Plymouth, Minn. -- The Tile Shop says it rejects a report stating its historical financial statements may require restatement along with other accounting irregularities. The company denies these allegations and believes that the financial statements are properly stated and its business practices are appropriate.
The report from Gotham City Research claims Tile Shop overstated its 2013 earnings by 200% and also failed to disclose that its largest supplier, Beijing Pingxiu, is a related company. Gotham City Research, which specializes in short-selling stock, said it believes Tile Shop will not get any further loans from its creditors until these issues are resolved.
In a press release, Tile Shop said it was unaware of previously undisclosed changes of the ownership of Beijing Pingxiu and it has suspended its relationship with the company. Tile Shop also said this issue had no material impact on its inventory purchases. The company also reaffirmed the guidance of net sales ranging from $227 million to $237 million, and adjusted EBITDA of $60 million along with the opening of 20 new stores for the year ending December 31, 2013 provided on October 30, 2013.