Why is the Super Retail share price falling 5% today?

Investors are shying away from the retailer as the company gets ready to go to court.

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It's a merciless morning for the Super Retail Group Ltd (ASX: SUL) share price as investors react to impending court proceedings.

Shares in the retail operator fell as much as 8% on the open. Investors have become more comfortable with the news as the day goes on. The company's share price is still 4.8% worse off at $14.17 apiece.

Knowing it's a doozy of a day for the S&P/ASX 200 Index (ASX: XJO) might provide some consolation. The Australian benchmark is down 1.2% as fears of further interest rate increases gather steam. But, today's concern for Super Retail Group probably has little to do with macroeconomics.

Super Retail shares are under pressure today as accusations have been laid against the CEO of Super Retail Group, Anthony Heraghty, and a former colleague.

The owner of Supercheap Auto, BCF, Macpac, and Rebel clarified that court proceedings are expected to commence soon over allegations made by two employees. Represented by Harmers Workplace Lawyers, the claim loss and damage is estimated to be between $30 million and $50 million.

As per the announcement, these proceedings relate to the alleged non-disclosure of a relationship between Heraghty and a former chief human resources officer. Furthermore, the allegations are expected to cover inappropriate company travel, bullying, adverse treatment, unreasonable workloads, and unsatisfactory company record management.

An internal investigation carried out by an independent external advisor found the allegations to be unsubstantiated.

Leading international law firm Allens is acting on behalf of Super Retail Group to defend these claims. The company noted it intends not to further comment on the matter, although updates will be made where 'appropriate'.

Rough run for Super Retail share price

Today's move deepens the disappointing year so far for the ASX retail share. Shares in the company are down approximately 11% year-to-date, while the benchmark is flat.

Investors began applying pressure to Super Retail shares following its half-year results on 22 February. A 6% fall in normalised net profit after tax stood out from the figures, implanting concerns about what future earnings might look like.

Motley Fool contributor Mitchell Lawler has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has positions in and has recommended Super Retail Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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