According to a press release dated April 1, 2010, the Complaint alleges that, during the Class Period, Defendants discussed an emerging shift in fashion trends that Defendants represented was an opportunity for the Company and represented to investors that the Company would be able to manage the trend, that the Company had effective inventory management controls and systems, and that Urban Outfitters inventory would "grow more in-line with sales growth."
It is alleged, however, that by the beginning of the Class Period, Defendants knew, or had reason to know, that the Company was not managing the shift in fashion trends because: (1) the Company's inventories were increasing materially more than sales, (2) sales at the Company's namesake Urban Outfitters store and Anthropologie division were materially declining due to lack of customer demand, especially for women's apparel, and (3) as a result, the Company was forced to mark down the price of inventory which materially adversely affected the Company's margins and financial results for the quarter ended January 31, 2011.
The Complaint further alleges that on March 7, 2011, investors in Urban Outfitters' stock learned the truth about the Company when, after the close of trading, Defendants disclosed the Company's financial results for the quarter ended January 31, 2011. Among other things, the Company disclosed i) earnings of $75 million or $0.45 per share for the fourth quarter, which was approximately 13% less than the $0.52 per share expected by analysts; ii) that gross profit margin materially declined, primarily due to increased merchandise markdowns to clear seasonal inventory associated with changing women's apparel fashion trends; and iii) retail inventories increased by 10% at cost while total comparable store inventory increased by 4% at cost and total inventories grew by $43 million or 23%, on a year-over-year basis.
On March 8, 2011, Urban Outfitters shares declined from a close on March 7, 2011 of $37.99 per share, to close at $31.66 per share, a decline of $6.33 per share or approximately 17% on heavier than usual volume.
On June 17, 2011, both parties filed a joint Stipulation of Voluntary Dismissal without prejudice to either party. Each party assumed responsibility for their legal costs. The Court terminated the case effective on the same date.