Domino’s Pizza Enterprises, the Australian pizza chain, announced on Monday that it has been served with a shareholder class action lawsuit. The lawsuit alleges that the company engaged in misleading or deceptive conduct regarding its expected performance in Japan.
Following this announcement, Domino’s shares dropped by 2.5%, reaching A$29.18, marking the lowest price since late August.
The class action has been filed by Echo Law, an Australian legal consultancy, on behalf of shareholders who acquired an interest in the company through equity swap confirmations between August 18, 2021, and November 3, 2021. Echo Law stated on its website that the lawsuit relates to a Domino’s announcement made on November 3, 2021.
Domino’s had previously reported strong performance in Japan during a trading update in November 2021. The company claimed that its Japan operations experienced “excellent compounding sales” and that new store openings remained robust.
The chain attributed its success to structural changes in marketing, pricing, and store penetration, stating that current sales and customer counts were significantly higher than pre-COVID levels.
However, the company’s stock hit a nine-year low in July after analysts downgraded their earnings outlook. This downgrade followed Domino’s decision to close low-volume stores in both Japan and France.
Echo Law has not yet responded to requests for further comments regarding the class action.