×
Newsmax TV & Webwww.newsmax.comFREE - In Google Play
VIEW
×
Newsmax TV & Webwww.newsmax.comFREE - On the App Store
VIEW
Tags: Short | Tile | Shop | Margins

Short Seller Says Tile Shop Margins Inflated; Shares Tank

Thursday, 14 November 2013 06:23 PM EST

Shares of Tile Shop Holdings Inc plunged 39 percent Thursday after short seller Gotham City Research alleged that the stone tile retailer's gross margins were inflated.

Gotham City Research said in a report on Thursday that Tile Shop used captive suppliers such as Beijing Pingxiu to overstate inventories, understate cost of sales and overstate gross profits.

The short seller claimed that Beijing Pingxiu was run by Fumitake Nishi, who it said was the brother-in-law of Tile Shop Chief Executive Robert Rucker.

Tile Shop later in the day suspended its relationship with Beijing Pingxiu, saying it was not aware of ownership changes at the supplier. The company denied misreporting financial statements.

The Gotham City report said that Beijing Pingxiu, Tile Shop's largest supplier, sold to the retailer at zero cost, allowing the company to achieve higher gross margins.

Tile Shop shares sank $8.27 to end at $12.95 in New York. In aftermarket trading, the shares regained some of the loss, rising about 10 percent to $14.20.

About $400 million of the company's market value was wiped out during regular trading. The shares had risen 55 percent over the last year.

Gotham City said it did not value the company's shares at more than $1.54-$3.34 per share.

© 2024 Thomson/Reuters. All rights reserved.


InvestingAnalysis
Shares of Tile Shop Holdings plunged 39 percent Thursday after short seller Gotham City Research alleged that the stone tile retailer's gross margins were inflated.
Short,Tile,Shop,Margins
205
2013-23-14
Thursday, 14 November 2013 06:23 PM
Newsmax Media, Inc.

Sign up for Newsmax’s Daily Newsletter

Receive breaking news and original analysis - sent right to your inbox.

(Optional for Local News)
Privacy: We never share your email address.
Join the Newsmax Community
Read and Post Comments
Please review Community Guidelines before posting a comment.
 
Get Newsmax Text Alerts
TOP

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

NEWSMAX.COM
MONEYNEWS.COM
© Newsmax Media, Inc.
All Rights Reserved
NEWSMAX.COM
MONEYNEWS.COM
© Newsmax Media, Inc.
All Rights Reserved