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Class action suit filed against Tile Shop

Plymouth, Minn. -- The Shareholders Foundation, Inc. has filed a lawsuit on behalf of certain purchasers of Tile Shop common stock over alleged violations of federal securities laws in connection with certain allegedly false and misleading statements made between August 22, 2012 and November 13, 2013. The plaintiff alleges that the defendants failed to disclose that one of its largest suppliers, Beijing Pingxiu, is an undisclosed related company secretly controlled by Fumitake Nishi, the brother-in-law of the company's CEO and a Tile Shop employee.

On November 14, 2013, a report was published that alleged that Tile Shop has greatly exaggerated its true financial performance, failed to disclose Beijing Pingxiu as a material related party supplier, uses Beijing Pingxiu to overstate inventories, understate cost of sales and overstate gross profits, purchases goods from Beijing Pingxiu at or near cost to achieve an artificial cost advantage, and overstates earnings.

Shareholders who purchased a significant amount of shares of Tile Shop parent company Tile Shop Hldgs, Inc. between August 22, 2012 and November 13, 2013, and/or purchased shares in 2012 or earlier and currently hold any of those shares may be eligible to join the suit.