The legal action, spearheaded by Levi & Korsinsky, LLP, centers on allegations that management provided misleading projections while internal inventory and demand issues remained undisclosed. In early 2025, the company promised net sales of up to $8.9 billion and an adjusted EBITDA reaching $1.78 billion. However, by the end of the year, those figures were slashed significantly, with the company ultimately reporting adjusted EBITDA as low as $1.43 billion.
The complaint asserts that leadership was aware of rising inventory levels and deteriorating consumer demand at the time the optimistic guidance was issued. Adding to shareholder frustration, the litigation highlights that CEO Michael Doss and CFO Stephen Scherger sold shares worth nearly $1.8 million shortly before resigning in November 2025. Following three successive corrective disclosures, shares fell from approximately $25.31 to close at $12.42 on February 3, 2026.
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