Myer is being sued by some of its shareholders amid anger at its shock profit downgrade.
Myer last week stunned analysts and investors by lowering its full-year profit forecast, sparking questions about why it hadn’t issued a warning two weeks ago when it announced its new chief executive.
The company says it was served legal papers yesterday by a shareholder seeking to bring a group action for itself and on behalf of other investors.
The writ, filed by Portfolio Law on behalf of Melbourne City Investments, alleges loss and damage said to have resulted from a statement made in the context of the company’s full-year results.
“Myer denies the claim and will defend the litigation vigorously,” the retailer said in a statement today.
Shares in Myer plunged by more than six per cent in early trade. The stock was 8.5 cents lower at $1.33 at 1027 AEDT.
The retailer last week lowered its full-year profit forecast to between $75 million and $80 million, well below market expectations of a $90 million profit and the previous year’s $98.5 million result.
That news sent Myer shares down 10 per cent.
Analysts at the time questioned why the new, weaker forecast wasn’t provided when Myer announced the appointment of new chief executive Richard Umbers a fortnight earlier.
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Myer on Tuesday defended the timing of its profit downgrade, saying the market was told about weaker-than-expected earnings as soon as possible.
In response to a “please explain” letter from the ASX, Myer said its board only decided to revise the profit forecast the day before the company released its half year results.
The company issued the new guidance before the market opened the next day, meaning it had not breached disclosure rules, Myer said.
