According to the law firm press release, the Complaint alleges that during the Class Period, Defendants violated provisions of the Exchange Act by issuing false and misleading statements regarding the Company’s end-user demand, channel inventory, and growth prospects for its high-margin supplies business. Lexmark is a manufacturer of printers and related supplies, primarily ink cartridges. Lexmark sells its products to wholesale distributors and large retail chains in more than 90 countries around the world.
During the Class Period, Lexmark repeatedly touted the profitability and growth of its high-margin supplies business. However, Defendants’ Class Period statements pertaining to the Company’s profitability and growth prospects were materially false and misleading because Defendants failed to disclose that: (1) end-user demand and growth for the Company’s supplies business was deteriorating; (2) pricing increases were the primary driver of supplies revenue growth, not end-user demand; (3) customers in the supplies channel reacted by buying ahead of anticipated pricing increases; and as a result, (4) there was excessive inventory levels at its European wholesale distributors.