Law Offices of Howard G. Smith announces that a class action lawsuit has been filed on behalf of investors who purchased 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.
Investors suffering losses on their Scotts investments are encouraged to contact the Law Offices of Howard G. Smith to discuss their legal rights in this class action at 888-638-4847 or by email to howardsmith@howardsmithlaw.com.
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.
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 Howard G. Smith, Esquire, of Law Offices of Howard G. Smith, 3070 Bristol Pike, Suite 112, Bensalem, Pennsylvania 19020, by telephone at (215) 638-4847 or by email to howardsmith@howardsmithlaw.com, or visit our website at www.howardsmithlaw.com.
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Contacts
Law Offices of Howard G. Smith
Howard G. Smith, Esquire
215-638-4847
howardsmith@howardsmithlaw.com
www.howardsmithlaw.com
