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Notice is hereby given that a class action lawsuit has been filed on behalf of those who purchased or otherwise acquired shares of Party City Holdco Inc. (NYSE: PRTY) (“Party City”) pursuant and or traceable to the company’s Initial Public Offering (“IPO”) on or around April 16, 2015.
According to the complaint, Party City, through its subsidiaries, designs, manufactures, and distributes party supplies throughout North America. The Party City stores sell costumes, novelties, gifts, and paper goods for parties and celebrations.
The complaint alleges that on January 1, 2014, Party City filed a Registration Statement on Form S-1 with the SEC. On April 10, 2015, Party City filed its eighth amendment to the Registration Statement on Form S-1/A with the SEC, which was signed by the individual defendants. In the IPO, 21,875,000 shares of Party City were sold at $17.00 per share. Total proceeds from the IPO were $371,875,000.
According to the complaint, the offering documents contained misstatements of material fact and/or omissions. Specifically, the complaint alleges that the defendants were aware, and failed to disclose certain risks in the offering documents, including the impact on the company due to: (1) soft consumer traffic trends; (2) lapping of the extraordinary performance of the Disney Frozen franchise from the prior year; and (3) the store reset initiative.
On August 13, 2015, the company held an earnings conference call. The complaint alleges that during the call, the company’s Chief Executive Offer, James M. Harrison (“Harrison”) stated, in part, “we expect the first part of the third quarter to face several challenges. First, we’ll be lapping sales of Disney Frozen licensed product, which had strong initial load and demand last year.” Harrison also stated, “we’ve been also remerchandising our stores to highlight more productive categories, and the implementation of these visual merchandising changes has created some temporary disruption in stores.”
Following this news, shares of Party City fell $0.97 per share or more than 5% from its previous closing price to close at $17.92 per share on August 14, 2015.
Then, in a November 12 conference call, Party City’s President Gregg Melnick (“Melnick”) said, “Last year’s Frozen phenomenon created an anomaly in our business. ... Moms wanted to buy products incorporating the Frozen images and themes because of the popularity of the franchise and not necessarily because they were having a celebration.” The complaint alleges that Melnick admitted that the company underestimated the importance of Frozen’s popularity on its bottom line. Following this news, shares of Party City fell $1.75 per share or more than 11% from its previous closing price to close at $14.88 per share on November 12, 2015. As of November 17, 2015, the last trading day prior to filing of the complaint, Party City’s shares closed at $11.80, which is approximately $5.20 per share or over 30% below than the IPO price.
If you are a member of the class described above, you may no later than January 19, 2016, move the Court to serve as lead plaintiff of the class, if you so choose.
A lead plaintiff is a representative party that acts on behalf of other class members in directing the litigation. In order to be appointed lead plaintiff, the Court must determine that the class member's claim is typical of the claims of other class members, and that the class member will adequately represent the class. Your ability to share in any recovery is not, however, affected by the decision whether or not to serve as a lead plaintiff. Any member of the purported class may move the court to serve as a lead plaintiff through counsel of their choice, or may choose to do nothing and remain an inactive class member.
Kessler Topaz Meltzer & Check, LLP has not filed a complaint in this matter. If you wish to discuss this action or have any questions concerning this notice or your rights or interests with respect to these matters, please contact Kessler Topaz Meltzer & Check, LLP.
Kessler Topaz Meltzer & Check, LLP
James Maro, Esq.
Adrienne Bell, Esq.
280 King of Prussia Road
Radnor, PA 19087
1-888-299-7706 (toll free) or 1-610-667-7706