DENVER, Sept. 6, 2018 /PRNewswire/ -- Franklin D.
Azar & Associates ("FDA") and Thornton Law Firm, LLP
("Thornton") announced today that
they have filed a securities class action lawsuit on behalf of
Plaintiff Bristol County Retirement System against Qurate Retail,
Inc. ("Qurate" or the "Company) (NASDAQ:QRTEA), Michael A. George, Gregory B. Maffei, Darrell Cavens, and Thaddeus "Ted" Jastrzebski.
The class action, filed in United
States District Court, District of Colorado, and docketed under 1:18-cv-2300, is
on behalf of a class consisting of investors who purchased or
otherwise, acquired Qurate securities between August 5, 2015, and September 7, 2016, both dates inclusive (the
"Class Period"). Plaintiff seeks to recover compensable damages
caused by Defendants' violations of the federal securities laws and
to pursue remedies under Sections 10(b) and 20(a) of the Securities
Exchange Act of 1934 (the "Exchange Act") and Rule 10b-5 promulgated thereunder.
Qurate markets and sells various consumer products primarily
through live merchandise-focused televised shopping programs,
websites, and mobile applications. Qurate Retail, Inc. is comprised
of eight leading retail brands – QVC, HSN, zulily, Ballard Designs,
Frontgate, Garnet Hill, Grandin
Road, and Improvements, all dedicated to providing a "third way to
shop" that goes beyond transactional eCommerce and traditional
stores. The Company is number one in video commerce, with a
worldwide reach of nearly 360 million homes via 16 television
channels and multiple media outlets. QVC, Inc. ("QVC") is Qurate's
largest segment, accounting for roughly 85 percent of the Company's
total revenue in 2016.
As a promotional tool used to spur sales, QVC offers a payment
plan called Easy-Pay to its customers in the U.S., U.K.,
Germany and Italy (known as Q-Pay in Germany, and Italy). Easy Pay allows QVC customers to pay
for certain merchandise in two or more monthly installments. When
Easy-Pay is elected by the QVC customer, the first installment is
billed to the customer's credit card upon shipment and an Easy-Pay
receivable is established to account for the collection of
subsequent installments.
Qurate is exposed to the credit risk on the Easy-Pay
receivables. Specifically, if the QVC customer does not remit
payment for the subsequent Easy-Pay installments, Qurate is
required to record a loss and write off the Easy-Pay receivable.
Under Generally Accepted Accounting Principles, the Company is
required to establish adequate reserves for its Easy-Pay
receivables.
The Complaint alleges that throughout the Class Period, Qurate
repeatedly attributed its growth to broad-based marketing and
higher personalized customer experience, which the Company claimed
would spur continued revenue growth. However, Defendants' Class
Period statements pertaining to the Company's revenue growth were
materially false and misleading because Defendants failed to
disclose that: (1) the Company was aggressively loosening the
credit standards of its Easy-Pay program to attract a large group
of new customers; (2) the Company's strong sales growth was due to
this loose credit policy; (3) accounts receivable associated with
this new group of customers posed a high risk of write-off; and (4)
as a result of the foregoing, the Company's positive statements
about its business, operations, and prospects lacked a reasonable
basis.
The slowdown in QVC sales began to emerge on August 5, 2016, when the Company issued a press
release announcing financial results for the second quarter ended
June 30, 2016, in which the Company
disclosed "significant headwinds" and sales declines as compared to
prior periods. Later that day, during the Company's Second Quarter
2016 Earnings Call with analysts and investors, the Company
disclosed "higher than expected write-offs on Easy Pay purchases
from October and November of last year" and announced increased
reserves for prior period purchases. The Company also disclosed
that "[g]iven heightened write-off risks, we choose to moderate our
Easy Pay usage beginning in June, which puts some additional
pressure on our sales."
On news of Qurate's sales slowdown, the Company's stock price
fell $5.69 per share, or 21.63
percent, to close on August 5, 2016
at $20.61 per share. On September 8, 2016, the Company disclosed the true
impact of the Easy Pay issues, revealing to investors that it
expects to see "higher default rates" associated with these sales.
Moreover, the Company warned that this negative trend, while
improved, would still, continue to impact its business. The
Company's stock fell price $1.87 per
share, or 8.71 percent, to close on September 8, 2016 at $19.59 per share.
If you wish to serve as Lead Plaintiff for the Class, you must
file a motion with the Court no later than November 5, 2018, which is 60 days from the date
of publication of notice of the pendency of the first filed,
related securities class action on behalf of Qurate investors. Any
member of the proposed Class may move the Court by the above
deadline to serve as Lead Plaintiff through counsel of their
choice, or may choose to do nothing and remain a member of the
proposed Class.
If you would like to discuss this Action in more depth, or have
any questions concerning this notice, your rights, or your
interests, please contact Ivy Ngo at
303.757.3300 and/or Guillaume Buell
at 617.531.3933 or by email at ngoi@FDAzar.com and
gbuell@tenlaw.com. More information about FDA and Thornton may be found online at
https://fdazar.com/class-action-law-suits/ and
https://tenlaw.com/.
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SOURCE Franklin D. Azar &
Associates, P.C.