NEW YORK, June 26, 2019 (GLOBE NEWSWIRE) -- Labaton Sucharow LLP (“Labaton Sucharow”) announces that on June 26, 2019, it filed a securities class action lawsuit on behalf of its client Rhode Island Laborers’ Pension Fund (“Rhode Island Laborers”) against FedEx Corporation (“FedEx” or the “Company”) (NYSE: FDX), and certain of its senior executives (collectively, “Defendants”). The action, which is captioned Rhode Island Laborers’ Pension Fund v. FedEx Corporation, No. 19-cv-05990 (S.D.N.Y.), asserts claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (the “Exchange Act”), and U.S. Securities and Exchange Commission (“SEC”) Rule 10b-5 promulgated thereunder, on behalf of all persons or entities who purchased or otherwise acquired FedEx common stock between September 19, 2017 and December 18, 2018, inclusive (the “Class Period”).
FedEx is a global logistics company that ships goods to commercial and residential customers throughout the world. Traditionally, FedEx has generated a substantial majority of its revenues in the United States. In July 2016, FedEx significantly expanded its international operations through its $4.8 billion acquisition of TNT Express N.V. (“TNT”), a Netherlands-based logistics company with operations concentrated in Europe.
On June 27, 2017, TNT’s operations were crippled by a cyberattack known as NotPetya, which involved the spread of a malware virus throughout TNT’s systems (the “Cyberattack”). The timing of the attack was particularly problematic for FedEx, as TNT’s systems were paralyzed during the critical period involving the integration of TNT with the Company’s legacy European operations.
Throughout the Class Period, Defendants continually assured investors about its recovery from the Cyberattack and that any negative impact from the attack was minimal. For example, Defendants told investors that TNT customer volumes were being restored to pre-attack levels and that “despite the cyberattack, the customers stuck with us.” Defendants also stated that TNT integration efforts were successfully progressing and continuously stated that FedEx was “on track” to achieve TNT synergy targets.
Notwithstanding these positive representations to the market, Defendants made false and misleading statements and/or failed to disclose that: (1) TNT’s overall package volume growth was slowing as TNT’s large customers permanently took their business to competitors after the Cyberattack; (2) as a result of the customer attrition, TNT was experiencing an increased shift in product mix from higher-margin parcel services to lower-margin freight services; (3) the anticipated costs and timeframe to integrate and restore the TNT network were significantly larger and longer than disclosed; (4) FedEx was not on track to achieve TNT synergy targets; and (5) as a result of these undisclosed negative trends and cost issues, FedEx’s positive statements about TNT’s recovery from the Cyberattack, integration into FedEx’s legacy operations, customer mix, customer service levels, profitability, and prospects lacked a reasonable basis.
The truth about TNT’s deteriorating business was revealed through a series of disclosures culminating on December 18, 2018. On that date, FedEx reported a large profit miss for its second fiscal quarter ended November 30, 2018. Defendants attributed the disappointing results to lower package volumes in Europe and a negative shift in TNT’s product mix to lower margin freight business following the Cyberattack—which had occurred well over a year ago. The Company also lowered its fiscal 2019 earnings guidance and announced its main TNT synergy target would no longer be achievable by fiscal year 2020. On this news, FedEx stock dropped $22.50 per share, or 12.2 percent, to close at $162.51 per share on December 19, 2018.
If you purchased or acquired FedEx common stock during the Class Period, you are a member of the “Class” and may be able to seek appointment as Lead Plaintiff. Lead Plaintiff motion papers must be filed with the U.S. District Court for the Southern District of New York no later than August 26, 2019. The Lead Plaintiff is a court-appointed representative for absent members of the Class. You do not need to seek appointment as Lead Plaintiff to share in any Class recovery in this action. If you are a Class member and there is a recovery for the Class, you can share in that recovery as an absent Class member. You may retain counsel of your choice to represent you in this action.
If you would like to consider serving as Lead Plaintiff or have any questions about this lawsuit, you may contact Francis P. McConville, Esq. of Labaton Sucharow, at (800) 321-0476, or via email at fmcconville@labaton.com.
You can view a copy of the complaint online at https://www.labaton.com/cases/rhode-island-laborers-pension-fund-v-fedex-corporation.
Rhode Island Laborers is represented by Labaton Sucharow, which represents many of the largest pension funds in the United States and internationally with combined assets under management of more than $2 trillion. Labaton Sucharow’s litigation reputation is built on its half-century of securities litigation experience, more than 60 full-time attorneys, and in-house team of investigators, financial analysts, and forensic accountants. Labaton Sucharow has been recognized for its excellence by the courts and peers, and it is consistently ranked in leading industry publications. Offices are located in New York, NY, Wilmington, DE, and Washington, D.C. More information about Labaton Sucharow is available at www.labaton.com.
Source: Labaton Sucharow LLP