Robbins LLP Announces that RH (RH) Could Be Found Liable for Substantial Financial Damages After Securities Class Action Survives Motion to Dismiss

Investors filed a consolidated class action complaint against RH arising from defendants’ false and misleading statements regarding the launch of RH’s new product line, RH Modern, and the company’s inventory levels. The complaint alleges that RH repeatedly assured the public that it would have the inventory to support the product launch, but in reality, RH had not even placed orders with manufacturers in time for the launch.  As a result, orders were delayed for up to a year, and RH made extensive accommodations to combat customer complaints, resulting in $18 million in customer accommodation expenses.  When the truth of RH’s wrongdoing was revealed, the company’s stock dropped 75%, erasing more than $3 billion in shareholder value.  On February 26, 2018, the Honorable Yvonne Gonzalez Rogers of the U.S. District Court for the Northern District of California denied RH’s motion to dismiss, paving the way for litigation to proceed.  This class action could result in substantial damages to RH, causing depletion of its financial resources and further harm to shareholders.

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