Vista Outdoor is facing a class-action lawsuit accusing the parent company of CamelBak, Bell, Giro, and dozens of other outdoor and firearms brands of artificially inflating the value of its stock. The price of a share fell from $42.75 in August to $28.70 last month.
Patrick Lentsch, an investor, filed the suit in the United States District Court of Utah on Jan. 25. The complaint alleges that Vista Outdoor failed to disclose important information about “softening of the retail environment” that negatively affected business.
Vista Outdoor, Chairman and CEO Mark DeYoung, Senior VP and CFO Stephen Nolan, and Kelly Grindle, former president of outdoor products, were named as defendants in the suit.
In August, Vista issued a press release saying that it was affected by a shift in consumer spending and the timing of international orders, but that it expected “a recovery in the second half of the fiscal year due to sell through of new products, increased international sales, the continued improvement in the retail environment, and seasonal upside in the shooting sports market.”
Vista failed to inform shareholders that it would have to assess the value of its intangible assets in the third quarter rather than at the end of the fiscal year as usual, the complaint states.
As a result, when Vista Outdoor announced on Jan. 11 that it would have an “expected non-cash intangible asset impairment charge” of $400 to $450 million, shares plummeted nearly 22 percent, to $29.58, by the end of the following day. On Jan. 13, Vista announced that it would replace Kelly Grindle, president of the Outdoor Products segment, with Dave Allen, and shares dropped another 88 cents.
The lawsuit alleges that Vista’s securities intentionally “traded at artificially inflated prices” from Aug. 11 to Jan. 13.