NEW YORK (Reuters) - Shares of Mecox Lane MCOX.O fell as much as 38.7 percent below their initial public offering price on Monday after U.S. shareholders filed two class-action lawsuits against the online retailer.
The shares fell as low as $6.74 on the Nasdaq before recovering to trade at $7.02, or 36.2 percent below their $11 IPO price at midday.
Mecox Lane, a China-based online retailer, went public on the Nasdaq in late October. A class action lawsuit filed by Kahn Swick & Foti has charged Mecox Lane directors, its chief financial officer and underwriters with failing to conduct adequate due diligence before the IPO.
The lawsuit says that Mecox Lane failed to disclose that its third-quarter gross margins had shrunk because of increased costs and expenses.
A second class action lawsuit filed by The Rosen Law Firm also alleged that Mecox Lane’s officers, directors, and others should have disclosed that the company’s gross margins had been hurt by increased costs and expenses.
The Kahn Swick & Foti lawsuit was filed on Friday evening. The Rosen lawsuit was filed on Saturday.
Shares of Mecox Lane fell last week after the company announced third-quarter results. The company reported higher quarterly revenue and profit, but said its gross margin had fallen to 39.7 percent from 43.7 percent a year earlier.
Mecox Lane said in a statement on Monday that it was aware that at least one class action complaint has been filed, but said it has not been served with a copy of any complaint. It said that the complaint was without merit. It did not say which complaint it was referring to.
“The company does not believe that any such lawsuit will have any material impact on its normal daily operations,” Mecox Lane said in a statement.
The company sells clothing and accessories to young, urban women and operates the website M18.com. On October 25, the company and investors sold 11.74 million American Depositary Shares for $11 each, raising about $129.17 million. It had planned to sell shares for $8 to $10 each.
Underwriters on the IPO were led by Credit Suisse and UBS Investment Bank.
Reporting by Clare Baldwin. Editing by Robert MacMillan
Our Standards: The Thomson Reuters Trust Principles.