Floor & Decor Holdings, Inc. (NYSE:FND) has reached an $8 million settlement in a shareholder derivative lawsuit, according to a recent filing with the U.S. Securities and Exchange Commission (SEC). The agreement, intended to resolve allegations of fiduciary breaches and unjust enrichment by certain officers, directors, and stockholders, includes corporate governance enhancements alongside the monetary compensation.
The lawsuit, initially filed on June 18, 2020, by Lincolnshire Police Pension Fund, was amended several times before reaching the current settlement. The claims are similar to those in a previously dismissed securities litigation detailed in Floor & Decor's 2020 annual report. Defendants have consistently denied any wrongdoing.
Despite these denials, the settlement was pursued to avoid the uncertainties and costs of ongoing litigation. The compensation, net of plaintiffs' legal fees and expenses, will be paid to the company. In addition to the financial aspect, the settlement stipulates the implementation or maintenance of specific corporate governance measures, as outlined in the filed Stipulation of Compromise and Settlement.
The Delaware Court of Chancery has scheduled a hearing for December 13, 2024, to consider final approval of the settlement. If approved, the settlement will result in the dismissal of the lawsuit with prejudice, meaning it cannot be filed again. Current shareholders have been notified of their rights in connection with the settlement through a court-approved notice, also available on the company's investor relations website.
The resolution of this legal matter allows Floor & Decor to focus on its core business without the distraction of ongoing litigation. The settlement details and the notice to shareholders are attached to the SEC filing as Exhibits 99.1 and 99.2, respectively. This news is based on the company's SEC filing and does not include any additional analysis or commentary.
In other recent news, Floor & Decor Holdings, Inc. has been navigating a challenging housing market while maintaining its growth trajectory. The company reported a slight dip in second-quarter sales by 0.2% to $1,133,100,000, but saw an increase in the gross margin rate to 43.3%. Fiscal 2024 sales are expected to fall between $4,400 million and $4,490 million, with an adjusted EBITDA estimated at $480 million to $505 million.
In terms of leadership, the company announced the upcoming retirement of its President, Trevor Lang, and a search for a successor is currently underway. Meanwhile, analysts from Telsey Advisory Group and Stifel have maintained their Market Perform and Hold ratings respectively, with Stifel raising the price target to $100 from $85.
The company is planning to open 30 new warehouse stores in fiscal 2024, aiming to increase its U.S. store count to 500. This growth strategy, combined with the introduction of innovative products and expansion into the commercial flooring market, indicate Floor & Decor's commitment to strengthening its market position despite current industry challenges.
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