Winn-Dixie Target of Shareholder Class Action Lawsuit
NEW YORK - Several law firms representing Winn-Dixie shareholders are filing a class action lawsuit against the company, alleging that its top executives portrayed Winn-Dixie as a growing and competitive company when it was suffering from substantial undisclosed long-term business and financial problems.
The lawsuit claims that when Allen Rowland stepped down as c.e.o., Frank Lazaran ordered his senior management to conduct a "comprehensive review" of Winn-Dixie's "entire business model." This was unbeknownst to the investing public, according to the suit.
On Jan. 30, 2004, before the opening of trading, a Winn-Dixie press release announced what the lawsuit calls "disastrous" financial results for the company's second fiscal quarter ended Jan. 7, 2004. The company's sales were down over a quarter of a billion dollars from the prior year period, and it had sustained a loss of $79.5 million, or $0.57 per share.
Winn-Dixie said it would take a "series of major actions" to change the way the company does business, including brand positioning for its Winn-Dixie brand, $100 million in expense reduction by July 1, 2004, in-depth analysis of the company's core markets, market share, and competitive positioning, an "image makeover program," and an initiative to "reengineer" organizational effectiveness and accountability.
In addition, Winn-Dixie announced that it would recognize a $36.4 million charge to earnings for impairment to its long-lived assets, namely, its store locations, and would add $21.4 million to its reserves for self-insurance expense, which included additional reserves for workers' compensation claims. The company also cut its dividend indefinitely.
The market reacted swiftly to the news. Winn-Dixie's stock plunged from $9.09 to $6.56 per share on volume of 24.6 million shares.
The plaintiff seeks to recover damages on behalf of all those who purchased or otherwise acquired Winn-Dixie securities during the Class Period, Oct. 9, 2002 through Jan. 29, 2004.
The lawsuit claims that when Allen Rowland stepped down as c.e.o., Frank Lazaran ordered his senior management to conduct a "comprehensive review" of Winn-Dixie's "entire business model." This was unbeknownst to the investing public, according to the suit.
On Jan. 30, 2004, before the opening of trading, a Winn-Dixie press release announced what the lawsuit calls "disastrous" financial results for the company's second fiscal quarter ended Jan. 7, 2004. The company's sales were down over a quarter of a billion dollars from the prior year period, and it had sustained a loss of $79.5 million, or $0.57 per share.
Winn-Dixie said it would take a "series of major actions" to change the way the company does business, including brand positioning for its Winn-Dixie brand, $100 million in expense reduction by July 1, 2004, in-depth analysis of the company's core markets, market share, and competitive positioning, an "image makeover program," and an initiative to "reengineer" organizational effectiveness and accountability.
In addition, Winn-Dixie announced that it would recognize a $36.4 million charge to earnings for impairment to its long-lived assets, namely, its store locations, and would add $21.4 million to its reserves for self-insurance expense, which included additional reserves for workers' compensation claims. The company also cut its dividend indefinitely.
The market reacted swiftly to the news. Winn-Dixie's stock plunged from $9.09 to $6.56 per share on volume of 24.6 million shares.
The plaintiff seeks to recover damages on behalf of all those who purchased or otherwise acquired Winn-Dixie securities during the Class Period, Oct. 9, 2002 through Jan. 29, 2004.