According to the Complaint, Defendants made numerous materially false and misleading statements and omissions concerning 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.”

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.

On this news, Scotts’ stock price fell $13.58 per share, or over 19%, to close at $57.86 per share on August 2, 2023.

If you wish to serve as lead plaintiff, you must move the Court no later than August 5, 2024. A lead plaintiff is a representative party acting on behalf of other class members in directing the litigation. Your ability to share in any recovery doesn’t require that you serve as lead plaintiff. If you choose to take no action, you may remain an absent class member.

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