Embattled department store Myer is back in court. The class action brought by shareholders claims that Myer engaged in misleading and deceptive conduct and that it failed to disclose price sensitive information.
Myer proceedings in the Federal Court have commenced. The department store is facing a class action launched on behalf of shareholders who claim Myer breached continuous disclosure obligations. In 2014, Bernie Brookes, then chief executive of Myer, told investors, analysts and journalists that the company’s profits would grow in 2015. Prior to this statement, the board had decided it could not reliably give such guidance. Shareholders claim that the board failed to correct Mr Brookes’ claim.
“When a company makes a forecast it has a obligation… to keep looking at the forecast and keep changing if it remains valid or not,” Norman O’Bryan, QC, told the court on the first day of proceedings. “Myer did not do that. Mr Brookes made a profit forecast on September 11, 2014 and Myer pretended it didn’t happen.”
Myer’s trading in the first quarter of 2015 was down by 15 percent, which meant that it would have needed a 23 percent jump in profit in the second quarter to support Brookes’ claim that profits would grow in 2015. This did not eventuate.
In 2015, Richard Umbers who replaced Brookes, warned that net profit would fall to between $75 and $80 million in 2015, resulting in a freefall drop in Myer’s share price.
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