NEW YORK, Aug. 9, 2005 (PRIMEZONE) -- Roy Jacobs & Associates today announced that it has filed a class action lawsuit in the United States District Court for the Southern District of New York on behalf of all purchasers of Prestige Brands Holdings, Inc. ("Prestige" or the "Company") (NYSE:PBH) securities from April 1, 2005 through July 27, 2005 (the "Class Period"). The lawsuit, alleging securities fraud, was filed against Prestige, Peter C. Mann, its CEO, and Peter J. Anderson, its CFO.
For further information you may call toll free, 888-884-4490, or contact Roy Jacobs & Associates by e-mail by writing to classattorney@pipeline.com.
Please be advised that this action is different from an earlier action filed by other counsel on or about August 3, 2005 against Prestige, a number of its officers and directors and various underwriters of the February 2005 Initial Public Offering (the "IPO"). The earlier action claims that the IPO Prospectus was materially false and misleading. The non-fraud claims asserted in that action are for a class who purchased in the IPO or which are traceable to the IPO. The Class Period in the earlier action is February 9, 2005 through July 28, 2005.
In this action, plaintiff does not challenge the IPO Prospectus. Rather, plaintiff claims that the Company and the named defendants defrauded purchasers of Prestige securities from April 1, 2005 through July 27, 2005. The Complaint alleges that defendants misrepresented the success of the Company's flagship product, the over-the-counter wart remover, Compound W, by repeatedly stating that it was selling well and there was every expectation that it would continue to do so. The defendants reiterated positive projections prior to and throughout the Class Period, and never retracted them. The positive statements continued throughout the Class Period, and Prestige stock reached prices as high as $21 per share.
Unbeknownst to the Class, Wal-Mart, the Company's primary mass distributor, had purchased a significant inventory of Compound W in or about late December 2004 for an early 2005 promotion. By April 1, 2005, the beginning of the Class Period, defendants knew that the Wal-Mart promotion had fallen seriously short of its goals, leaving Wal-Mart with significant excess inventory of Compound W. This, in turn, materially depressed Compound W sales in the following quarter, causing Prestige to suffer sales declines, and not the increases projected. Despite this knowledge, defendants failed to retract, and even reiterated, their earlier projections, and concealed the true results of the Wal-Mart sales promotion.
On May 9, 2005, defendant Mann in a conference call described sales of Compound W at Wal-Mart as "very good" and "strong" when in fact Wal-Mart was struggling to move this inventory off the shelves, and orders for new Compound W shipments were materially depressed. By no later than June 2005, not only were Wal-Mart sales depressed, but it was abundantly clear that the wart removal category for all sellers was contracting, not expanding. Nonetheless, the defendants failed to update or correct previous statements.
On July 27, 2005, Prestige shocked the market by announcing sales for the first quarter of fiscal 2006, which ended on June 30, 2005, that were 6% below sales for the comparable quarter of the previous year. In it largest business segment, OTC products, sales dropped 10% year-over-year. When trading in Prestige shares opened for trading the next day, shares dropped from a previous closing price of $20.04 to a close of $11.90, on extraordinary trading volume of 14.7 million shares. On July 28, 2005, defendant Mann finally admitted during a conference call that he knew that the Wal-Mart promotion had been unsuccessful, that Wal-Mart was carrying substantial excess inventory and that the wart removal consumer segment had suffered a material 13% decline. He also stated that inventory "overhang" at Wal-Mart was continuing and that this would affect the future quarter sales as well.
If you purchased Prestige securities during the Class Period, you may qualify to serve as Lead Plaintiff on behalf of the Class, which consists of all persons and entities who purchased Prestige securities from April 1, 2005 through July 27, 2005 (the "Class"). Motions for appointment to the Lead Plaintiff position must be filed no later than October 3, 2005. You are not required to have sold your Prestige shares in order to claim damages, or to serve in this role. Please feel free to contact Roy Jacobs & Associates to discuss the pending action, and your rights in this matter.
More information on this and other class actions can be found on the Class Action Newsline at www.primezone.com/ca