Woolworths to take stock of ASX disclosures as investors take aim

Marella Gibson
Chief Marketing Officer - Australia and Asia | +61 2 8223 3517 | [email protected]

SYDNEY, 11 April 2017: Investors hit by a Woolworths (ASX:WOW) share price dive on the back of a shock profit downgrade are preparing to launch a shareholder class action against the retail and supermarket giant, leveling serious allegations of breaches of the Corporations Act.

Australia’s leading class action law firm, Maurice Blackburn Lawyers, together with the support of global litigation funder IMF Bentham, today opened an online registration portal for aggrieved shareholders to sign up to a claim that could well exceed A$100 million.

Class Action Principal from Maurice Blackburn, Andrew Watson said there is reason to believe that Woolworths did not have a reasonable basis for providing its original profit guidance for FY15 and was misleading between 27 November 2014 and 26 February 2015. 

It is one thing for supermarket giants to drive down the prices on their shelves, but when they take actions that drive the share price down and they don’t make timely information available to shareholders about that, then they’ve got a problem.” Mr Watson said.

When corporations don’t abide by the laws requiring they make timely and accurate market disclosures, these aren’t mere technical breaches – it undermines the integrity of the market and distort the efficient allocation of capital that could go to more deserving companies.

The end result is that shareholders, both individual everyday Australians and large institutional investors entrusted with members’ savings such as large superannuation funds, unwittingly suffer the consequences and lose out in a major way.

There are only five shareholder class actions in this country that have settled for in excess of $100 million, and we have run all of them. We believe this case has the very real potential to be in that upper echelon if it is supported by aggrieved shareholders, who can register their interest from today.”

Senior Investment Manager at IMF Bentham, Wayne Attrill, said that like all shareholder class actions that attracted litigation funding, it was a market-based response to a market-based issue and would only proceed if enough shareholders supported seeking redress.

This is a chance for investors who were deprived of information on the true state of affairs of the company standing up and being able to access a meaningful redress mechanism whilst sending a strong message to the company that such breaches aren’t acceptable,” Mr Attrill said.

A strong culture of good corporate conduct is as important as ever when it comes to attracting future investment in our economy, and strong enforcement mechanisms through the public regulator and private redress via class actions help reinforce that message.” 

Background to the allegations

On 27 February 2015, Woolworths Ltd (ASX: WOW) announced that it was downgrading its previously issued guidance of growth in its Net Profit After Tax (NPAT) of 4% to 7% for Financial Year 2015. That guidance had been emphatically reaffirmed as recently as the 27 November 2014 Annual General Meeting at which then Woolworths Chairman Ralph Waters stated: 

Earlier in the year management provided guidance for the 2015 financial year of growth in net profit after tax of between 4% and 7%. Following a recent review by the Board, I am pleased to reaffirm our previous guidance today.

Following the downgrade on 27 February 2015, Woolworths’ share price declined 13.7% over two trading days.
It will be alleged that Woolworths’ original profit guidance for FY15 did not have a reasonable basis and was misleading between 27 November 2014 and 26 February 2015.

Registration for the potential shareholder class action is free and can be done online at: www.imf.com.au/woolworths

To find out more about the class action investigation, contact the IMF Client Liaison Team by email on [email protected] or call 1 800 016 464.

Media inquiries: Wayne Attrill,  T: (02) 8223 3567, E: [email protected]