Two law firms, one in New York and one in Atlanta, announced this week they have commenced securities class-action proceedings against Big Lots, joining other firms that took similar steps earlier this month.
The firms accuse Big Lots, an Ohio-based discount retailer with approximately 1,500 store locations including one in Canyon Country, of misleading investors by allegedly making false claims about its business outlook.
A statement from Morgan & Morgan of New York City claims the false statements violate the Securities Exchange Act of 1934.
It says Big Lots “knew but concealed from the investing public that: (a) Big Lots’s consumables line – which represented a third of Big Lots’s business – was deteriorating; and (b) the Company’s electronic products business was being adversely affected as shoppers were increasingly seeking online deals for big ticket products, thus adversely affecting the Company’s margins and prospects.”
Another law firm, headed by former SEC attorney Willie Briscoe, claims that Big Lots directors personally profited when the allegedly unloaded shares at inflated prices.
“As a result of defendants’ alleged false statements,” Briscoe’s firm said, “Big Lots stock traded at artificially inflated prices during the Class Period, reaching a high of $46.81 per share on March 27, 2012. Several of Big Lots’ executives took advantage of these inflated prices and unloaded hundreds of thousands of shares of Big Lots stock for millions of dollars of personal gain.”
Morgan & Morgan mentions an April 23 press release from Big Lots in which the retailer announced that its first quarter same-store sales to come in lower than previously projected.
“On this news, Big Lots’s stock fell $11 per share to close at $34.71 per share the following day,” Morgan & Morgan said.
On the same news, Zacks Equity Research downgraded Big Lots stock to “underperform.”
Big Lots hasn’t commented.