Robbins Arroyo LLP: Freshpet, Inc. (FRPT) Misled Shareholders According to a Recently Filed Class Action
Robbins Arroyo LLP announces that a class action complaint was filed against Freshpet, Inc. (NASDAQGM: FRPT) in the U.S. District Court for the District of New Jersey. The complaint is brought on behalf of all purchasers of Freshpet securities between April 1, 2015 and November 11, 2015, for alleged violations of the Securities Exchange Act of 1934 by Freshpet’s officers and directors. Freshpet manufactures, markets, and distributes natural fresh and refrigerated meals and treats for dogs and cats in the United States and Canada. Freshpet’s products are sold through a network of company-owned branded refrigerators, known as Freshpet Fridges, which are located in retail outlets.
Freshpet Accused of Misrepresenting the Growth of its Freshpet Fridges
According to the complaint, Freshpet believes its Freshpet Fridges give it a competitive advantage over other pet food because it guarantees exclusive shelf space in leading national retail chains and its highly-visible merchandising platform attracts customers. The company’s growth strategy is thus linked exclusively with its ability to install new Freshpet Fridges in retail stores. Throughout the class period, Freshpet officials participated in numerous conference calls with analysts and issued a series of press releases touting the company’s strong top-line growth and predicting net sales to increase by 29% to 32% and the number of Freshpet Fridges to increase approximately 13% to 17% compared to 2014. The company further stated that it was excited about several new potential retailers for its Freshpet Fridges.
However, the complaint alleges that these statements were misleading because Freshpet officials failed to disclose that: (i) one of the company’s material customers, Target Corp., was undergoing a corporate reorganization and was delaying the installation of a significant number of Freshpet Fridges; (ii) two of the company’s supermarket customers were experiencing financial hardships, so Freshpet Fridges located in their respective stores would likely soon have to be removed; and (iii) the company was therefore 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. In addition, Freshpet officials allegedly did not disclose that the rise in beef prices had negatively impacted the company’s sales far worse than disclosed and that the company was experiencing manufacturing and production issues that were delaying the introduction of certain new products.
The truth about the company’s financial state came to light on November 11, 2015, when Freshpet issued a press release announcing disappointing financial results due to lower than expected Freshpet Fridge growth and manufacturing inefficiencies. With regard to the company’s outlook, it revised downward its guidance for net sales, adjusted Earnings Before Interest, Taxes, Depreciation and Amortization, and Freshpet Fridges. The company also revealed in a conference call that the recent bankruptcy of two grocery retailers had negatively impacted its fridge count and that its decision to increase the price on certain Freshpet beef products had caused demand of those products to soften. On this news, Freshpet stock fell by $2.09 per share, or 25%, to close at $6.28 per share on November 12, 2015.
Freshpet Shareholders Have Legal Options
Concerned shareholders who would like more information about their rights and potential remedies can contact attorney Darnell R. Donahue at (800) 350-6003, or you can complete the form below and we will contact you directly.