A US law firm has launched a class action lawsuit against footwear company Collective Brands, claiming that it issued false and misleading statements regarding the business and its financial results.

Law firm Levi & Korsinsky claims that as a result of false statements made by Collective Brands, the footwear company's stock traded at "artificially inflated prices".

Levi & Korsinsky claim that between 1 December 2010 and 24 May 2011, the company's inventory levels for Payless remained at excessively high levels, and aging inventory for its Payless segment was a concern. The firm claims that sales at its flagship Payless stores were significantly worse than expected due to deteriorating customer demand and the company was forced to mark down Payless' "bloated inventory at significant discounts" which adversely affected its first-quarter margins and financial results.

In May last year, Collective Brands reported a 51.3% profit drop, which fell to US$26.5m on the back of a 1.1% sales decline. Former CEO Matthew Rubel said that the results were driven by a combination of increasingly unfavourable economic conditions affecting mass market consumers as well as unseasonably cold weather.

Rubel left the company in the middle of June last year, and was replaced by Michael Massey.

Collective Brands declined to comment on the lawsuit.