SYDNEY (Reuters) - Australian law firm Maurice Blackburn has filed a suit against the country's biggest grocer, Woolworths Group Ltd <WOW.AX>, alleging the company breached disclosure rules by reaffirming profit guidance a few months before dropping it.
The class action was filed in Australia's Federal Court on Monday, court documents show, and refers to the first half of 2015, when Woolworths' investors had been expecting profit to be on track for an annual rise.
But it fell for the half and the company amended its guidance without providing a specific outlook. Its shares dropped almost 10 percent in response, their biggest daily fall in six years, and are yet to recover.
Woolworths later reported a 12.5 percent fall in net profit for the 2015 financial year to June 28, its first drop in at least 19 years amid tough competition and falling market share.
"Woolworths will consider any proceedings once served, but otherwise anticipates that they will be thoroughly defended," the company said in a statement on Tuesday.
Court filings show Maurice Blackburn alleges Woolworths breached its disclosure obligations by issuing in August 2014 and reaffirming that November a forecast for profit growth between 4 percent and 7 percent. The firm estimates its claim could exceed A$100 million ($71 million).
The case is expected to turn on how early the company knew its sales were lagging behind forecasts. Woolworths shares, which still trade below 2014 highs, rose 0.6 percent to A$28.41 in morning trade, while the broader market <.AXJO> rose 0.4 percent.
($1 = 1.4085 Australian dollars)
(Reporting by Tom Westbrook; editing by Richard Pullin and Stephen Coates)
