Shalov Stone Bonner & Rocco LLP issued a press release announcing a class action lawsuit was filed on behalf of purchasers of Sturm, Ruger & Company, Inc. common stock between April 23, 2007 and October 29, 2007, inclusive.
The lawsuit is pending in the United States District Court for the District of Connecticut. According to the release, the complaint alleges that, throughout the Class Period, defendants misrepresented or failed to disclose that:
(1) the reductions in inventory balances by RGR in the first and second quarters of 2007 had reduced its parts and components inventories below efficient levels, preventing it from meeting production and shipment schedules, and resulting in its inability to sustain current or historical sales levels;
(2) because of RGR's inability to meet current production and shipping schedules, its “backlog” of unfilled purchase orders was materially inflated;
(3) orders received from RGR's independent distributors were artificially boosted by RGR's mandated change to firm and noncancellable purchase order submissions, and did not reflect actual demand for its products;
(4) these independent distributors were carrying large quantities of unsold products, increasing the risk that they would reduce or curtail future purchases; and
(5) based on the above, defendants did not have a reasonable basis for their positive statements and opinions concerning RGR's current financial performance and condition. On October 24, 2007, RGR announced that its firearm sales for the third quarter of 2007 fell 26%, resulting in a loss of 3 cents per share, and that this decline in sales was attributable to inventory reductions. On this news, the price of RGR common stock fell more than 37%.
