Class Action Lawsuits Filed Against B&N
Barnes & Noble just can’t catch a break. Sales are down in B&N stores, their digital investment is a money pit, and now they are the subject of several class action lawsuits. Over the past week 3 different law firms (one, two, three) have issued press releases, announcing that they are suing B&N, and that number is bound to grow.
The firms are suing on behalf of stockholders, and they alleging that B&N misled investors between 25 February 2013 and 5 December 2013. The lawsuits are based on the disclosure made by B&N last month. The retailer mentioned in their SEC filing that they had been notified by the SEC that the retailer was being investigated concerning (one) an allegation made by an ex-B&N manager, and (two) the restatement of earnings made on 29 July 2013.
But according to the law firms, there’s more to it than that. Each of the three firms is making different allegations, but there is a fair amount of consistency between each of the press releases. Pomerantz is alleging that B&N made false and misleading statements to shareholders and failed to disclose material adverse facts. Ryan & Maniska concurs with that claim, and in their press release they spelled out B&N’s supposed dissembling:
- Barnes & Noble’s Nook e-book reader sales had dramatically declined,
- the Company would shutter its Nook manufacturing operations altogether,
- the carrying value of the Nook assets were impaired by millions of dollars,
- the carrying value of the Nook inventory was overstated by $133 million,
- the Company was expecting fiscal 2014 retail losses in the high single digits,
- Barnes & Noble had over-accrued certain accounts receivables,
- Barnes & Noble was unable to provide timely audited financial results for fiscal 2013, and
- the Company might be forced to restate its previously reported financial results.
All of these false and misleading statements reportedly took place between late February and December 2013, and that makes me wonder exactly who was misled and why they weren’t paying closer attention to the press coverage.
If you were a B&N stockholder during that period in 2013, the law firms are requesting that you contact them and join in the class action.
fjtorres January 14, 2014 um 4:18 pm
Ambulance chasers smell blood in the water.
The one point I think they possibly might get some traction with is number 1.
That 27% market share brag has been looking pretty dubious since 2012…
The rest? Dunno…
Doug January 16, 2014 um 4:33 pm
I believe that the 27% figure was for e-book content. Point #1 is about e-book readers. Regardless, B&N had been quite clear about significantly declining sales of both e-readers and content going into calendar 2013:
"The NOOK segment, which consists of the company’s digital business (including devices, digital content and accessories), had revenues of $316 million for the quarter. This represents a decline of 26% as compared to the same period a year ago, primarily as a result of lower device unit volume." – Feb 28, 2013 B&N press release accompanying their 3Q13 financial results.
flyingtoastr January 14, 2014 um 9:03 pm
Almost all of those complaints fall under safe harbor protections, and I’m sure the law firms know it. This is all about the SEC probe. It costs these firms very little to file their lawsuits, and all they then do is sit around and wait for the results of the SEC investigation. If there was no wrongdoing the firms are out a small amount of cash. But if there is wrongdoing these firms get consolidated into the general class-action and reap huge rewards with little work required.
This means absolutely nothing – it’s just lawyers trying to fleece some more money out of the system, like usual.