Australia’s Domino’s served with class action on ‘misleading’ Japan market comments

(Reuters) -Australian pizza chain Domino’s Pizza Enterprises has been served with a shareholder class action, which includes an allegation that it misled investors in 2021 about expected performance in Japan.

The pizza maker, in a market filing on Monday, denied any liability and said it would defend against the legal proceeding.

Its shares were trading lower by as much as 2.8% at A$29.1.

Legal consultancy Echo Law has filed the proceeding on behalf of Domino’s shareholders who scooped an interest in the firm by entering equity swap confirmations between Aug. 18, 2021 and Nov. 3, 2021.

Echo Law on its website said the class action was in relation to a Domino’s announcement made on Nov. 3, 2021.

Domino’s had said in a trading update on Nov. 3, 2021 that its Japan operations recorded “excellent compounding sales” and had added that new store openings in the country continued to remain strong.

“As a result of structural changes in marketing, pricing and store penetration, current sales and customer counts remain materially higher than corresponding period pre-COVID,” the pizza chain had said in 2021.

Echo Law in an emailed statement told Reuters that it had filed the proceeding in the Federal court of Australia on behalf of shareholders.

“The class action seeks to recover the loss and damage suffered by shareholders as a result of Domino’s alleged conduct,” the firm said in the statement.

Domino’s Pizza Enterprises decided to close low-volume stores in both Japan and France in July this year, leading analysts to slash their earnings outlook and sending its shares to a more-than-nine-year low.

(Reporting by Rishav Chatterjee in Bengaluru; Editing by Mrigank Dhaniwala)