Mogensen v. Body Central Corp. (15 F. Supp. 3d 1191, 2014)

ORDER

HARVEY E. SCHLESINGER, District Judge.

Defendants having notified this Court that they do not wish to convert their motion to dismiss into a motion for summary judgment, (Dkt. 47, filed September 24, 2013), this cause is before this Court on the following filings:

(1) Defendants’ “Corrected Motion to Dismiss Corrected Amended Class Action Complaint” (Dkt. 36, filed April 23, 2013), less the Motion’s disputed factual assertion, based on Exhibit 11 of Brian Danitz’s declaration, that this Court will strike pursuant to its previous Order (Dkt. 46, signed September 18, 2013);

(2) Defendants’ “Declaration of Brian Danitz in Support of Defendants’ Motion to Dismiss” (Dkt. 37, filed April 23, 2013)' and its attached exhibits;

(3) Plaintiffs “Memorandum of Law in Opposition to Defendants’ Motion to Dismiss” (Dkt. 41, filed June 24, 2013);

(4) Defendants’ “Reply Memorandum in Support of Their Motion to Dismiss” (Dkt. 45, filed July 19, 2013); and

(5) Defendants’ “Unopposed Motion for Oral Argument” (Dkt. 35, filed April 23, 2013).

This Court has considered these filings, determined that this matter does not require oral argument, and now issues this Order.

I. BACKGROUND

Nick Mogensen, lead Plaintiff, initiated this putative class action suit on August 27, 2012, and filed an Amended Complaint on February 26, 2013. (Dkts. 1, 25). Plaintiff alleges that, between November 10, 2011 and June 18, 2012 (the “class period”), Defendants lied to investors about Body Central’s expected growth and sales to artificially inflate its stock prices. Plaintiff farther alleges that Defendants Angelo and Weinstein, along with an executive who is not named as a defendant (Angelo’s father, Jerrold Rosenbaum), reaped the benefits of this inflation by engaging in insider trading during the class period before Body Central’s stock prices plummeted in early May of 2012. On behalf of himself and all others who purchased Body Central common stock during the class period, Plaintiff brought suit under §§ 10(b) and 20(a) of the Securities Exchange Act of 1934, 15 U.S.C. §§ 78j(b) and 78t(a), and Rule 10b-5 promulgated thereunder, 17 C.F.R. § 240.10b-5.

A. The Parties

Plaintiff Nick Mogensen purchased Body Central common stock during the class period and suffered an economic loss when the market price of his stock declined. Compl. at ¶¶ 16, 123-35. This Court,' in a prior Order, appointed Mr. Mogensen to serve as Lead Plaintiff in this putative class action suit. (Dkt. 17).

Defendant Body Central is a Delaware corporation with its headquarters in Jacksonville, Florida. Body Central retails trendy apparel and accessories for females in their late teens and early twenties who seek a flattering fit at bargain prices. Compl. at ¶¶ 17, 28, 29. To remain profitable, the company needs to anticipate and react quickly to changes in fashion trends and consumer demand. Until the class period, Body Central appears to have done this fairly well. Starting from a single store in Jacksonville in 1972, the company went public in October 2010, and by 2012, the company had expanded to 276 stores across 24 states. Compl. at ¶¶ 2, 28; (Dkt. 36 at p. 4). Body Central stock hit its all-time high on April 27, 2012, but on May 4, 2012, its market price plummeted by approximately 48.55% in the wake of a press release that revealed the company’s declining financial performance. Compl. at ¶¶ 5, 7. When Body Central lowered its sales and earnings forecasts a second time on June 18, 2012, the market price of the company’s common stock again lost almost half of its value, falling approximately 48%. As of the date of the Amended Complaint, the price of Body Central stock had not recovered. Compl. at ¶¶ 9,10.

During the class period, Defendant B. Allen Weinstein was President, Chief Executive Officer (“CEO”), and a director of Body Central. On August 16, 2012, Wein-stein resigned from his CEO and director positions. Compl. at ¶ 18. During the class period, Defendant Thomas Stoltz was Chief Financial Officer (“CFO”), Executive Vice President, and Treasurer of Body Central. On August 17, 2012, the company announced that Stoltz would become Body Central’s Chief Operating Officer (“COO”) and interim CEO to replace Weinstein. Compl. at ¶ 19. During the class period, Defendant Beth Angelo was Chief Merchandising Officer (“CMO”) of the company. Compl. at ¶ 20.

According to the Amended Complaint, throughout the class period, Weinstein, Stoltz, and Angelo were responsible for ensuring the accuracy of Body Central’s public filings and statements, and they personally attested to — and certified the accuracy of — those filings and statements. In short, they controlled the contents of the company’s SEC filings and other public statements. By virtue of their positions, they were privy to confidential company information and had access to nonpublic information concerning the company’s business, finances, merchandise, markets, and present and future business prospects. Compl. at ¶¶ 21-25.

B. Body Central’s Worsening Sales Performance During the Class Period

By the start of the class period, Body Central had announced plans to expand its business by at least 15% annually through the opening of new stores. Compl. at ¶ 30. During the class period, however, Body Central experienced declining sales performance. According to the Amended Complaint, two factors accounted for this decline: (1) at least since first-quarter 2011 and throughout most of the class period, the company’s “lazy buyers” lagged far behind the latest fashions and instead repeatedly reordered the same items for extended periods of time, even reordering merchandise that had previously sold on clearance due to low demand; and (2) during the class period, Weinstein and another executive instituted changes in company policy that resulted in extensive turnover of key employees and short-staffing at the district management level. Compl. at ¶¶ 31-54.

To support these contentions, the Amended Complaint relies on information given by five anonymous confidential witnesses who worked at the company during the class period: (1) a former regional vice president who oversaw nearly 100 stores across different regions of the country and reported directly to Weinstein; (2) a former senior district manager who oversaw 12 Florida stores and reported to a regional vice president; (3) a former senior district manager who oversaw an unspecified number of stores in three states; (4) a former district manager who supervised 10 Florida and Georgia stores and reported to a regional manager; and (5) a former store manager who oversaw a store in Jacksonville, Florida and reported to a district manager. Compl. at ¶¶ 32 n. 1, 35 n. 2, 36 n. 3, 37 n. 4, 38 n. 5 These confidential witnesses generally described the company’s repeated failure to order new, trendy merchandise and excessive inventory mark-downs in their stores. Compl. at ¶¶ 32-42. The second former senior district manager asserted that Body Central failed to meet internal sales goals in the fourth quarter of 2011. Compl. at ¶¶ 37. The witnesses also described Body Central’s failure to cure the problem in the first quarter of 2012, when repetitive and “unexciting” products continued to appear on their shelves, and the “horrible” January and February that ensued. Furthermore, according to the confidential witnesses, their stores continued to offer stale merchandise when the company rolled out its inventory for spring 2012, and this negatively impacted their sales in 2012. Compl. at ¶¶ 33, 34, 37-39.

. According to the Amended Complaint, the former regional vice president contends that the lack of new, updated merchandise was a primary concern for low- and mid-level management, and the concern was “definitely discussed” with corporate executives — including Weinstein— during Monday morning conference calls with regional vice presidents, corporate executives, and Body Central’s buyers. Compl. at ¶ 40. The former regional vice president, first former senior district manager, and former store manager all contend that Weinstein participated in these calls. Compl. at ¶¶ 40-42. Additionally, the former regional vice president asserts that Weinstein was unreceptive to the concerns voiced by lower management during these calls. Compl. at ¶ 40. The Amended Complaint further alleges that Wein-stein always participated in conference calls with regional managers and Body Central buyers after a “bad” week of sales. Compl. at ¶ 42.

According to the Amended Complaint, the confidential witnesses also contend that Weinstein changed the pay structure for employees to prevent them from receiving bonuses by setting unrealistic internal sales goals (which were higher than those announced to investors), and this led to a mass exodus of many key district managers, along with a regional director. Compl. at ¶¶ 43-54. According to the former regional vice president, not all of these vacant positions were filled, and new employees with little ability and experience came to occupy the positions that were filled. Other district managers began to leave, and several regions did not have enough district managers to cover their stores. Compl. at ¶¶ 44, 45. With lower management spread too thin, Body Central began to experience heightened management turnover that negatively impacted sales. Compl. at ¶¶ 45-49. Finally, Weinstein allegedly restricted payroll dollars so that store managers lacked the resources to adequately staff their stores. These policy changes, the confidential witnesses contend, led to a short-staffing crisis that greatly exacerbated the company’s stale merchandise problem and resulted in declining sales performance. Compl. at ¶¶ 50-54.

C. Defendants’ Allegedly False Statements During the Class Period

According to the Amended Complaint, despite Body Central’s declining sales performance, the company’s class-period disclosures dishonestly viewed the situation through rose-colored glasses. In particular, Plaintiff alleges that Defendants made six false and misleading public disclosures during the class period: (1) a November 10, 2011 press release and subsequent conference call; (2) Body Central’s third-quarter 2011 Form 10-Q filed with the SEC; (3) a January 9, 2012 press release; (4) a March 8, 2012 press release and conference call; (5) Body Central’s 2011 Form 10-K filed with the SEC; and (6) a May 3, 2012 press release and conference call. Like the Amended Complaint, this Order holds and italicizes those statements that Plaintiff contends were materially false and misleading.

1. November 10, 2011 Press Release and Subsequent Conference Call

After the market closed on November 10, 2011, Body Central issued a press release that reported its financial results for third-quarter 2011 and the year to date. In the press release, Weinstein stated:

Our solid momentum continued in the third quarter as we consistently delivered fashionable merchandise at value prices. Our comparable store sales performance demonstrates the strength of our existing stores while our new stores are also performing ahead of expectations. We are on target to open 33 new stores in 2011 — a record for our Company. In addition, we remain focused on enhancing our infrastructure and have made several strategic additions to our management team that we believe will better position us to execute on our long term growth objectives.

Compl. at ¶ 55. The next day, before the market opened, the company hosted a conference call to discuss its third-quarter 2011 results and operations. Weinstein, Stoltz, and Angelo participated on behalf of the company, and during the call, Wein-stein stated:

Our third-quarter financial results reflect continued strength in our business. In addition to delivering strong sales growth and more than doubling our net income, we have operational initiatives underway that we believe will enhance our ability to achieve our long-term growth objectives.

m * #

In summary, our business remains healthy overall as our assortments are on trend, our merchandise margins are on plan and our operating cost continues to be leveraged. We enter the fourth quarter with our inventory fresh and on plan. We will continue to execute on our goals to expand our services at least 15% annually, drive comparable sales increases, and build our brand. We believe that by doing that we can continue to drive long-term profít growth of 20% or more.

Compl. at ¶ 56. During the call, Weinstein also said that “[inventories are in very good shape and they are very fresh now so we feel good about how we are positioned.” Compl. at ¶ 57.

The next day, Body Central’s common stock price rose more than 5% on the heels of these positive outlooks. However, Plaintiff alleges, the highlighted statements were false and misleading when made because they omitted material facts and Defendants knew from their weekly Monday morning conference calls that the company’s existing stores were experiencing the stale merchandise problems described above. Additionally, Plaintiff alleges that Defendants knew, or recklessly disregarded, that Body Central’s store expansion was a misleading indicator of the company’s financial performance and outlook, because they knew about the stale merchandise and short-staffing issues, and those issues left it ill-equipped to expand while simultaneously growing sales. Plaintiff therefore alleges that Defendants lacked a reasonable basis for their positive assessment of Body Central’s business, future business, and future growth. Compl. at ¶ 60.

2. Body Central’s Third-Quarter 2011 Form 10-Q Filed with the SEC

On November 15, 2011, Body Central filed its quarterly report on Form 10-Q for the quarter that ended October 1, 2011. This document was signed by Weinstein and Stoltz, and it stated, in pertinent part:

We continually update our merchandise and floor sets with an emphasis on coordinated outfits presented by lifestyle to give our customers a reason to shop our stores frequently. We believe our multi-channel strategy supports our brand building efforts and provides us with synergistic growth opportunities across all of our sales channels.

Compl. at ¶ 61. Plaintiff alleges that the highlighted statement was false and misleading when made because it omitted material facts and Defendants knew that Body Central’s merchandise was not updated, was missing trend items, and contained outdated fashions that the company had offered in previous years. Plaintiff further alleges that the statement was false and misleading because Defendants knew that the company was not meeting internal sales goals in the fourth quarter of 2011. Compl. at ¶¶ 62, 65.

3. January 9, 2012 Press Release

On January 9, 2012, Body Central issued a press release announcing its fourth quarter 2011 sales results. In the press release, Weinstein stated:

Our fourth quarter sales were driven by our continued focus on providiny on-trend fashion at value prices. In addition to the solid comparable store sales increase, our new stores and e-commerce business turned in a strony sales performance for the fourth quarter. Due to the unseasonably warm weather, we took timely markdowns on cold weather cateyories to ensure that we were in a yood inventory position to start the new year. We believe that our overall sales results continue to validate our future yrowth potential.

Compl. at ¶ 66. Plaintiff alleges that these statements were false and misleading because they omitted material facts and Defendants knew, or recklessly disregarded, that the company was failing to update its merchandise as fashion trends shifted, and its buying department repeatedly re-ordered items (including items that had previously sold on clearance). Plaintiff alleges that, contrary to the press release, the “timely markdowns” were required not because of the weather, but rather because of the staleness of the merchandise. Finally, Plaintiff alleges that, contrary to the press release, the company’s “overall sales” did not validate its future growth potential because another key factor — the company’s short-staffing issues — left it ill-equipped to grow its declining sales. Plaintiff therefore alleges that Defendants lacked a reasonable basis for the optimistic statements contained in the press release. Compl. at ¶ 67.

4. March 8, 2012 Press Release and Conference Call

On March 8, 2012, Body Central issued a press release. Announcing the company’s financial results for the fourth quarter and fiscal year 2011, the release stated:

We closed 2011 with strong sales and earnings growth in the fourth quarter. In addition, we ended the quarter with inventory current and on plan. We are against two consecutive years of mid-teen comp sales increases in the first quarter and have experienced a softening in our sales trend quarter-to-date. Our direct business is ahead of plan. We have taken steps to enhance the merchandise assortment and expect sales trends to improve in the second quarter. Also, we are on track to open at least 35 new stores this year including 4 new stores and 2 store closings in the first quarter of 2012. We remain confident in our ability to drive positive comp sales and margin improvement for the year.

Compl. at ¶ 68. Discussing the company’s first quarter and fiscal year 2012 outlook, the release stated:

For the first quarter of fiscal 2012, the Company expects net revenues in the range of $80 million to $82 million and diluted earnings per share in the range of $0.34 to $0.36, based on diluted weighted-average shares outstanding of 16.2 million.

For fiscal 2012, the Company expects net revenues in the range of $343 million to $348 million and diluted earnings per share in the range of $1.46 to $1.50, based on diluted weighted-average shares outstanding of 16.3 million.

Compl. at ¶ 69.

That same day, Body Central hosted a conference call. Weinstein, Angelo, and Stoltz participated in the call on behalf of the company, with Stoltz reiterating the company’s recently-issued financial guidance for the first quarter and fiscal 2012. While discussing the company’s first quarter 2012 sales, Weinstein stated:

As always, our merchandising team follows our test and reorder philosophy. We underestimated demand for one important lifestyle category. This has resulted in softer than expected sales quarter-to-date. We have taken corrective action and expect this category to improve as we head into the second quarter. We do expect margins to be below last year but on our plan.

Our goal continues to be to expand our store at least 15% per year, drive comparable store sales increases to improve merchandise assortments and allocation, continue to grow the direct channel and to learn more about our customer and in turn, build our brand. We expect to continue [to] deliver 20% earnings growth for the foreseeable future.

Compl. at ¶¶70. Despite these “softer than expected sales,” Weinstein further stated that Body Central’s “inventory ended on plan and was current.” Compl. at ¶ 71. When asked to elaborate on the timing of these softening sales, Weinstein responded:

Late in the fourth quarter, one particular category, it became obvious that we needed to intensify, we had — we needed to — we underestimated our commitment to those goods, and so the merchandising team went to work to build that up. Thankfully it is a category that has relatively short lead times. So we expect to see, toward the very end of this first quarter on into the second quarter, to see improvement there. It had nothing to do with prior season goods.

Compl. at ¶ 72. In response to a follow-up question, Weinstein assured that the softening of sales was limited to a “single category that we've had some trouble in. But we have a policy of not elaborating on the speciñc categories. It’s isolated to one thing.” Compl. at ¶ 73.

Later in the call, an analyst asked whether this underestimated commitment meant that the company did not have enough of some category or some product. Weinstein responded:

That’s right. We read that it was slowing down, it in fact started to slow down for a little bit, but it took a big spurt and there we were a little — since we react pretty quickly, we wound up — we found ourselves under-prepared, but thankfully it is a category that is a real good chase category for us. And that is what they have been doing — working to move merchandise up, and increase the amount of testing in the category to make sure that w hen we do buy the bigger purchases, that they are more proven.

Compl. at ¶ 74. When asked whether he was seeing sales improve, Weinstein answered “Yes.” Compl. at ¶75. He also stressed that the merchandise problem was contained, stating, “The category where we are short of goods is where the issue is. That’s what we are working on.... The rest of the business is fíne.” Stoltz added that if the category had “been up to our expectations, we would have been in the low-, mid-single digits [comps]. ‘Weinstein added,” That’s right, yes.” Angelo also added, “That is correct.” Compl. at ¶ 76.

When another question requested clarification of Body Central’s merchandise struggles, Angelo stated:

Yes, in the fourth quarter it was showing as not as important of a trend, and so we, on purpose, planned it a little down because that is what the customer was saying. But it turned on in the first quarter, and we are absolutely responding to these trends. And we let our customers decide what the best course of action is, and they have voted with their dollars. We are chasing it, and we feel confident that we can be in position very shortly.

Yes, but it takes time to flow in, so it’s a flow, it’s not in one day you get it all in.

It’s already started, but we want to be in full position in this category. Compl. at ¶ 77. Weinstein then followed up, stating, “I think it was just we underestimated what [sic] the category that they wanted.” Compl. at ¶ 78. The next day, March 9, 2012, the market price of Body Central common stock fell 6.8%. Compl. at ¶ 81.

Plaintiff alleges that these highlighted statements were false and misleading because they omitted material facts and Defendants did not take steps to enhance Body Central’s merchandise assortment but instead continued to carry repetitive merchandise. Plaintiff also alleges that the statements were false because the company’s problems were not “isolated to one thing” and the rest of the business was not “fine” — the company was experiencing a horrible January and February 2012 and was failing to correct significant merchandise problems. Furthermore, Plaintiff alleges that Defendants knew, or recklessly disregarded, that it was misleading to tout their expectation that Body Central would continue to deliver 20% earnings growth for the foreseeable future, given the extensive nature of the company’s merchandise difficulties, short-staffing issue, and poor managerial morale. Plaintiff therefore alleges that Defendants’ statements about the company’s second quarter and full year 2012 earnings lacked a reasonable basis. Compl. at ¶ 79.

In sum, Plaintiff alleges that Defendants misled the public when they represented that Body Central’s merchandise miscalculation was isolated and quickly fixable. Compl. at ¶ 80.

5. Body Central’s 2011 Form 10-K Filed with the SEC

On March 15, 2012, Body Central filed its Form 10-K for the fiscal year that ended on December 81, 2011. Weinstein, Stoltz, and Angelo signed the form. The Form 10-K stated, in relevant part:

Our merchandising team seeks to identify current fashion trends and merchandise consistent with our brand image. We do not dictate fashion trends; rather we focus on quickly adapting to the latest trends to provide the right merchandise at value prices every day. Our merchandising team consists of our Chief Merchandising Officer, buyers and assistant buyers organized by product category as well as a team focused on our direct business. Our merchandising team is responsible for selecting and sourcing our product assortments, managing inventory levels and allocating merchandise to stores. We build our product assortments after careful review and consideration and select products that can be displayed in our stores in a coordinated manner to encourage our customers to purchase complete outfits.

Compl. at ¶ 82. The 2011 Form 10-K went on to state:

Our test-and-reorder strategy enables us to respond rapidly to changing trends. This strategy allows us to minimize our inventory risk by testing small quantities in our stores before placing larger purchase orders for a broader roll out, which minimizes fashion risk and inventory markdowns.

Compl. at ¶ 83.

Plaintiff alleges that these statements were materially false and misleading because they omitted material facts and Defendants knew, or recklessly disregarded, that the company was not quickly adapting or responding rapidly to the latest trends. Plaintiff alleges that, contrary to the Form 10-K, Body Central was not executing its test-and-reorder strategy, but was instead continuing to supply its stores with outdated, repeat merchandise that prompted a need for increased markdowns. Compl. at ¶ 84.

6. May 3, 2012 Press Release and Conference Call

On May 3, 2012, Body Central issued a press release reporting its first-quarter 2012 financial results. The press release revised the company’s recently-issued, optimistic outlook for fiscal year 2012, stating:

For the second quarter of fiscal 2012, the Company expects net revenues in the range of $80 million to $82 million, comparable sales to decrease in a range of 5 to 7 percent and diluted earnings per share in the range of $0.26 to $0.28, based on diluted weighted-average shares outstanding of 16.4 million.

For the full físcal year, the Company now expects net revenues in the range of $333 million to $337 million, comparable sales to decrease in a range of 1 to 3 percent and diluted earnings per share in the range of $1.34 to $1.38, based on diluted weighted-average shares outstanding of 16.4 million.

Compl. at ¶ 87. The press release included Weinstein’s comments on Body Central’s outlook, stating:

First quarter sales and earnings came in as expected. We are on track to open at least 35 stores in 2012. New stores and direct sales are outperforming our plan for volume and profitability. However, we continue to see softness in overall store sales trends through April. We are closely monitoring our inventory levels and content. In addition, we are expanding the use of our test and reorder process. We believe that our sales performance will improve as we transition into the back-to-school and fall seasons.

Compl. at ¶ 88.

Following the issuance of the press release, Body Central hosted a conference call, with Weinstein, Stoltz, and Angelo participating on behalf of the company. During the call, Weinstein stated:

We mentioned in our last call that we were seeing weakness in one of our four lifestyle categories consisting of active, casual, club and dressy which led to higher markdowns and consequently gross margin pressure. Our sales trends softened in April and, as a result, we’re revising our expectations for 2012.... We believe we have identified the cause of our recent slowdown and are working to address the issues.

Now we’ll talk about the steps we are taking to improve the results. We’ve adjusted our sales plan, our merchandise receipts and our markdown plans to reflect recent sales trends. As you’ll recall, at the end of quarter one our average store inventory was up 5%. We will closely monitor — we will continue to closely monitor sales trends and adjust inventory levels accordingly.

We are also expanding our test and reorder strategy to get faster reads on selling trends. As we’ve discussed in the past, we receive hundreds of samples each week from which test styles are selected. We will [expect] to increase the number of styles tested to bring even more newness into our assortment. We expect to receive a final report from our regionally completed market research and intend to review its recommendations and implement those that we believe will improve our business.

In conclusion, we continue to have a three-pronged growth strategy — comparable store sales growth, new store openings and direct business expansion. We’re currently seeing strong performance in two of these three areas and are addressing the slowdown in our [comp] sales and remain conftdent in our long-term growth outlook.

Our goals remain to expand our store base by at least 15% annually, drive comparable store sales increases through improved merchandise assortments and allocation, expand the direct channel and continue our marketing efforts to build our brand. All of this we believe will lead to 20% annual profit growth in the long term.

Compl. at ¶89. During the call, Stoltz reiterated Body Central’s financial outlook for the second quarter of 2012, stating:

Next our outlook for the second quarter of 2012 — we expect diluted earnings per share in the range of $0.26 to $0.28 using a range of net income between $4.3 million and $4.6 million and diluted shares outstanding of approximately 16.4 million. Our second-quarter 2012 earnings are based on estimates of total revenue from $80 million to $82 million based on comp store sales of negative 5% to negative 7%. We have opened eight new stores and closed nine in the year to date and expect to open 11 more stores before the end of the second quarter.

For the full year 2012 we expect diluted earnings per share in the range of $1.34 to $1.38 using a range of net income between $22 million and $22.6 million. This assumes a tax rate of approximately 37.5% and shares outstanding of approximately 16.4 million. Our físcal year 2012 earnings are based on estimated net revenues in the range of $333 million to $337 million, assuming a low-single-digit comp store sales decrease and at least 35 new store openings. We expect sales from our direct business to increase in the mid- to high-single-digit range for the full year.

Compl. at ¶ 90.

When a participant in the call asked a question regarding the cause of weakness in the quarter, Angelo responded:

We saw that our best-performing category was the trend casual which really performed well. And some of the other categories that we’re known for were slightly not as important. And so we may have lost a little bit of ground in those categories.

Compl. at ¶ 91. Another question asked how long it would take for Body Central to fix its “miss,” and whether it would be “more than the four to six week lead time that you guys normally work with.” Angelo answered:

We hope not. We certainly are doing everything we possibly can in the merchandising and marketing side to improve the trends. But because we can only do the best we can, we think that we want to be conservative in our approach and say that it could take a little longer to fix. But overall we feel optimistic that we will fix it shortly and start seeing increases. We haven’t seen decreases, we’ve had 12 continuing quarters of increasing sales comps.

Compl. at ¶ 92. Weinstein also commented on the company’s trends, stating:

I think what we saw as we entered into April is a more generalized confidence in our entire business. And because of that and because of trends we‘re seeing now, we want to be conservative in our expectations as we move out of the second quarter into the third quarter.

Compl. at ¶ 93. In response to a question pointing out the “significant deceleration for 2Q” guidance, Stoltz stated:

We don’t speak to individual weeks or months, but the guidance of minus 5% to minus 7% for the quarter is what we’re comfortable with. As I mentioned previously, we have seen a further softness in our business as we entered April and got past Easter. So I think we’ll just leave it at that.

Compl. at ¶ 94. When someone asked about expansion of the company’s test-and-reorder process, and whether the “goal there is to ... add more newness,” Angelo responded:

I can answer that. We are being more diligent than ever on the test and reorder strategy. We are taking only the top-performing items and reordering those with our — keeping our inventories in line, we are spending all our money on the best producing products, no doubt, not going beyond what our open to buy or what our sales plans are.

So we are really diligent in trying more testing, we feel confident — it always made us the success that we’ve had and we’re going to stay true to our system, just be more and more diligent and increase our marketing efforts as well.

Compl. at ¶ 95.

After these disclosures, investors began to lose confidence in the company, an d Body Central common stock lost almost half its value, plummeting approximately 48.55% by the close of business on the following day. Compl. at ¶ 97. Even so, Plaintiff alleges that these disclosures did not reveal the whole truth, and that the bolded and italicized statements were false and misleading for three reasons. First, Plaintiff alleges that the statements omitted material facts. Second, Plaintiff alleges that Defendants misled the market by pointing to planned store openings, a deceitful indicator of Body Central’s performance, and Defendants knew sales would continue to suffer for a prolonged period due to extensive merchandise and short-staffing problems. Third, Plaintiff alleges that Defendants knew they were failing to execute the company’s test-and-reorder strategy and the company was not re-ordering only the top performing items. For these reasons, Plaintiff alleges that Defendants lacked a reasonable basis for their revised financial guidance for the second quarter and fiscal year 2012. Compl. at ¶ 96.

D. The Ugly Truth Emerges — June 18, 2012

On June 18, 2012, Defendants issued a press release that yet again slashed their sales and earnings predictions for second quarter and fiscal year 2012. The release revealed that second quarter sales had not recovered, aggressive markdowns would continue, and the sales slump would persist into the third quarter. Compl. at ¶¶ 104, 105. The market swiftly responded to this second round of bad news, and by close of business on the date of the press release, the price of Body Central common stock had again fallen more than 48%, settling at a price more than 73% less than its class-period high of $30.69 per share on April 27, 2012. Compl. at ¶¶ 106, 110. Plaintiff alleges that the June 18, 2012 press release revealed the company’s true financial condition, causing the market to remove the artificial inflation in Body Central stock price that Defendants’ previous false statements had created and sustained.

E. Defendants’ Stock Sales

Plaintiff alleges that while Defendants carried out their scheme to artificially inflate the price of Body Central stock, Defendants Weinstein and Angelo — along with Angelo’s father, Jerrold Rosen-baum — cashed in on the fraud. The Amended Complaint focuses especially on sales that occurred between May 1 and May 3, 2012 — the date on which Body Central released its first significantly downbeat guidance. During these three days, Angelo and her father sold a combined 99,591 shares of the company’s stock for $2,923,163. These sales occurred only days after Body Central stock hit its all-time high, and the next day, on May 4, 2012, the market price of Body Central common stock fell 48.55% due to the company’s downbeat May 3 press release and conference call. Compl. at ¶¶ 5, 6, 11, 86.

The Amended Complaint alleges that other sales indicate that the individual defendants knowingly or recklessly misled the investing public for personal gain. In total, from the beginning of the class period until May 3, 2012, Angelo sold 148,711 shares (including the 14,456 shares that she sold between May 1-May 3, 2012), generating proceeds of $3,862,581, for an average sale price of $25.97 per share. Compl. at ¶ 20. Weinstein sold 35,354 shares of Body Central stock during this time span, generating proceeds of $892,084, for an average sale price of $25.23 per share. Compl. at ¶ 18. After May 8, 2012, neither Weinstein nor Angelo sold stock for the remainder of the class period. Compl. at ¶ 120. Plaintiff alleges that their class-period sales constitute insider trading proceeds and show their motivation for misleading the investing public. Id.

F. Post-Class Period Events

The Amended Complaint notes that Weinstein resigned from his CEO position and from the company’s board of directors on August 16, 2012. Compl. at ¶¶ 18, 113. Stoltz served as interim CEO and would become COO. Compl. at ¶¶ 19, 113. On November 27, 2012, The Wall Street Journal published an article entitled “Executives’ Good Luck in Trading Own Stock.” The article examined “20,237 executives who traded their own company’s stock during the week before their companies made news,” explicitly mentioning the sales that Angelo and her father completed in early May 2012. Compl. at ¶¶ 114, 115. On December 10, 2012, The Wall Street Journal published another article, entitled “Insider-Trading Probe Widens, U.S. Launches Criminal Investigation into Stock Sales by Company Executives.” This article reported that Angelo and her father were under investigation by the U.S. Attorney’s Office for the Southern District of New York and the Federal Bureau of Investigation. Compl. at ¶ 116. Plaintiff alleges that Angelo and her father remained under investigation as of the date of the Amended Complaint, but does not allege that the investigation resulted in criminal charges. Compl. at ¶¶ 12, 117.

II. LEGAL STANDARDS

A. Elements

Section 10(b) of the Exchange Act makes it unlawful “[t]o use or employ, in connection with the purchase or sale of any security ..., any manipulative or deceptive device or contrivance in contravention of such rules and regulations as the [Securities and Exchange Commission] may prescribe.” 15 U.S.C. § 78j(b). Under the authority of this provision, the SEC has promulgated Rule 10b-5, which provides that:

It shall be unlawful for any person, directly or indirectly, by the use of any means or instrumentality of interstate commerce, or of the mails or of any facility of any national securities exchange,

(a) To employ any device, scheme, or artifice to defraud,

(b) To make any untrue statement of a material fact or to omit to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading, or

(c) To engage in any act, practice, or course of business which operates or would operate as a fi-aud or deceit upon any person,

in connection with the purchase or sale of any security.

17 C.F.R. § 240.10b-5.

To state a claim under § 10(b) and Rule 10b-5, a plaintiff must allege:

(1) a material misrepresentation or omission; (2) made with scienter; (3) a connection with the purchase or sale of a security; (4) reliance on the misstatement or omission; (5) economic loss; and (6) a causal connection between the material misrepresentation or omission and the loss, commonly called “loss causation.”

Mizzaro v. Home Depot, Inc., 544 F.3d 1230, 1236-37 (11th Cir.2008); 15 U.S.C. § 78j(b); 17 C.F.R. § 240.10b-5. Defendants’ Motion to dismiss focuses on the first and second elements, and this Court will therefore discuss only those elements in detail.

As to the first element, “Rule 10b-5 prohibits not only literally false statements, but also any omissions of material fact ‘necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading.’ ” FindWhat Investor Group v. FindWhat.com, 658 F.3d 1282, 1305 (11th Cir.2011) (quoting 17 C.F.R. § 240.10b-5(b)). “A statement is misleading if ‘in light of the facts existing at the time of the [statement] ... [a] reasonable investor, in the exercise of due care, would have been misled by it.’ ” FindWhat Investor Group, 658 F.3d at 1305 (quoting SEC v. Texas Gulf Sulphur Co., 401 F.2d 833, 863 (2d Cir.1968)) (alterations provided by FindWhat Investor Group). “By voluntarily revealing one fact about its operations, a duty arises for the corporation to disclose such other facts, if any, as are necessary to ensure that what was revealed is not so incomplete as to mislead.” FindWhat Investor Group, 658 F.3d at 1305 (internal quotation marks omitted). But this does not require corporations to disclose all facts that would be interesting to the market — “[a] corporation has a duty to neutralize only the natural and normal implication of its statements.” Id. (internal quotation marks omitted) (emphasis added).

As to the second element, scien-ter may be alleged by pleading facts that denote “severe recklessness” or an “intent to deceive, manipulate, or defraud.” Bryant v. Avado Brands, Inc., 187 F.3d 1271, 1283 (11th Cir.1999); Ernst & Ernst v. Hochfelder, 425 U.S. 185, 193, 96 S.Ct. 1375, 47 L.Ed.2d 668 (1976).

Severe recklessness is limited to those highly unreasonable omissions or misrepresentations that involve not merely simple or even inexcusable negligence, but an extreme departure from the standards of ordinary care, and that present a danger of misleading buyers or sellers which is either known to the defendant or is so obvious that the defendant must have been aware of it.

Bryant, 187 F.3d at 1282 n. 18 (internal quotation marks omitted). “While allegations of motive and opportunity [to commit fraud] may be relevant to a showing of severe recklessness ... such allegations, without more, are not sufficient to demonstrate the requisite scienter.... ” Id. at 1285-86.

Additionally, to state a claim against individual defendants for a company’s misrepresentations or omissions, § 20(a) requires a plaintiff to allege that the individual defendants controlled the company, either directly or indirectly, and that they directly or indirectly induced the misrepresentations or omissions. 15 U.S.C. § 78t(a). "When, as here, § 20 claims are “predicated upon the same alleged unlawful conduct relevant to” § 10b-5 and Rule 10b-5 claims, the § 20 claims cannot survive dismissal of the underlying § 10b-5 and Rule 10b-5 claims. Garfield v. NDC Health Corp., 466 F.3d 1255, 1261 (11th Cir.2006); see also Kinnett v. Strayer Educ., Inc., 501 Fed.Appx. 890, 894 (11th Cir.2012) (“Because a primary violation of the securities laws constitutes an essential element of a § 20(a) derivative claim, a plaintiff adequately pleads a § 20(a) claim only where the plaintiff adequately pleads a primary violation.”).

B. Pleading Standards

A complaint alleging violations of § 10(b) and Rule 10b-5 must satisfy three pleading standards to continue past the motion to dismiss stage into discovery. FindWhat Investor Group, 658 F.3d at 1296. First, it must contain “a short and plain statement of the claim showing that the pleader is entitled to relief.” Fed. R.Civ.P. 8(a)(2). Mere “labels and conclusions,” and a mere “formulaic recitation of the elements of a cause of action,” will not suffice. Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). Instead, while they need not be detailed, the complaint’s non-concluso-ry, factual allegations must be enough to “state a claim to relief that is plausible on its face,” not merely a claim that is “conceivable.” Id. at 555, 570, 127 S.Ct. 1955. In other words, the factual allegations must “raise a reasonable expectation that discovery will reveal evidence” of the required elements, even though a “savvy” judge might think that “actual proof of those facts is improbable.” Id. at 556, 127 S.Ct. 1955. When considering a Rule 12(b)(6) motion to dismiss, however, courts must accept as true all well-pled factual allegations. Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551 U.S. 308, 322, 127 S.Ct. 2499, 168 L.Ed.2d 179 (2007). Courts must consider the complaint in its entirety, and may also consider matters that may be judicially noticed. Id. In particular, relevant documents required to be filed — and actually filed — with the SEC, and other public records are amenable to judicial notice. Bryant, 187 F.3d at 1278, 1280; La Grasta v. First Union Secs., Inc., 358 F.3d 840, 842 (11th Cir.2004) (allowing judicial notice of stock prices on a given date). Additionally, courts may consider documents attached to a defendant’s motion to dismiss when they are central to the plaintiffs claim and their authenticity is undisputed. Day v. Taylor, 400 F.3d 1272, 1276 (11th Cir.2005); Harris v. Ivax Corp., 182 F.3d 799, 802 n. 2 (11th Cir.1999).

Second, because it alleges fraud, the complaint “must state with particularity the circumstances constituting fraud,” although “[mjalice, intent, knowledge, and other conditions of a person’s mind may be alleged generally.” Fed.R.Civ.P. 9(b). This requires a plaintiff to allege:

(1) precisely what statements or omissions were made in which documents or oral representations; (2) the time and place of each such statement and the person responsible for making (or, in the case of omissions, not making) them; (3) the content of such statements and the manner in which they misled the plaintiff; and (4) what the defendant obtained as a consequence of the fraud.

FindWhat Investor Group, 658 F.3d at 1296.

Third and finally, the complaint must meet the heightened pleading requirements imposed by the Private Securities Litigation Reform Act of 1995 (“PSLRA”), Pub.L. No. 104-67, 109 Stat. 737 (codified as amended in scattered sections of Title 15 of the United States Code). FindWhat Investor Group, 658 F.3d at 1296. Congress enacted the PSLRA “[a]s a check against abusive litigation by private parties.” Tellabs, 551 U.S. at 313, 127 S.Ct. 2499. The PSLRA curbs abusive private securities litigation mainly through two mechanisms. First, it provides that when a private securities claim is brought, “all discovery and other proceedings shall be stayed during the pendency of any motion to dismiss.15 U.S.C. § 78u-4(b)(3)(B). Second, the PSLRA imposes “[ejxacting pleading requirements.” Tellabs, 551 U.S. at 313, 127 S.Ct. 2499. Under the PSLRA, for Rule 10b-5 claims predicated on allegedly false or misleading statements or omissions, “the complaint shall specify each statement alleged to have been misleading, the reason or reasons why the statement is misleading, and, if an allegation regarding the statement or omission is made on information and belief, the complaint shall state with particularity all facts on which that belief is formed.” 15 U.S.C. § 78u-4(b)(1). Furthermore, for all private Rule 10b-5 actions requiring proof of scienter, “the complaint shall, with respect to each act or omission alleged to violate this chapter, state with particularity facts giving rise to a strong inference that the defendant acted with [scienter].” Id. § 78u-4(b)(2)(A) (emphasis added). “To qualify as ‘strong’ ... an inference of scienter must be more than merely plausible or reasonable — it must be cogent and at least as compelling as any opposing inference of nonfraudulent intent.” Tellabs, 551 U.S. at 314, 127 S.Ct. 2499. Any omissions or ambiguities weigh against an inference of scienter. Id. at 326, 127 S.Ct. 2499. “Although factual allegations may be aggregated to infer scienter, scienter must be alleged with respect to each defendant and with respect to each alleged violation of the statute.” FindWhat Investor Group, 658 F.3d at 1296. “[CJonclusory allegations are insufficient to establish a strong inference” of scienter. Thompson v. RelationServe Media, Inc., 610 F.3d 628, 634 (11th Cir.2010) (internal quotation marks omitted). “In sum, the reviewing court must ask: When the [factual] allegations are accepted as true and taken collectively, would a reasonable person deem the inference of scienter at least as strong as any opposing inference?” Tellabs, 551 U.S. at 326, 127 S.Ct. 2499.

III. DISCUSSION

Defendants have moved to dismiss the Amended Complaint, arguing that dismissal with prejudice is warranted for three independent reasons: (1) Plaintiff alleges no particularized facts showing that any challenged statement was false or misleading when made, but instead relies on five confidential witnesses who can provide information only about the stores they supervised and who lacked knowledge of Body Central’s overall corporate forecasts or expectations; (2) all of Body Central’s forward-looking statements (and their stated factual assumptions) contained sufficient warnings and are protected by the “safe harbor” provision contained in 15 U.S.C. § 78u-5; and (3) the Amended Complaint provides no specific facts — such as contemporaneous documents inconsistent with defendants’ statements or information by a confidential witness claiming to have knowledge of what defendants believed — that suggest any defendant did not believe the statements he or she made, and Plaintiffs circumstantial evidence — class-period stock sales by Defendants Wein-stein and Angelo and non-defendant Rosenbaum — cannot establish the required “strong inference” of scienter because their trading history prior to the class period “negates any such inference.” (Dkt. 36 at pp. 2-3).

At bottom, aside from the immaterial and forward-looking statements, Defendants’ Motion requires this Court to evaluate the relative strengths of two competing inferences. Plaintiff urges that Defendants knowingly or severely recklessly concealed the souring financial condition of Body Central to maximize their personal gain, selectively revealing only half-truths until the house of cards had already toppled. Defendants, on the other hand, urge that they timely revealed adverse financial information as they became aware of it, and they are liable for nothing more than a failure to anticipate the rapidly changing fashion tastes of young women. As to Defendants’ material and non-forward-looking statements, the instant Motion requires this Court to determine whether the Amended Complaint’s factual allegations make Plaintiffs inference at least as compelling as Defendants’ opposing inference.

A. The § 10(b) Claim

1. Materiality

Defendants begin by arguing that many of the challenged statements are immaterial as a matter of law and therefore inactionable. Indeed, the federal securities laws provide a cause of action only for misrepresentations or omissions that are material. 17 C.F.R. § 240.10b-5(b) (“It shall be unlawful for any person ... [t]o make any untrue statement of a material fact or to omit to state a material fact (emphases added). “[A] misstatement or omission is material if there is a ‘substantial likelihood that the disclosure of the omitted fact would have been viewed by the reasonable investor as having significantly altered the “total mix” of information made available.’ ” SEC v. Morgan Keegan & Co., Inc., 678 F.3d 1233, 1245 (11th Cir.2012) (quoting TSC Indus., Inc. v. Northway, Inc., 426 U.S. 438, 449, 96 S.Ct. 2126, 48 L.Ed.2d 757 (1976)).

“Reasonable” investors do not base their investing decisions on corporate “puffery” — generalized, non-verifiable, vaguely optimistic statements. Hence, courts both within and outside of this circuit have agreed that such statements are immaterial as a matter of law and therefore inactionable. See, e.g., In re Airgate PCS, Inc. Securities Litig., 389 F.Supp.2d 1360, 1378-79 (N.D.Ga.2005) (phrases like “opportunity to leverage,” “more effectively penetrate our combined territories,” “strategic combination,” “additional operating efficiencies, financial flexibility, and growth potential” are “classic examples of mere ‘puffery’”); Cutsforth v. Renschler, 235 F.Supp.2d 1216, 1238-39 (M.D.Fla.2002) (comment that an acquisition “continues” a corporation’s “dynamic growth,” “adds enhanced value,” or “adds value” is inactionable puffery, as are comments that a company is “well-positioned to move forward with efforts to establish [itself] as the nation’s premier provider” of a type of service and that a merger was “effective” and “quick[ ]”); In re Royal Cruises Ltd. Securities Litig., 2013 WL 3295951, at *12 (S.D.Fla. April 19, 2013) (optimistic discussion of “healthy demands,” an “intention to compete successfully,” and the “ ‘encouraging’ prospect of early bookings” held to be puffery); ECA Local 134 IBEW Joint Pension Trust of Chicago v. JP Morgan Chase Co., 553 F.3d 187, 205-06 (2d Cir.2009) (bank’s statements regarding its “ ‘highly disciplined’ risk management” and “standard-setting reputation for integrity” held to be puffery); Southland Securities Corp. v. INSpire Ins. Solutions, Inc., 365 F.3d 353, 372 (5th Cir.2004) (“generalized, positive statements about the company’s competitive strengths, experienced management, and future prospects” held to be puffery); Grossman v. Novell, Inc., 120 F.3d 1112, 1117-21 (10th Cir.1997) (statements that merging companies “experienced ‘substantial success’ in integrating [their] sales forces,” the merger was moving “fast[]” and presented a “compelling set of opportunities,” and the companies were “moving rapidly to a fully integrated sales force” held to be puffery); Shaw v. Digital Equip. Corp., 82 F.3d 1194, 1217-19 (1st Cir.1996) (statements that a company’s sales transition was “going reasonably well,” the company “should show progress quarter over quarter, year over year,” the company was “basically on track” and “very healthy,” and management was “pretty optimistic” that revenue would stabilize and grow all held to be puffery); Searls v. Glasser, 64 F.3d 1061, 1066-67 (7th Cir.1995) (statements that a company was “recession-resistant” and would maintain a “high” level of growth held to be puffery); Hillson Partners Ltd. v. Adage, Inc., 42 F.3d 204, 212-14 (4th Cir.1994) (statement that a year would “produce excellent results” and “significant gains should be seen as the year progresses” held to be puffery); Raab v. Gen. Physics Corp., 4 F.3d 286, 289 (4th Cir.1993) (optimistic statements that company expected “10% to 30% growth rate over the next several years” and was “poised to carry the growth and success of 1991 well into the future” held to be puffery).

However, the level of specificity a statement must exhibit to cross the puffery threshold cannot be determined from a bright-line rule. C.f. Matrixx Initiatives, Inc. v. Siracusano, — U.S. -, 131 S.Ct. 1309, 1318, 179 L.Ed.2d 398 (2011) (the determination whether a statement is material is “inherently fact-specific” and requires consideration of a statement in its proper context). Statements that might be considered puffery in one context can be actionable in another, especially when defendants allegedly knew or recklessly disregarded facts contradicting their statements. See, e.g., Novak v. Kasaks, 216 F.3d 300, 315 (2d Cir.2000) (defendants’ statement that “the inventory situation was ‘in good shape’ or ‘under control’ ” was not puffery when “they allegedly knew that the contrary was true”); Warshaw v. Xoma Corp., 74 F.3d 955, 959 (9th Cir.1996) (statement that company was doing “fine” when defendants knew that revenues were slowing may, when taken in context, be actionable); Shapiro v. UJB Fin. Corp., 964 F.2d 272, 282 (3d Cir.1992) (statement that management practices were “adequate,” “conservative,” and “cautious,” — when defendants intentionally or recklessly omitted facts contradicting the representations — held to be actionable); In re Scientific-Atlanta, Inc. Securities Litig., 239 F.Supp.2d 1351, 1360 (N.D.Ga.2002) (declining to treat as puffery statements about a company’s success, business strategies, and growing demand because they were not too exaggerated or vague); In re Premiere Tech. Securities Litig., 2000 WL 33231639, at *15 (N.D.Ga. Dec. 8, 2000) (defendants’ optimistic public statements about company’s infrastructure, personnel, and management held to be actionable because the defendants allegedly knew or recklessly disregarded facts contradicting those statements); In re Moody’s Corp. Securities Litig., 599 F.Supp.2d 493, 509 (S.D.N.Y.2009) (“declaration of intention, hope, or projections of future earnings” are the “hallmarks of in-actionable puffery,” but consistent affirmation of a central aspect of a company’s business is actionable when not couched “in the language of optimism or hope”); Lapin v. Goldman Sachs Group, Inc., 506 F.Supp.2d 221, 239 (S.D.N.Y.2006) (“[Optimistic statements may be actionable upon a showing that the defendants did not genuinely or reasonably believe the opinions they touted ... or that the opinions imply certainty.”); In re Countrywide Financial Corp. Securities Litig., 588 F.Supp.2d 1132, 1144 (C.D.Cal.2008) (holding that while vague descriptions like “high quality” generally constitute puffery, “[plaintiff] adequately alleges that [defendant’s] practices so departed from its public statements that even ‘high quality became materially false or misleading”); In re St. Jude Medical, Inc. Securities Litig., 836 F.Supp.2d 878, 888 (D.Minn.2011) (vague statements held to be actionable because they were responses to specific questions raised by investors, journalists, and analysts); c.f. also Va. Bankshares, Inc. v. Sandberg, 501 U.S. 1083, 1093-95, 111 S.Ct. 2749, 115 L.Ed.2d 929 (1991) (holding, under an analogous statute, that a statement that directors recommended a merger because it was “fair” and offered shareholders a “high” value for their shares was materially misleading because shareholders could reasonably infer that it was justified by provable facts, and the plaintiffs had produced evidence that the sale price of the shares did not offer a premium over the book and market price).

This Court agrees with Defendants that several of the statements Plaintiff alleges were false and misleading, when placed in their proper context, amount to no more than inactionable corporate puffery. In particular, the following statements are too generalized to be susceptible to verification:

“Our comparable store sales performance demonstrates the strength of our existing stores_” Compl. at ¶ 55.

“Our third-quarter financial results reflect continued strength in our busi-ness_ [W]e have operational initiatives underway that we believe will enhance our ability to achieve our long-term growth objectives.” Compl. at ¶ 56.

“Our fourth quarter sales were driven by our continued focus on providing on-trend fashion at value prices.” Compl. at ¶ 66.

“We believe that our overall sales results continue to validate our future growth potential.” Compl. at ¶ 66.

“[W]e focus on quickly adapting to the latest trends to provide the right merchandise at value prices every day.” Compl. at ¶ 82.

“Our test-and-reorder strategy enables us to respond rapidly to changing trends.” Compl. at ¶ 83.

“[We] ■ • • remain confident in our long-term growth outlook.” Compl. at ¶ 89. ‘We hope [that it will not take more than four to six weeks to fix the inventory miss]. We certainly are doing everything we possibly can in the merchandising and marketing side to improve the trends. But because we can only do the best we can, we think that we want to be conservative in our approach and say that it could take a little longer to fix. But overall we feel optimistic that we will fix it shortly and start seeing increases.” Compl. at ¶ 92.

“I think what we saw as we entered into April is a more generalized confidence in our entire business. And because of that and because of trends we’re seeing now, we want to be conservative in our expectations as we move out of the second quarter into the third quarter.” Compl. at ¶ 93.

“So we are really diligent in trying more testing, we feel confident — it always made us the success that we’ve had and we’re going to stay true to our system, just be more and more diligent and increase our marketing efforts as well.” Compl. at ¶ 95.

These vague and generalized statements— several of which are expressly based on the opinions, “feel[ings],” “belieffs],” “hope[s],” and “want[s]” of management— cannot give rise to a securities fraud claim. No reasonable investor would rely on t