Federal court revives lawsuit against Keurig

A United States federal appeals court has revived a lawsuit against Keurig Green Mountain, accusing it of misleading its shareholders. The court found that a previous decision to dismiss Keurig investors’ class action against Keurig company executives was a mistake. “We are disappointed with the appeal court’s decision,” a spokesperson told GCR Magazine. “We continue to believe the complaints are totally without merit and intend to defend ourselves vigorously.” Investors have accused executives of overstating growth prospects and hiding high inventory levels. It is alleged that in 2011, then CEO Lawrence Blanford announced a plan to increase production of Keurig single-cup brewers to build a “cushion” for future demand. Not long after, Keurig revealed that it had failed to meet sales and revenue expectations and that its inventory levels were at an all time high. The federal court’s three-judge panel ruled that there was a “strong inference” that the company intended to deceive shareholders. In more bad news for Keurig, the company announced this week that net sales for Third Quarter Fiscal 2015 were down. Keurig blamed lower brewer sales, down 26 per cent on the prior year period, for the 5 per cent decline. Keurig’s net sales totaled US$970 million in the third quarter. Keurig said negative foreign exchange rates also accounted for some of the losses. “While we are not pleased with our revenue growth, we delivered earnings at the high end of our previous guidance,” said President and CEO, Brian Kelley, in a statement. “Going forward, we will continue to maintain a strong, flexible capital structure and balance sheet to enable us to return significant value to our shareholders as we continue to invest in the business.”

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