Faruqi & Faruqi LLP Reminds Shareholders of a Lead Plaintiff Deadline on August 5, 2024 in Scotts Lawsuit
Securities Litigation Partner James (Josh) Wilson Encourages Investors Who Suffered Losses In Scotts To Contact Him Directly To Discuss Their Options
If you purchased or acquired securities in Scotts between November 3, 2021, and August 1, 2023 and would like to discuss your legal rights, call Faruqi & Faruqi partner Josh Wilson directly at 877-247-4292 or 212-983-9330 (Ext. 1310). You may also click here for additional information: www.faruqilaw.com/SMG.
NEW YORK, July 19, 2024 /PRNewswire/ -- Faruqi & Faruqi, LLP, a leading national securities law firm, is investigating potential claims against The Scotts Miracle-Gro Company ("Scotts" or the "Company") (NYSE: SMG) and reminds investors of the August 5, 2024 deadline to seek the role of lead plaintiff in a federal securities class action that has been filed against the Company.
Faruqi & Faruqi is a leading national securities law firm with offices in New York, Pennsylvania, California and Georgia. The firm has recovered hundreds of millions of dollars for investors since its founding in 1995. See www.faruqilaw.com.
As detailed below, the complaint alleges that the Company and its executives violated federal securities laws by making false and/or misleading statements and/or failing to disclose that: the Company's inventory levels, debt covenant compliance, and financial performance. Specifically, Defendants repeatedly assured investors that the Company's inventory levels were appropriate, while attributing strong sales to "selling through high-cost inventory," which resulted in "peak selling" and "record" shipments. Defendants also repeatedly assuaged investors' concerns about the Company's debt, stating that they were "optimistic we will remain within the bounds of our bank covenants" and "[did] not see leverage compliance issues going forward." As a result of these misrepresentations, Scotts common stock traded at artificially inflated prices during the Class Period.
The truth began to emerge on June 8, 2022, when Scotts admitted that replenishment orders from its U.S. retailers were more than $300 million below target in the month of May alone. The Company told investors that 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.
In response to these disclosures, the price of Scotts common stock declined by $9.05 per share, or nearly 9%, from a closing price of $102.18 per share on June 7, 2022, to a closing price of $93.13 per share on June 8, 2022.
On August 2, 2023, Scotts revealed that quarterly sales for its fiscal third quarter had declined by 6%, and that gross margins fell by 420 basis points. The Company also slashed fiscal year EBITDA guidance by a staggering 25% and announced a $20 million write down of "pandemic driven excess inventories." The Company also disclosed that it had to modify its debt covenants to 7.00 times debt-to-EBITDA ratio, from the former ratio of 6.25 times debt-to-EBITDA ratio.
These disclosures caused the price of Scotts common stock to decline 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.
The court-appointed lead plaintiff is the investor with the largest financial interest in the relief sought by the class who is adequate and typical of class members who directs and oversees the litigation on behalf of the putative class. Any member of the putative class may move the Court to serve as lead plaintiff through counsel of their choice, or may choose to do nothing and remain an absent class member. Your ability to share in any recovery is not affected by the decision to serve as a lead plaintiff or not.
Faruqi & Faruqi, LLP also encourages anyone with information regarding Scotts' conduct to contact the firm, including whistleblowers, former employees, shareholders and others.
To learn more about the Scotts class action, go to www.faruqilaw.com/SMG or call Faruqi & Faruqi partner Josh Wilson directly at 877-247-4292 or 212-983-9330 (Ext. 1310).
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