Domino’s Pizza Enterprises, the largest pizza chain in Australia, and the largest franchisee for US corporation Domino’s Pizza Inc. in the world, is facing a shareholder class action lawsuit, claiming that the company misled investors regarding its anticipated performance in Japan. In a market announcement made on Monday, the pizza chain refuted any claims of liability and stated its intention to contest the claims.

The lawsuit has been initiated by class action specialists Echo Law on behalf of shareholders who acquired an interest in the company through equity swap confirmations between 18 August and 3 November 2021. According to Echo Law’s website, the class action pertains to a statement made by Domino’s on 3 November 2021.

On that date, Domino’s reported in a trading update that its operations in Japan had achieved “excellent compounding sales” and noted that the opening of new stores in the region remained robust. The company indicated that due to structural changes in marketing, pricing, and store penetration, current sales and customer counts were significantly higher than those of the corresponding pre-COVID period.

The class action aims to recover losses and damages incurred by shareholders due to the alleged misrepresentation by Domino’s. In a statement released on 18 July 2024, the fast food chain announced plans to shut down up to 80 underperforming locations in Japan partially offset by the opening of 20 new stores in higher potential locations.

The Australian company, which launched more than 400 stores in Japan from FY20 to FY23, indicated that it has been evaluating its marketing expenditures and assessing the ongoing sustainability of certain locations. Domino’s shares are down nearly 40% to 36.09 Australian dollars so far this year.