Domino’s Pizza Faces Shareholder Class Action

(Reuters) – Australian pizza chain Domino’s Pizza (NYSE:DPZ) Enterprises has been served with a shareholder class action alleging it misled investors in 2021 about expected performance in Japan.

The pizza maker denied any liability and stated it would defend against the legal proceeding in a market filing on Monday. Following this news, its shares dropped by as much as 2.8% to A$29.1.

Legal consultancy Echo Law filed the proceeding on behalf of shareholders who engaged in equity swap confirmations between August 18, 2021, and November 3, 2021. The class action is tied to a Domino’s announcement from November 3, 2021.

In that trading update, Domino’s claimed their Japan operations recorded “excellent compounding sales” and that new store openings continued to remain strong. The company asserted that structural changes in marketing, pricing, and store penetration resulted in current sales and customer counts being materially higher than pre-COVID periods.

Echo Law stated that it filed the proceeding in the Federal Court of Australia on behalf of shareholders, seeking to recover losses and damages resulting from Domino’s alleged conduct.

In July, Domino’s Pizza Enterprises announced the closure of low-volume stores in Japan and France, which led analysts to revise their earnings outlook, sending its shares to a more-than-nine-year low.