On November 21, 2016, Pomerantz LLP was appointed Co-Lead Counsel in a class action lawsuit against Signet Jewelers Ltd. ("Signet" or the "Company") and certain of its officers. The class action, filed in United States District Court, Southern District of New York, and docketed under 16-cv-06861, is on behalf of a class consisting of all persons or entities who purchased or otherwise acquired Signet securities between January 7, 2016 and June 3, 2016 both dates inclusive (the "Class Period"). This class action seeks to recover damages against Defendants for alleged violations of the federal securities laws under the Securities Exchange Act of 1934.
Signet purports to be the world's largest retailer of diamond jewelry. The Company claims to operate thousands of stores inNorth America, and some in the United Kingdom, through well-known brand names such as "Kay," "Jared," "Zales," and "Peoples Jewelers."
The complaint alleges that throughout the Class Period, Defendants made materially false and misleading statements regarding the Company's business, operational and compliance policies. Specifically, Defendants made false and/or misleading statements and/or failed to disclose that: (i) the Company was experiencing difficulty ensuring the safety of customer's jewelry while in the custody of Signet's brands; (ii) employees at stores under at least one of Signet's brands (Kay) were swapping customers' stones for less valuable stones; (iii) the Company was experiencing a drop-off in customer confidence; (iv) the Company was facing increasing competitive pressures; (v) as result of the foregoing, the Company's financial performance was being negatively impacted; and (vi) as a result of the foregoing, Defendants' positive statements about Signet's business, operations, and prospects, were false and misleading and/or lacked a reasonable basis.
On May 25, 2016, BuzzFeed News reported on the seemingly wide-spread occurrences of diamond swapping in connection with the Company's Kay stores. The news report recounted the stories of multiple Kay customers whose diamonds were swapped out for considerably less expensive stones while the customers' jewelry was in the custody of Kay, typically for repair.
On May 26, 2016, the Company issued a press release announcing its first quarter fiscal year 2017 financial results. Therein, the Company disclosed that its same store sales for the period increased by only 2.4%, falling below the Company's previously issued first quarter 2017 guidance of 3% to 4%. The Company also disclosed that it was lowering its fiscal year 2017 same store sales growth guidance from 3.0% – 4.5% down to 2.0% – 3.5%.
On this news, Signet's stock price fell $11.37 per share, or 10.5%, to close at $97.00 per share on May 26, 2016, on unusually heavy trading volume.
On June 3, 2016, the Company issued a press release entitled "Signet Jewelers Issues Statement Regarding Its Longstanding Commitment to Superior Customer Service and Rigorous Product Quality Procedures." Therein, the Company appeared to confirm the occurrence of instances of "diamond swapping" at the Company's stores, though it denied that this was "systematic."
On this news, Signet's stock price fell $4.04 per share, or 4.3%, to close at $88.19 per share on June 3, 2016.