A class-action lawsuit alleging that online retailer LightInTheBox artificially inflated the value of its shares on the New York Stock Exchange before they plunged on a disappointing revenue outlook is "without merit," the company said, and it promised to "vigorously defend itself."

The plaintiffs in the suit, filed in the US district court for the Southern District of New York, are shareholders who purchased the Beijing company's stock from June 6 to Aug 19, a period that includes the company's June 6 initial public offering, law firm Federman & Sherwood said in a press release. The statement from the Oklahoma City, Oklahoma, firm was released Tuesday after the US stock market closed.

The suit alleges "violations of federal securities laws", including "issuing a series of material or false misrepresentations to the market which had the effect of artificially inflating the market price" during the time the shares were purchased, according to the release. The plantiffs seek to "recover damages on behalf of all" LightInTheBox shareholders who bought stock during the class period", according to the release.

In its response to the suit, issued Wednesday after the market opened, LightInTheBox, which sells customizable wedding dresses to online customers, said the suit's target was "the company and certain senior officers".

"The company has reviewed the claims asserted in the complaint and believes they are without merit," the release said. It said LightInTheBox had not yet been served with a copy of the complaint, but would work with the New York-based law firm of Simpson Thacher & Bartlett LLP, to "vigorously defend itself in this matter".

Class-action status allows a large number of people with a common interest in a matter to sue as a group. The suit against LightInTheBox comes nearly three months after its initial public offering raised $79 million and ended a seven-month drought of new US stock-market listings by Chinese companies. Negative sentiment tied to accounting scandals and fraud allegations involving US-listed Chinese companies, as well as a dispute between Chinese and US regulators, have limited the number of Chinese listings on US exchanges.

The stock, which trades under the symbol, LITB, priced at $9.50 per share, in the middle of the IPO target range. After ending its first day at $11.61, it climbed to a high of $23.38 on Aug 14, a 146 percent jump above its IPO price. But on Aug 20, shares tumbled after LightInTheBox gave a weak revenue forecast for the current quarter because of slow sales of wedding and prom dresses. As of Wednesday's close, the stock had slid to $10.06 and was just 5.9 percent above the IPO price.

In a conference call with analysts following the company's second-quarter earnings release, CEO Alan Guo said LightInTheBox "placed too much emphasis on higher-end (apparel) and not enough focus on lower-end products that traditionally sell very well". The company forecast third-quarter revenue of $68 million to $70 million, below the $75.8 million predicted by analysts. The CEO said the company expected the wedding and prom dress business to pick up by first-quarter 2014.

At LightInTheBox's IPO, the first by a China-based company in the US since social-gaming operator YY Inc went public in November, Guo rang the NYSE closing bell.

Afterward, when asked whether the company's robust IPO could signal a revival in US-listed Chinese IPOs, he replied: "I can only speak for LightInTheBox."

michaelbarris@chinadailyusa.com

(China Daily USA 08/29/2013 page2)