Campbell Soup Company is facing a shareholder class action after the company racked up millions in operating losses in its “Fresh” division, sending its stock price tumbling before its CEO was ousted after assuring investors of a rebound.
News of Campbell’s losses caused a roughly $4 dip in the company’s share price, an eight percent drop of its market value and losses continued to mount, according to the complaint.
“The Company’s Campbell Fresh division encompasses: Bolthouse Farms, which sells refrigerated beverages, salad dressings, and fresh carrots; Garden Fresh Gourmet, which sells salsa, hummus, and dips; and the U.S. refrigerated soup business,” the complaint states.
Lead plaintiff Charles W. Clayton in the District Court of New Jersey, claiming that in February of 2018, Campbell again reported an $11 million operating loss for the division that sent the stock price down 10 percent drop over the course of a few days. In May 2018, Campbell announced a $19 million dollar loss and a $619 million pre-tax non-cash impairment charge in May of 2018.
Campbell reported that the charge was caused by poor performance by its Fresh division, prompting action from shareholders who claim the company failed to share pertinent facts with the class by assuring them the division responsible for the losses would rebound later on in the year.
The company’s share price took yet another blow when CEO Denise Morrison announced that she would be stepping down and replaced with interim CEO Keith McLoughlin in May 2018. Further news on the CEO shift tanked Campbell’s price an additional $4.85 per share to close at $34.37, according to the complaint. The stock has since rebounded, hovering just below $40 for much of October and November.
The shareholders claim in their complaint that Campbell’s false statements created an “unrealistically positive assessment,” of the company’s prospects and seek damages for Campbell’s “overvalued and artificially inflated” shares.
The class is represented by Laurence M. Rosen of The Rosen Law Firm in South Orange, N.J., Lionel Z. Glancy, Robert V. Prongay, Lesley F. Portnoy and Charles H. Lineham of Glancy Prongay & Murray LLP in Los Angeles and Brian Schall and Sherin Mahdavian also in Los Angeles.