SAN DIEGO, June 08, 2024 (GLOBE NEWSWIRE) — Robbins LLP informs investors that a shareholder filed a class action on behalf of persons and entities that purchased The Scotts Miracle-Gro Company (NYSE: SMG) common stock between November 3, 2021 and August 1, 2023. Scotts produces various lawn, garden, and agricultural products for both consumer and professional purposes.
For more information, submit a form, email attorney Aaron Dumas, Jr., or give us a call at (800) 350-6003.
The Allegations: Robbins LLP is Investigating Allegations that The Scotts Miracle-Gro Company (SMG) Misled Investors Regarding its Business Prospects
According to the complaint, at the start of the class period, Scotts had an oversupply of inventory that far exceeded consumer demand. Recognizing that problem, 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. Ultimately, Scotts was only able to satisfy the covenants through the channel stuffing scheme.
On August 2, 2023, Scotts issued a press release announcing its financial results for its fiscal year 2023 third quarter ended July 1, 2023. In the press release, Scotts disclosed that it had amended its debt covenants. The most significant amendment was that the Company had to modify its debt covenants to permit a 7.00 times debt-to-EBITDA ratio, from the original covenant that only permitted a 6.25 times debt-to-EBITDA ratio. The same day, Scotts held an earnings call with analysts and investors to discuss the Company’s financial results for its fiscal year 2023 third quarter. Scotts revealed that quarterly sales for its fiscal third quarter had declined by 6%, and gross margins fell by 420 basis points. The Company also slashed fiscal year EBITDA guidance by a staggering 25% and announced it had to take a $20 million write down for “pandemic driven excess inventories.” On this news, Scotts common stock declined by $13.58 per share, or 19%, from a closing price of $71.44 per share on August 1, 2023, to a closing price of $57.86 per share on August 2, 2023.
What Now: You may be eligible to participate in the class action against The Scotts Miracle-Gro Company. Shareholders who want to serve as lead plaintiff for the class must file their motions with the court by August 2, 2024. A lead plaintiff is a representative party who acts on behalf of other class members in directing the litigation. You do not have to participate in the case to be eligible for a recovery. If you choose to take no action, you can remain an absent class member. For more information, click here.
All representation is on a contingency fee basis. Shareholders pay no fees or expenses.
About Robbins LLP: Some law firms issuing releases about this matter do not actually litigate securities class actions; Robbins LLP does. A recognized leader in shareholder rights litigation, the attorneys and staff of Robbins LLP have been dedicated to helping shareholders recover losses, improve corporate governance structures, and hold company executives accountable for their wrongdoing since 2002. Since our inception, we have obtained over $1 billion for shareholders.
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