SMG - Bragar Eagel & Squire P.C. Reminds Investors That Class Action Lawsuits Have Been Filed Against Scotts Gritstone Roblox and Rivian and Encourages Investors to Contact the Firm | Benzinga
NEW YORK, July 04, 2024 (GLOBE NEWSWIRE) -- Bragar Eagel & Squire, P.C., a nationally recognized shareholder rights law firm, reminds investors that class actions have been commenced on behalf of stockholders of The Scotts Miracle-Gro Company (NYSE:SMG), Gritstone bio, Inc. (NASDAQ:GRTS), Roblox Corporation (NYSE:RBLX), and Rivian Automotive, Inc. (NASDAQ:RIVN). Stockholders have until the deadlines below to petition the court to serve as lead plaintiff. Additional information about each case can be found at the link provided.
The Scotts Miracle-Gro Company (NYSE:SMG)
Class Period: November 3, 2021 - August 1, 2023
Lead Plaintiff Deadline: August 2, 2024
Scotts produces various lawn, garden, and agricultural products for both consumer and professional purposes. It is also the world's largest marketer of branded consumer products for lawn and garden care. In 2014, Scotts formed a wholly owned subsidiary, The Hawthorne Gardening Company, which focuses on hydroponics for the emerging cannabis growing market. The Company sells a vast majority of its products through third-party distributors.
During the Class Period, Scotts was highly leveraged, with its senior secured credit facilities containing various restrictive covenants and cross-default provisions that require the Company maintain specific financial ratios. A breach of any of these covenants could result in a default, enabling the Company's lenders to declare all outstanding indebtedness immediately due and payable. A key covenant required that Scotts maintain a debt-to-EBITDA ratio under 6.25. In 2020 and 2021, prior to the beginning of the Class Period, Scotts had missed out on millions of dollars in sales due to a lack of inventory as it faced surging demand. In response to this strong demand, Scotts significantly increased its inventory.
The complaint alleges that, throughout the Class Period, 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." As a result of these misrepresentations, Scotts common stock traded at artificially inflated prices during the Class Period.
The complaint further alleges that in reality, Scotts' executives engaged in a scheme to saturate the Company's sales channels with more inventory than could be sold to end users. This scheme enabled Scotts to book as revenue the sales to its distributors and maintain earnings to debt ratios that just barely exceeded those required by its debt covenants.
The complaint further alleges that the truth began to emerge on June 8, 2022, when Scotts revealed that replenishment orders from its U.S. retailers were $300 million below target in ...