinese supplier that was owned and operated by the brother-in-law of the Company's CEO. Gotham claimed that Tile Shop had inflated its earnings by 200% during fiscal year 2013 alone by using its China-based “phantom” suppliers to bolster its numbers. On this news, the price of Tile Shop stock fell 39%, or $8.27 per share, to close at $12.95 per share on November 14, 2013, on usually high trading volume.
As noted above, Tile Shop investors who wish to learn more about the action or to seek appointment as lead plaintiff should click here or contact Sharon M. Lee of Lieff Cabraser toll-free at 1 800 541-7358.
About Lieff Cabraser
Lieff Cabraser Heimann & Bernstein, LLP, with offices in San Francisco, New York, and Nashville, is a nationally recognized law firm committed to advancing the rights of investors and promoting corporate responsibility.
Since 2003, the National Law Journal has selected Lieff Cabraser as one of the top plaintiffs' law firms in the nation. In compiling the list, the National Law Journal examined recent verdicts and settlements in addition to overall track records. Lieff Cabraser is one of only two plaintiffs' law firms in the United States to receive this honor for the last ten consecutive years.
For more information about Lieff Cabraser and the firm's representation of investors, please visit http://www.lieffcabraser.com.
This press release may be considered Attorney Advertising in some jurisdictions under the applicable law and ethical rules.
Source/Contact (for Media Inquiries Only)
Lieff Cabraser Heimann & Bernstein, LLP
Sharon M. Lee