According to the law firm press release, Freshpet manufactures and markets natural fresh foods, refrigerated meals, and treats for dogs and cats in the United States and Canada. Freshpet’s products are sold to consumers through a network of Company-owned branded refrigerators, known as Freshpet Fridges, which are located in grocery stores and other retail outlets.
The complaint alleges that throughout the Class Period, defendants failed to disclose material adverse facts about the Company’s true financial condition, business and prospects. Specifically the complaint alleges that: (a) one of the Company’s material customers, Target Corp., was undergoing a corporate reorganization and, accordingly, was delaying the installation of a significant number of Freshpet Fridges; (b) two of the Company’s supermarket customers were experiencing financial hardships such that it was likely that any Freshpet Fridges located in their respective stores would soon have to be removed; and (c) due to the foregoing, the Company was not growing its overall number of installed Freshpet Fridges at the levels communicated to investors and was tracking well below internal forecasts for such placements.
On August 11, 2015 Freshpet announced its financial results for the second quarter of 2015, the period ending June 30, 2015, and revealed that the Company was experiencing weaker gross margins and slowing fridge growth. As a result, on August 12, 2015, the price of Freshpet common stock declined $0.87 per share, or 6%, to close at $13.73 per share, on heavy trading volume.
Then, on November 11, 2015 Freshpet announced its financial results for the third quarter of 2015, the period ending September 30, 2015. For the quarter, the Company reported net sales of $30.6 million, adjusted EBITDA of $2.3 million, and Freshpet Fridges of 14,670. In reaction to this announcement, on November 12, 2015, the price of Freshpet common stock fell $2.09 per share, or 25%, to close at $6.28 per share.