Woolworths faces $100 million class action suit

Woolworths Group LTD, is facing an estimated $100 million class action suit by Australian law firm Maurice Blackburn, alleging the grocery giant broke disclosure rules by giving misleading profit guidance in 2015.


Court documents found, profit fell in the first half of 2015, while Woolworths amended its guidance without providing an exact forecast.

Woolworths shares dropped almost 10% upon the news, causing one of their biggest falls in 6 years.

According to court reports, Maurice Blackburn alleged Woolworths breached disclosure obligations, after the company downgraded its profit growth forecasts from 4% to 7% to a lower 1.8 to 6.6 % for November.

Woolworths has since defended the claims, and said it would consider proceedings when they’re “served” in statement on Tuesday

"Woolworths will consider any proceedings once served, but otherwise anticipates that they will be thoroughly defended."

The case was filed in Australia’s Federal Court on Monday, where an expected investigation will take place around when Woolworths had knowledge of sales lagging forecasts, to determine whether or not the company is to face further prosecution. The class action is also supported by international litigation funding partners.

At 1pm EST Tuesday, Woolworths shares were up 22 cents, to $28.46, despite the news.

IGA, may distribute information/research produced by its respective foreign marketing partners within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.

This information/research prepared by IGA or IG Group is intended for general circulation. It does not take into account the specific investment objectives, financial situation or particular needs of any particular person. You should take into account your specific investment objectives, financial situation or particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. In addition to the disclaimer above, the information does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. Any views and opinions expressed may be changed without an update.

See important Research Disclaimer.

Find articles by writer