Domino’s Pizza Enterprises, Australia’s prominent pizza chain, is facing a legal storm as a shareholder class action claims the company misled investors regarding its 2021 performance in Japan. The class action, spearheaded by Echo Law, centers around a trading update issued on November 3, 2021, where Domino’s had painted a rosy picture of its Japan operations, citing “excellent compounding sales” and robust store openings. Shareholders who entered equity swap confirmations during August 18 to November 3, 2021, claim they were misled by this optimistic outlook, now seeking compensation for the losses incurred.
In response to the legal proceedings, Domino’s has categorically denied any wrongdoing, vowing to defend itself against the accusations. The pizza giant pointed to the structural changes in its marketing, pricing, and store penetration in Japan at the time, which it claimed had led to higher sales and customer counts compared to pre-pandemic levels. However, as news of the class action broke, shares in Domino’s slid by 2.8%, reflecting growing investor concern over the potential fallout from the lawsuit.
The situation marks a significant moment for Domino’s, which has been grappling with broader challenges in recent times. In July, the company made the tough decision to shutter underperforming stores in Japan and France, a move that rattled analysts and triggered a plunge in share value to a nine-year low. With the class action now looming large, Domino’s must not only navigate the legal landscape but also work to regain investor confidence amid mounting pressure on its international operations.
(Source: Investing.com | The Business Times)
