Case Page

 

Case Status:    DISMISSED    
On or around 09/14/2004 (Other)

Filing Date: August 14, 2002

According to the Company’s FORM 10-Q for the quarterly period ended September 25, 2004, on December 1, 2003, the district judge granted the Company’s motion to dismiss the plaintiff’s action, with prejudice. The plaintiffs subsequently filed an appeal. On August 17, 2004, the US Court of Appeals affirmed the district court’s ruling in favor of the Company.

On December 4, 2002, the Court entered the Order signed by U.S. District Judge Naomi R. Buchwald granting the amended motion for an order consolidating all related actions. The Court further granted the motion to appoint Capstone Asset Management Company as lead plaintiff and granted the motion to approve Schiffrin & Barroway, LLP as lead counsel and Bernstein Liebhard & Lifshitz, LLP as liaison. On February 3, 2003, the plaintiff filed a Consolidated Amended Complaint, and the defendants responded by filing a motion to dismiss.

The original Complaint alleges that defendants violated Sections 10(b) and
20(a) of the Securities Exchange Act of 1934, and Rule 10b-5
promulgated thereunder, by issuing a series of material
misrepresentations to the market during the Class Period, thereby
artificially inflating the price of Duane Reade securities. On April
25, 2002, the start of the Class Period, defendants issued Duane's First
Quarter 2002 earnings new release for the quarter ending March 31, 2002.
Duane reported recorded first quarter sales and earnings results as
follows: net sales increased 12.5% to $305.8 million and net income was
$5.3 million, or $0.22 per share, before a previously disclosed one-time
non-cash charge, compared to net income of $2.6 million, or $0.14 per
share, in the prior year period. With respect to the slight decline in
gross profit margin for the quarter, defendants stated in the news
release that it was "primarily attributable to the temporary dampening
of front-end sales in the post September 11 period and also due to a
$0.4 million LIFO provision in the period." In addition, defendants
misled the public by presenting a very positive outlook for the second
quarter projecting that Duane Reade would earn between $0.40 to $0.44
cents per share. Suddenly, on July 25, 2002, defendants issued a news
release announcing that Duane Reade's second quarter profits had
plummeted by more than half because Duane Reade had failed to disclose
previously that a) in connection with the "$218 convertible notes
offering," which was completed in April 2002, it had incurred expenses
of $7.7 million, after tax, which expenses would sharply reduce Duane
Reade's profits in the second quarter of 2002 and cause Duane Reade to
report earnings significantly lower than the level defendants told the
market to expect; b) had sharply lowered prices in their stores
commencing in April 2002 and planned to continue such program throughout
the second quarter in an effort to increase revenues, knowing that this
would cause reduced profit margins in the second quarter; c) was
experiencing increased "shrink," primarily due to increased theft and
vendor errors, which would further erode profits in the second quarter
of 2002; d) was experiencing an increase in sales of generic drugs as a
percentage of total drug sales, which sales were at lower prices than
sales of branded equivalents; e) was experiencing a fall-off in higher
margin items, including cosmetics, snacks, jewelry and toys; and f) had
embarked on a program, beginning in April 2002 when defendants learned
that they would receive $9 million in business interruption insurance
proceeds from the claims submitted in the aftermath of September 11, to
open in the second quarter five additional stores to the number of new
stores originally planned to be opened during the second quarter which,
together with the three additional unplanned stores opened in the first
quarter of 2002, would cause Duane Reade to incur additional costs of
$1.5 million, including $800,000 in store pre-opening expenses, in the
second quarter of 2002. In response to the surprise negative announcement on July 25, 2002, the price of the Company's common stock dropped from a closing price of $23.55 per share on July 24, 2002 to a closing price of $14.60 per share on July 25, 2002.

COMPANY INFORMATION:

Sector: Services
Industry: Retail (Drugs)
Headquarters: United States

SECURITIES INFORMATION:

Ticker Symbol: DRD
Company Market: New York SE
Market Status: Public (Listed)

About the Company & Securities Data


"Company" information provides the industry and sector classification and headquarters state for the primary company-defendant in the litigation. In general, "Securities" information provides the ticker symbol, market, and market status for the underlying securities at issue in the litigation.

In most cases, the primary company-defendant actually issued the securities that are the subject of the litigation, and the securities information and company information relate to the same entity. In a small subset of cases, however, the primary company-defendant is not the issuer (for example, cases against third party brokers/dealers), and the securities information and company information do not relate to the same entity.
COURT: S.D. New York
DOCKET #: 02-CV-6478
JUDGE: Hon. Naomi Reice Buchwald
DATE FILED: 08/14/2002
CLASS PERIOD START: 04/25/2002
CLASS PERIOD END: 07/24/2002
PLAINTIFF FIRMS NAMED IN COMPLAINT:
  1. Abbey Gardy, LLP (New York)
    212 East 39th Street, Abbey Gardy, LLP (New York), NY 10016
    212.889.3700 · info@abbeygardy.com
  2. Brodsky & Smith, LLC (former Pennysylvania)
    11 Bala Avenue, Suite 39, Brodsky & Smith, LLC (former Pennysylvania), PA 19004
    610.668.7987 610.660.0450 · esmith@Brodsky-Smith.com
  3. Cauley Geller Bowman Coates & Rudman LLP (Little Rock, AR)
    P.O. Box 25438, Cauley Geller Bowman Coates & Rudman LLP (Little Rock, AR), AR 72221-5438
    501.312.8500 501.312.8505 ·
No Document Title Filing Date
COURT: S.D. New York
DOCKET #: 02-CV-6478
JUDGE: Hon. Naomi Reice Buchwald
DATE FILED: 02/03/2003
CLASS PERIOD START: 04/01/2002
CLASS PERIOD END: 07/24/2002
PLAINTIFF FIRMS NAMED IN COMPLAINT:
  1. Bernstein Liebhard & Lifshitz, LLP (New York)
    10 E. 40th Street, 22nd Floor, Bernstein Liebhard & Lifshitz, LLP (New York), NY 10016
    800.217.1522 · info@bernlieb.com
  2. Schiffrin & Barroway LLP
    3 Bala Plaza E, Schiffrin & Barroway LLP, PA 19004
    610.667.7706 610.667.7056 · info@sbclasslaw.com
No Document Title Filing Date
No Document Title Filing Date