Woolworths Group Ltd (ASX:WOW) hit with $100 million class action

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.

Instead I will focus on these blue chip shares which I think offer investors a winning combination of growth and income.

Top 3 ASX Blue Chips To Buy In 2018

For many, blue chip stocks mean stability, profitability and regular dividends, often fully franked..

But knowing which blue chips to buy, and when, can be fraught with danger.

The Motley Fool’s in-house analyst team has poured over thousands of hours worth of proprietary research to bring you the names of "The Motley Fool’s Top 3 Blue Chip Stocks for 2018."

Each one pays a fully franked dividend. Each one has not only grown its profits, but has also grown its dividend. One increased it by a whopping 33%, while another trades on a grossed up (fully franked) dividend yield of almost 7%.

The names of these Top 3 ASX Blue Chips are included in this specially prepared free report. But you will have to hurry. Depending on demand – and how quickly the share prices of these companies moves – we may be forced to remove this report.

Click here to claim your free report.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The 5 mining stocks we’re recommending in 2019…

For decades, Australian mining companies have minted money for individual investors like you and me. But if you believe the pundits and talking heads on TV, those days are long gone. Finito! Behind us forever…

We say nothing could be further from the truth. To earn the really massive returns, you’ve got to fish where others aren’t fishing—and the mining sector could be primed for a resurgence. That’s why top Motley Fool analysts just revealed their exciting new research on 5 ASX miners they believe could help you profit in 2019 and beyond…


The best way we see to play the global zinc shortage… Our #1 favourite large-cap miner (hint: it’s not BHP)… one early-stage gold miner we think could hit the motherlode… Plus two more surprising companies you probably haven’t heard of yet!

For free access to our brand-new research, simply click here or the link below. But be warned, this research is available free for a limited time only, and we reserve the right to withdraw it at any time.

Click here for your FREE report!