WASHINGTON, DC (July 11, 2017) — U.S. Market Advisors Law Group PLLC announces that a class action lawsuit has been filed against HD Supply Holdings, Inc. (“HD Supply” or the “Company”) (NASDAQ:HDS) and certain of its senior executives. The class action is on behalf of investors who purchased or otherwise acquired HD Supply securities, seeking to recover compensable damages caused by defendants’ violations of the Securities Exchange Act of 1934. The case has been docketed under 17-cv-02587 in United States District Court for the Northern District of Georgia.
If you are a shareholder who purchased HD Holdings securities between November 9, 2016 and June 5, 2017 (“Class Period”), you have until September 11, 2017 to ask the Court to appoint you as Lead Plaintiff for the class. The Lead Plaintiff is a representative for absent members of the class.
Investors do not need to seek appointment as Lead Plaintiff to share in any class recovery in this action. If you are a class member and there is a recovery for the class, you can share in that recovery as an absent class member. You may retain counsel of your choice to represent you in this action. Contact USMA Law Group to discuss this action.
HD Supply is one of the largest industrial distributors in North America. The Company provides a broad range of products and services to approximately 500,000 professional customers in the maintenance, repair and operations, infrastructure and power and specialty construction sectors.
Allegations Against HD Supply
According to the initial lawsuit complaint, this action involves a fraudulent and illegal scheme by HD Supply’s senior executives to artificially inflate the Company’s stock price by issuing false and misleading guidance and hiding critical information from investors. Defendants’ wrongful conduct allowed Defendant Joseph DeAngelo, HD Supply’s President, Chief Executive Officer (“CEO”), and Chairman of the Board of Directors, to unload over 1.3 million shares (representing 80% of his ownership in the Company) for proceeds of over $54 million just weeks before HD Supply’s stock price declined precipitously.
In early 2016, HD Supply’s Facilities Maintenance (“FM”) segment began experiencing a number of supply chain deficiencies. The Company initially failed to properly calculate the demand for its products, leaving it undersupplied in advance of the 2016 spring and summer selling sessions. When management noticed the Company’s product shortfall, it took remedial action to adjust ordering, a decision that led to an unreasonably large buildup of inventory. As a result, HD Supply’s distribution centers were stretched beyond capacity during the latter part of 2016.
On June 6, 2017, HD Supply reported first quarter 2017 earnings that missed analyst estimates; disclosed the divestiture of one its main business segments, “Waterworks,” which is the nation’s largest distributor of water, sewer, storm and fire protection products; and announced increased capital investments in its FM segment. Given the sizeable increase in FM investment spending, HD Supply was forced to reduce its operating leverage targets for full year 2017—a widely followed metric in the industrial product supply industry. The announced increase in FM investment spending caught analysts and investors by surprise, particularly since the Company had stated on multiple occasions that its inventory setbacks were a thing of the past and that substantial investment in technology and operations had already been made by the Company.
As a result of these disclosures, the Company’s share price declined $7.24 per share, or 17.5%, from a close of $41.27 per share on June 5, 2017 to a close of $34.03 per share on June 6, 2017—wiping out over $1.4 billion in market capitalization in one day. HD Supply’s share price continued trading lower the next day on unusually elevated trading volume, dropping an additional $1.22 per share, or 4%, to $32.81 per share on June 7, 2017—representing a two-day drop of over 20%.
U.S. Market Advisors Law Group PLLC is a national law firm based in Washington, D.C. The firm represents investors worldwide in U.S. securities class action lawsuits.
David P. Abel