A securities class action was recently filed against Boulder Brands, Inc.
Boulder Brands is a consumer foods firm that makes and distributes food products to consumers. The company, which is based in Boulder, Colorado, brings in more than $460 million in revenue each year. Its products are divided into six brands and 60 categories.
Robbins Arroyo suit
On April 7, 2015, Robbins Arroyo LLP announced the filing of a federal securities fraud class action suit, which involved allegations the company, as well as certain directors and officers, breached the Securities Exchange Act of 1934.
According to the lawsuit, which was brought forth in the U.S. District Court for the District of Colorado, the aforementioned defendants breached this act between Dec. 23, 2013, and Oct. 22, 2014.
The securities class action alleged that during the class period, the company failed to reveal that both its Udi and EVOL brands were facing inventory management and integration challenges.
Gainey McKenna & Egleston suit
On April 2, 2015, Gainey McKenna & Egleston announced the filing of a separate shareholder lawsuit. This legal claim involved the same class period – spanning Dec. 23, 2013 to Oct. 22, 2014 – and involved allegations that during the aforementioned class period, the defendants provided statements that were materially false and misleading – and or failed to disclose key adverse facts – about the prospects and business of the company.
“Company stock reached artificially high prices during the class period.”
Like the Robbins Arroyo suit, the Gainey McKenna & Egleston legal claim alleged that defendants neglected to reveal the company’s challenges involving integrating recent acquisitions and inventory management. Because Boulder Brands consistently moved toward a mix of lower-margin products, the organization was unable to achieve the margin improvements it announced before.
Because of the false and misleading statements provided by defendants, company stock reached artificially high prices during the class period, the aforementioned suit claimed.
Updated financial results
On Oct. 22, 2014, the consumer foods company supplied an update on its anticipated financial results for the third quarter of 2014. In addition, the firm revealed its revised outlook for the fourth quarter of 2014. In a statement, Stephen Hughes, chairman and CEO of Boulder Brands, elaborated on the difficulties his company was encountering, as well as their impact on firm’s performance.
“During the third quarter, we faced a number of headwinds that impacted our financial results. Smart Balance continued to face challenges in the spreads category, resulting in a larger than expected decline,” he noted. “In addition, as noted on our second quarter call, the mix shift of our fast-growing, lower margin Natural segment is significantly outpacing our higher margin Balance segment and is therefore putting increased pressure on our gross margins.”
Hughes stated that while his company expected fourth-quarter consumption to be similar to that in the third quarter, the organization predicted shipments would fall because of Boulder Brands’ largest customer normalizing certain inventories.
Finally, the statement revealed the company planned to take a significant charge and that earnings per share would would likely
When global investors found out about these difficulties, Boulder Brands shares plunged 24 percent to close at $9.62 on Oct. 22, 2014. This sharp decline happened during a day when market participants traded more than 9 million of these units of ownership. The following day, shares declined once again, falling 6 percent to close at $8.99 each on Oct. 23, 2014.
“Boulder Brands shares plunged 24% to close at $9.62.”
Shareholders eligible to participate in the aforementioned class action can reach out to Darnell Donahue at Robbins Arroyo. Alternatively, eligible investors interested in working with Gainey McKenna & Egleston can speak with Thomas McKenna or Gregory Egleston.
Those interested in serving as lead plaintiff in the securities class action filed by Gainey McKenna & Egleston have until June 1, 2015, to move the court.