According to the law firm press release, the complaint charges Body Central and certain of its officers and directors with violations of the Securities Exchange Act of 1934. Body Central is a multi-channel, specialty retailer offering women’s apparel and accessories at specialty stores under the Body Central and Body Shop banners, as well as through a direct business.
The complaint alleges that, throughout the Class Period, defendants issued materially false and misleading statements regarding the Company’s financials and future business prospects. Specifically, defendants misrepresented and/or failed to disclose adverse facts concerning what defendants described as a “merchandise miss,” as well as the poor operating and financial performance of the Company’s stores. As a result of defendants’ false statements, which included statements regarding the Company’s 2012 financial outlook, Body Central common stock traded at artificially inflated prices during the Class Period, reaching a high of $30.69 per share on April 27, 2012.
On May 3, 2012, Body Central issued a press release announcing its first quarter 2012 financial results. Among other things, the Company unexpectedly issued a weak forecast for second quarter and full year earnings, pointing to an expected decrease in comparable store sales. For the second quarter, the Company forecast earnings between $0.26 and $0.28, well below market expectations of $0.36. The Company forecasted full year earnings of $1.34 to $1.38, below the average analyst forecast of $1.52. On this news, Body Central common stock abruptly lost almost half of its value, falling $14.04 per share to close at $14.88 per share on May 4, 2012, a one-day decline of more than 48%.
Then, on June 18, 2012, Body Central issued a press release “revising sales and earning guidance for its second quarter and full year 2012.” On this news, Body Central common stock again lost almost half of its value, falling $7.77 per share from a closing price of $15.99 on June 15, 2012 to close at $8.22 per share on June 18, 2012, the next trading day – a one-day decline of more than 48% – on volume of more than 14 million shares traded.
The complaint alleges defendants misrepresented and/or failed to disclose the following adverse facts: (i) that the Company’s merchandise miss was not an isolated, quickly fixable event, but would take at least several quarters to remedy and would have a material, negative impact on the Company’s financial results; (ii) that the Company’s stores were experiencing increasingly poor performance and financial results; (iii) that defendants issued materially false and misleading statements regarding the Company’s operations and its business and financial results and outlook; and (iv) that, based on the above, defendants lacked a reasonable basis for their positive statements about the Company or its revenue outlook.
On December 13, 2012, the Court issued an Order appointing lead plaintiff and approving the selection of lead counsel. Lead plaintiff filed an amended complaint on February 22, 2013. A corrected version of this complaint was filed 4 days later.
Plaintiffs filed an amended complaint on April 23, 2014.
On August 25, 2014, the parties entered into a Stipulation of Settlement. The Settlement was preliminarily approved by the Court on October 10.
On January 21, 2015, the Court issued a Final Judgment and ordered this case dismissed with prejudice. An award of attorneys' fees and expenses was made on the same day.