Robbins Arroyo LLP: Sprouts Farmers Market, Inc. (SFM) Misled Shareholders According to a Recently Filed Class Action
March 29, 2016 (San Diego, CA & Phoenix, AZ) – Shareholder rights law firm Robbins Arroyo LLP announces that a class action complaint was filed against Sprouts Farmers Market, Inc. (NASDAQGS: SFM) in the Superior Court of the State of Arizona, County of Maricopa. The plaintiff brings the complaint on behalf of all purchasers of Sprouts common stock in connection with the company’s March 10, 2015 underwritten secondary public offering, for alleged violations of the Securities Act of 1933 by Sprouts’ officers and directors. Sprouts Farmers Market, together with its subsidiaries, operates as a retailer of fresh, natural, and organic food in the United States.
Sprouts Accused of Misleading Investors About Price Deflation
According to the complaint, Sprouts stated in its Form 10-K with the U.S. Securities and Exchange Commission (“SEC”) for the fiscal year ended December 28, 2014, that its resilient business model, strong financial performance, and its ability to offer competitive prices on natural and organic products set it apart from its competitors. Sprouts further mentioned that food deflation could reduce sales growth, but did not discuss then-current trends in produce price deflation or the effects of such deflation on the company’s sales growth or outlook. On March 4, 2015, Sprouts filed a Registration Statement with the SEC registering the selling stockholders’ remaining shares of Sprouts common stock for sale to the public at a maximum offering price of $35.85 per share. The offering, which closed on March 10, 2015, was successful for the selling stockholders, who sold 15,847,800 shares of common stock to the public at $35.30 per share, raising more than $559.4 million in gross proceeds. The complaint alleges that the offering documents were misleading because they were required to, but did not disclose uncertainties that are reasonably likely to have a material impact on the company’s profitability, including price deflation.
The false and misleading nature of Sprouts’ offering documents was revealed when the company issued a press release announcing disappointing results that were below the projected guidance level of between five and six percent for the quarter. That same day, during a conference call with investors, a Sprouts official admitted that the company was experiencing accelerating produce deflation in February, which continued into April. Then, on August 6, 2015, Sprouts again revealed disappointing results, including sales that missed analysts’ expectations and reduced the company’s guidance for full-year sales growth guidance by approximately 18 percent. As news of Sprouts’ declining financial position became public, its stock fell significantly, and was trading more than 38 percent below the offering price when the complaint was filed.
Sprouts 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.
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