Earlier today I wrote about Slater & Gordon Limited (ASX: SGH) launching its Get Your Super Back campaign which will result in a series of legal actions targeting Commonwealth Bank of Australia (ASX: CBA) and AMP Limited (ASX: AMP) initially.
But these weren't the only companies on the Australian share market being hit with legal action today.
This morning Australian class action law firm Maurice Blackburn Lawyers advised that, together with litigation funder International Litigation Funding Partners, it has filed a case against supermarket and retail giant Woolworths Group Ltd (ASX: WOW) in the Federal Court. Maurice Blackburn estimates the claim could exceed $100 million for aggrieved investors.
According to the release, the case alleges that "Woolworths breached its continuous disclosure obligations and engaged in misleading conduct by issuing and reaffirming a profit guidance that could not be met without adversely affecting Woolworths' competitiveness. Woolworths then shocked the market with a significant profit downgrade in 2015 and subsequent admissions about the flawed metrics that underpinned the original guidance."
Woolworths responded to the news by reminding investors that a proposed class action was previously announced by IMF Bentham Ltd (ASX: IMF) and Maurice Blackburn in 2017.
Following that announcement, Woolworths corresponded with IMF Bentham. After which, in 2018, IMF Bentham announced that it had decided not to proceed with funding the claim as it considered that the proposed class action did not meet its investment criteria.
The statement finished by saying that "Woolworths will consider any proceedings once served, but otherwise anticipates that they will be thoroughly defended."
Judging by the share price reaction today, the market doesn't appear overly concerned by this news. Woolworths' shares finished the day 1% higher at $28.54.
Should you invest?
I wouldn't be a buyer of Woolworths' shares at the current level regardless of the class action as I feel they don't offer value for money at present. So, until its shares pull back to a more attractive level I intend to stay clear of the retail conglomerate.
