Scotts Miracle-Gro(US:SMG) Newsfilter·2024-06-12 13:50Core Viewpoint - The Scotts Miracle-Gro Company is facing legal scrutiny due to significant financial misrepresentations and a decline in stock value, prompting a class action lawsuit for investors who suffered losses exceeding $100,000 between November 3, 2021, and August 1, 2023 [8][9]. Financial Performance - On June 8, 2022, Scotts disclosed that replenishment orders from U.S. retailers were over $300 million below target for May, leading to a drastic reduction in full-year earnings guidance to approximately half of previous estimates [2]. - For the fiscal third quarter on August 2, 2023, Scotts reported a 6% decline in quarterly sales and a 420 basis point drop in gross margins, alongside a 25% cut in fiscal year EBITDA guidance and a $20 million write-down of excess inventories [3]. - The company modified its debt covenants from a 6.25 times debt-to-EBITDA ratio to 7.00 times, indicating increased financial strain [3]. Stock Price Impact - Following the June 2022 disclosures, Scotts' stock price fell by $9.05, or nearly 9%, from $102.18 to $93.13 per share [11]. - On August 2, 2023, the stock price dropped by $13.58, or 19%, from $71.44 to $57.86 per share after the company’s negative financial announcements [12]. Legal Proceedings - A federal securities class action has been filed against Scotts, with a deadline of August 5, 2024, for investors to seek the role of lead plaintiff [8]. - The complaint alleges that Scotts and its executives violated federal securities laws by making false statements regarding inventory levels, debt compliance, and overall financial performance, which led to artificially inflated stock prices during the class period [10].