Scotts Miracle-Gro Leaders Sued Over Debt-to-Earnings Surprise

Scotts Miracle-Gro Co. directors and officers engaged in a scheme to unload excess inventory into distribution channels to prop up sales figures and stay in compliance with debt covenants, an investor alleges.

The lawn and garden care marketer’s inventory woes stemmed from a misjudgment during the Covid-19 pandemic, when it made up for insufficient inventory in 2020 and 2021 by overpurchasing relative to demand, Gary Carone says in his suit on behalf of the company. He filed the derivative suit Tuesday in the US District Court for the Southern District of Ohio.

The suit is among several in which investors ...