The flower delivery giant FTD and three of its executives were recently named as defendants in a securities class action lawsuit stemming from issues with previous financial statements and taxes. To learn more about this case, visit Battea’s FTD case summary.
Specifically, the suit pertains to issues that led FTD to restate some of its financial reporting dating back as far as 2014, and alleges that the company did not have effective internal controls over its financial reporting. The suit also claims the company overstated the benefits of acquiring the business Provide Commerce.
The securities class action suit was filed in the U.S. District Court for the Northern District of Illinois, and has a class period of March 13, 2015 to March 14, 2017. It names FTD Companies, Inc., previous Chief Executive Officer Robert Apatoff, former Interim CEO and Interim President Christopher Shean, and former Executive Vice President and Chief Financial Officer Becky Sheehan as defendants.
The flower delivery company FTD is facing a securities class action.What happened?
FTD released its fourth-quarter and full-year financial results for 2016 in mid-March 2017, and reported that revenues were down slightly on an annual basis for both periods examined. Moreover, it found “immaterial errors” related to cross-border indirect taxes, which affected previous financial statements for the full years of 2014 and 2015, as well as all quarters in 2015 and 2016. As a consequence of these issues, retained earnings dating back as far as Jan. 1, 2014 had to be reduced by $12.4 million.
“The impact of these errors in the prior years are not material to the consolidated financial statements in any of these years; however, the aggregate impact of correcting these prior period errors all within the year ended December 31, 2016 would have been material to the company’s current year consolidated financial statements,” FTD wrote in the annual announcement. “Consequently, the company has corrected these immaterial errors in the periods to which they relate.”
How stock price moved
At the start of the class period, on March 13, 2015 (the day the company announced its full-year 2014 results) FTD’s stock was trading at a little more than $30 per share. It remained roughly in that neighborhood for most of the rest of that year, but tumbled to less than $25 per share by the start of January 2016. It continued to decline for much of last year, hitting a recent low of just $18.03 in early November. But before the end of the year, it had recovered a good portion of that lost value and closed 2016 at $23.84.
In mid-March 2017, when it announced its 2016 results as well as the revisions, it was trading at $23.39 per share, but the next day collapsed to just $17.85. Now, stock in FTD is trading at just $19.11, down significantly from where it was when the class period began.
For more information on this case or other class action litigations, please contact Kevin Doyle, Senior Vice President, at 203-987-4949 or info@battea.com.