EVERETT
A shareholder of Zumiez, the Everett-based retailer of cutting-edge clothing aimed at teens, has filed a class-action lawsuit against the company, claiming management misled investors about the retailer’s potential earnings this year and violated federal securities laws.
David Rosenfeld of Coughlin Stoia Geller Rudman &Robbins LLP, which is representing the plaintiff, said other shareholders who purchased Zumiez shares between March 14 and Nov. 7 can join the legal action.
The 21-page complaint charges that company officials between March and November issued “materially false and misleading statements” that misrepresented and failed to disclose that the company wouldn’t meet sales and earning expectations this fall.
The suit was filed in U.S. District Court in Seattle this week on behalf of plaintiff Jan Rubia Richards and others who join the action. It names Zumiez Inc.; Thomas Campion, its co-founder and chairman; Richard Brooks, its chief executive officer; and Trevor Lang, the firm’s chief financial officer, as defendants.
A call to Lang and Zumiez representatives was not returned Tuesday.
The Nov. 7 date mentioned in the lawsuit is crucial. That’s when Zumiez’s mostly high- flying shares abruptly dove after the company indicated its 2007 earnings may end up between 92 cents to 94 cents per share. The company had forecasted earnings of up to $1.01 per share earlier in the year.
That, combined with a lower-than-expected increase in same-store sales during October, sent the stock falling $10.71 per share, or 27 percent, to close at $28.74 per share on Nov. 7.
The company’s shares haven’t recovered in recent volatile weeks on Wall Street. On Tuesday, Zumiez shares closed at $24.84.
The suit seeks to recover compensatory damages amounting to the plaintiffs’ losses in the stock this year.
Sara Hasan, an analyst who tracks Zumiez for McAdams Wright Ragen in Seattle, said the lawsuit, on first glance at least, seems odd. She said she’s seen no indication that Zumiez’s management sat on information instead of telling investors.
“It seems silly to me. It’s just a distraction from their normal operations, which they need to be focused on right now,” Hasan said.
Scott Smallman, senior vice president of investments with Wedbush Morgan Securities in Seattle, said such shareholder suits typically are settled, with the payouts usually covered by a company’s insurance.
Eric Fetters is a reporter for The Herald in Everett.
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