LOS ANGELES--(BUSINESS WIRE)--The Law Offices of Frank R. Cruz announces that a class action lawsuit has been filed on behalf of persons and entities that purchased or otherwise acquired The Scotts Miracle-Gro Company (“Scotts” or the “Company”) (NYSE: SMG) common stock between November 3, 2021, and August 1, 2023, inclusive (the “Class Period”). Scotts investors have until August 5, 2024 to file a lead plaintiff motion.
If you are a shareholder who suffered a loss, click here to participate.
On June 8, 2022, Scotts announced that replenishment orders from its U.S. retailers were more than $300 million below target in the month of May, 2022, and disclosed 2022 full-year earnings would be roughly half of its prior guidance. The Company also announced plans to take on additional debt to cover restructuring charges as it attempted to cut costs. Analysts were shocked by the announcement, with one report by Truist commenting that, “[w]e have not seen anything similar occur in the 20 years we have covered [Scotts].”
On this news, Scotts’ stock price fell $9.05, or 8.9%, to close at $93.13 per share on June 8, 2022, thereby injuring investors.
On August 2, 2023, the Company disclosed disappointing financial results, revealing that the Company’s quarterly sales for its fiscal third quarter of 2023 declined by 6%, and that gross margins fell by 420 basis points in the same period. The Company also announced a 25% reduction in fiscal year EBITDA guidance, and a $20 million write down of “pandemic driven excess inventories.” The Company also disclosed that it had to increase its debt covenants to 7.00 times debt-to-EBITDA ratio.
On this news, Scotts’ stock price fell $13.58, or 19%, to close at $57.86 per share on August 2, 2023, thereby injuring investors further.
The complaint filed in this class action alleges that throughout the Class Period, Defendants made materially false and/or misleading statements, as well as failed to disclose material adverse facts about the Company’s business, operations, and prospects. Specifically, Defendants failed to disclose to investors that: (1) Scotts had an oversupply of inventory that far exceeded consumer demand; (2) Scotts executives engaged in a scheme to saturate the Company’s sales channel with more product than those retailers could sell through to end users, a practice that required Scotts sales personnel to pressure retailers to purchase more inventory than they wanted or needed; (3) Scotts was only able to satisfy the covenants through the channel stuffing scheme; and (4) as a result, Defendants’ positive statements about the Company’s business, operations, and prospects were materially misleading and/or lacked a reasonable basis at all relevant times.
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If you purchased Scotts common stock during the Class Period, you may move the Court no later than August 5, 2024 to ask the Court to appoint you as lead plaintiff. To be a member of the Class you need not take any action at this time; you may retain counsel of your choice or take no action and remain an absent member of the Class. If you purchased Scotts common stock, have information or would like to learn more about these claims, or have any questions concerning this announcement or your rights or interests with respect to these matters, please contact Frank R. Cruz, of The Law Offices of Frank R. Cruz, 2121 Avenue of the Stars, Suite 800, Los Angeles, California 90067 at 310-914-5007, by email to info@frankcruzlaw.com, or visit our website at www.frankcruzlaw.com. If you inquire by email please include your mailing address, telephone number, and number of shares purchased.
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