SCOTTS ALERT: Bragar Eagel & Squire, P.C. Announces that a Class Action Lawsuit Has Been Filed Against The Scotts Miracle-Gro Company and Encourages Investors to Contact the Firm

Core Viewpoint - A class action lawsuit has been filed against The Scotts Miracle-Gro Company, alleging that the company misled investors regarding its inventory levels, debt compliance, and financial performance during the Class Period from November 3, 2021, to August 1, 2023 [8][9]. Company Overview - Scotts produces a variety of lawn, garden, and agricultural products for both consumer and professional markets and is the largest marketer of branded consumer products for lawn and garden care [5]. - In 2014, Scotts established The Hawthorne Gardening Company, focusing on hydroponics for the cannabis market [5]. Allegations and Financial Disclosures - The complaint alleges that Scotts executives engaged in a scheme to inflate sales by saturating sales channels with excess inventory, allowing the company to book revenue from distributor sales and maintain earnings to debt ratios just above required levels [2][9]. - On June 8, 2022, Scotts disclosed that replenishment orders from U.S. retailers were $300 million below target for May, leading to a significant cut in its 2022 earnings guidance by approximately 50% and plans to incur additional debt for restructuring [6][9]. - Throughout the Class Period, Scotts allegedly made false statements about inventory levels and debt compliance, assuring investors that inventory was appropriate and that there were no leverage compliance issues [9][12]. Financial Performance and Impact - On August 2, 2023, Scotts reported a 6% decline in quarterly sales and a 420 basis point drop in gross margins, along with a 25% reduction in fiscal year EBITDA guidance and a$ 20 million write-down for excess inventories [13]. - The company modified its debt covenants from a 6.25 times debt-to-EBITDA ratio to 7.00 times, indicating increased financial strain [13].