Updated: November 21, 2018
Status: Ongoing Case
On January 19, 2018, Labaton Sucharow was appointed lead counsel in a securities class action lawsuit against Skechers U.S.A., Inc., and certain of its senior executives. The action asserts claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and U.S. Securities and Exchange Commission Rule 10b-5 promulgated thereunder, on behalf all persons or entities who purchased or otherwise acquired Skechers common stock between April 23, 2015 and October 22, 2015, inclusive. The plaintiffs filed a second amended complaint on July 24, 2018, which defendants moved to dismiss on November 21, 2018.
Skechers designs, develops, and markets footwear for men, women, and children. The company’s primary reporting segments are Domestic Wholesale; International Wholesale; and Retail (which includes both domestic and international company stores). From 2013 through 2015, Domestic Wholesale was the company’s primary driver of growth and accounted for higher net sales as compared to the other two segments. The Domestic Wholesale segment accounted for approximately 39 percent of Skechers’ 2015 total net sales. Skechers’ Domestic Wholesale customers include department stores, athletic footwear retailers, and specialty shoe stores.
During the class period, Skechers repeatedly touted the strength of customer demand within the Domestic Wholesale segment, which the company claimed would spur continued sales growth. Skechers frequently emphasized that its Domestic Wholesale segment growth would continue into the second half of 2015 based on pending orders and meetings with key customers. However, the defendants’ class period statements pertaining to back-half 2015 customer demand and sales growth related thereto were materially false and misleading because the defendants failed to disclose that: 1) the company’s Domestic Wholesale customers took early receipt of fall 2015 inventory, causing them to delay receipt of and, in some cases, cancel pending orders scheduled for delivery in the second half of 2015; 2) as a result of the foregoing, the company’s Domestic Wholesale growth rate was unsustainable; and 3) the company’s positive statements about its business, operations, and prospects lacked a reasonable basis.
The case is Steamfitters Local 449 Pension Plan v. Skechers U.S.A, Inc., No. 17-cv-08107 (S.D.N.Y.). Labaton Sucharow represents lead plaintiff Cavalier Fundamental Growth Fund. The defendants are Skechers U.S.A., Inc. and certain of its senior executives.