SAN DIEGO–(BUSINESS WIRE)–Robbins Geller Rudman & Dowd LLP announces that purchasers of common stock of Torrid Holdings Inc. (NYSE: CURV) in Torrid Holding’s initial public offering on July 1, 2021 (the “IPO”) have until January 17, 2023 to seek appointment as lead applicant of the Steamy Bottoms class action. Subtitle Waswick v. Torrid Holdings Inc.no. 22-cv-08375 (CD Cal.), the Steamy Bottoms class action accuses Torrid Holdings, some of its key officers and directors, IPO underwriters, and others who violated the Securities Act of 1933.
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CASE ALLEGATIONS: Torrid Holdings is a direct-to-consumer women’s plus size apparel and underwear brand. Via its IPO, Torrid Holdings sold more than 12 million shares at $21 per share, generating more than $265 million in gross proceeds from the offering. Notably, all shares sold were by insiders of Torrid Holdings.
Prior to the IPO, Torrid Holdings claimed to be experiencing rapid sales growth and an impressive recovery after a temporary slowdown in the face of the initial phases of the COVID-19 pandemic, which began in March 2020. However, as the Steamy Bottoms the class action alleges, the IPO registration statement failed to disclose the following adverse facts: (i) in the first half of 2021, Torrid Holdings experienced a temporary increase in demand due to changing consumer behaviors in response to the COVID-19 pandemic and government stimulus and that these short-lived demand trends had dissipated and were not internally expected to continue after the IPO ; (ii) Torrid Holdings was suffering from severe supply chain disruptions caused by the emergence of the Delta variant of COVID-19, which first emerged in May 2021; (iii) Torrid Holdings was operating significantly below historical inventory levels due to supply chain disruptions; (iv) as such, Torrid Holdings did not have sufficient inventory to meet expected consumer demand for its third fiscal quarter 2021; (v) as a result, the late arrival of inventory had significantly impeded Torrid Holdings from effectively adapting to consumer buying trends, creating an undisclosed risk of increased markdowns and promotional activity required to sell unwanted inventory ; (vi) the chief financial officer of Torrid Holdings, defendant George Wehlitz, planned to retire shortly after the IPO; and (vii) therefore, statements in the IPO registration statement regarding Torrid Holding’s historical financial and operating measures and alleged market opportunities did not accurately reflect the business, operations, results Torrid Holdings’ actual financials and trajectory at the time of the IPO, and were materially false and misleading and not based on a reasonable factual basis.
At the time of filing the Steamy Bottoms class action lawsuit, the price of Torrid Holdings common stock remained significantly below the IPO price.
THE PRINCIPAL APPLICANT PROCESS: The Private Securities Litigation Reform Act of 1995 allows any investor who purchased shares of Torrid Holdings common stock in connection with the IPO or who are traceable to it to seek appointment as a plaintiff main in the Steamy Bottoms class action. A principal plaintiff is generally the plaintiff with the greatest financial interest in the relief sought by the putative class that is also typical and adequate of the putative class. A lead plaintiff acts on behalf of all other class members by directing the Steamy Bottoms class action. The main plaintiff can select a law firm of his choice to plead Steamy Bottoms class action. An investor’s ability to participate in any potential future takeover does not depend on its status as the lead claimant of the Steamy Bottoms class action.
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