Performance Sports Group Ltd.
Robbins Arroyo LLP: Performance Sports Group Ltd. (PSG) Misled Shareholders According to a Recently Filed Class Action
Robbins Arroyo LLP announces that a class action complaint was filed against Performance Sports Group Ltd. (NYSE: PSG) in the U.S. District Court for the Southern District of New York. The complaint is brought on behalf of all purchasers of Performance Sports Group (“PSG”) securities between January 15, 2015 and March 14, 2016, for alleged violations of the Securities Exchange Act of 1934 by PSG’s officers and directors. PSG, together with its subsidiaries, designs, manufactures, and distributes performance sports equipment, related apparel, and accessories for ice hockey, roller hockey, lacrosse, baseball, and softball primarily in the United States, Canada, and Europe.
Performance Sports Group Accused of Misrepresenting Its Financial Condition
According to the complaint, in 2015, PSG touted its strong financial condition in several press releases and filings with the U.S. Securities and Exchange Commission, attesting to the accuracy of financial reporting and effectiveness of internal controls. Then, on December 16, 2015, Team Express, an online sporting goods retailer and large customer of PSG, filed for Chapter 11 Bankruptcy protection. On January 13, 2016, PSG announced that Baseball/Softball Earnings Before Interest, Taxes, Depreciation, and Amortization in the second quarter decreased 31% to $7.9 million, “largely driven by a bad debt write-off related to outstanding receivables for an internet baseball retailer that filed for bankruptcy reorganization.” On March 2, 2016, The Sports Authority, Inc., another large PSG customer, filed for Chapter 11 Bankruptcy protection after a year of publicly airing their financial concerns. The complaint alleges that PSG officials failed to disclose that: (1) PSG officials misdated PSG’s earnings by asking clients to move future orders into earlier quarters; (2) Sports Authority’s financial woes would impact PSG’s financial performance; (3) the baseball and softball markets were in decline; and (4) the consolidation of PSG’s U.S. hockey customers would create a smaller demand for hockey equipment.
On March 8, 2016, PSG issued a press release and held a conference call to discuss the revised fiscal year 2016 guidance and preliminary third quarter 2016 results, stating that it was increasing its bad debt reserves for certain of its U.S. hockey and baseball/softball customers due to an unexpected significant downturn in retail sales, weakening of consumer demand, and the Chapter 11 filing by one of its largest U.S. national sporting goods retailers. It further stated that it was reducing its fiscal year 2016 Adjusted Earnings Per Share guidance to approximately $0.12 to $0.14 per diluted share, compared to its prior publication of guidance of $0.66 to $0.69 per share. PSG also admitted that Sports Authority’s bankruptcy caused PSG to write-down their receivable as well as take their future sales out of PSG’s forecast. Since news of PSG’s financial troubles were made public, PSG stock declined by $6.62 per share, or over 65%, to close at $3.55 per share on March 15, 2016.
Performance Sports Group 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.