ST. PAUL, Minn., Jan. 31, 2005 (PRIMEZONE) -- Reinhardt Wendorf & Blanchfield announces that a class action lawsuit was filed in the United States District Court for the District of Minnesota on January 28, 2005, on behalf of purchasers of Gander Mountain Company ("Gander Mountain" or "the Company") (Nasdaq:GMTN) common stock pursuant to the Company's Initial Public Offering ("IPO") and on the open market during the period between April 20, 2004 and January 13, 2005 (the "Class Period").
The complaint charges Gander Mountain and certain of its officers and directors with violations of the Securities Exchange Act of 1934 and the Securities Act of 1933. Gander Mountain is a specialty retailer offering an assortment of merchandise that caters to outdoor lifestyle enthusiasts, with a particular focus on hunting, fishing and camping. The complaint alleges that prior to going public (and even afterward) Gander Mountain was controlled by the Erickson family (including certain of the defendants named in the complaint) through their individual ownership in the Company as well as their holdings in the Company's major shareholders. Defendants knew that unless the Company went public, their shares in the Company would remain illiquid, and virtually worthless. Further, defendants were also keenly aware that unless the Company went public prior to revelations of lowered earnings expectations in November 2004 and January 2005, the Company would be prevented from going public altogether. This possibility would not only jeopardize defendants' ability to infuse value and liquidity into their shares via the IPO, but also would jeopardize the Company's ability to repay a $9.8 million debt owed to a company owned by the Erickson family.
On April 26, 2004, Gander Mountain closed its IPO of 6,583,750 shares of its common stock and converted existing preferred stock to common stock, raising in excess of $105 million. On November 9, 2004, the Company announced it had "lowered its stock outlook for pretax income for fiscal 2004 to a range of $8 million to $13 million, compared with the company's prior guidance of $16 million to $21 million." Then, on January 14, 2005, the Company issued a press release lowering its outlook for pretax income for fiscal 2004 even further, "to a range of $2.0 million to $4.0 million, compared with the company's prior guidance of $8 million to $13 million." On this news, the Company's shares plunged to an all time low of $9.30 per share, more than a 60% drop from the Class Period high of $24.65 on June 7, 2004.
According to the complaint, the true facts, which were known to each of the defendants during the Class Period and concealed from the public, were as follows: (a) the Company's co-branded credit card program was faltering; (b) the value of the Company's inventory was overstated, requiring massive reductions and causing the Company's future margins to be negatively impacted as a result; (c) the Company's debt capacity was jeopardized and was inconsistent with the defendants' own growth plans; (d) the Company was actually experiencing average trends with respect to its sales; and (e) as a result of the above, defendants' own projections of positive comparable sales growth of 3% - 5% and pretax income of $8-$13 million were materially false and misleading.
Plaintiff seeks to recover damages on behalf of all purchasers of Gander Mountain common stock pursuant to the Company's IPO and on the open market during the Class Period (the "Class"). The plaintiff is represented by Reinhardt Wendorf & Blanchfield, which has expertise in prosecuting investor class actions and extensive experience in actions involving financial fraud.
Reinhardt Wendorf & Blanchfield and its predecessor firm have devoted its practice to shareholder class actions and complex commercial litigation for more than thirty years and have recovered hundreds of millions of dollars for shareholders in class actions throughout the United States.
If you purchased or otherwise acquired any of the Gander Mountain stock described above, pursuant to the IPO or on the open market between April 20, 2004 and January 13, 2005 and sustained damages, you may, no later than March 29, 2005, move the Court to serve as lead plaintiff. If you wish to discuss this case or have questions concerning these cases or your rights or interests, please contact: Garrett D. Blanchfield of Reinhardt Wendorf & Blanchfield at 800-465-1592 or 651-287-2100, via facsimile at 651-287-2103 or via email at g.blanchfield@rwblawfirm.com. For more information about Reinhardt Wendorf & Blanchfield, visit our website at www.rwblawfirm.com .