Robbins Geller Rudman & Dowd LLP, a renowned law firm specializing in investor class actions, recently announced the filing of a class action lawsuit against Hayward Holdings, Inc. (HAYW) and its top executives and controlling shareholders. The lawsuit seeks to represent purchasers of Hayward Holdings common stock during the Class Period, which spans from March 2, 2022, to July 27, 2022. The legal action alleges violations of the Securities Exchange Act of 1934 and accuses the company of engaging in deceptive practices to artificially boost sales and earnings.

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Case Allegations

Hayward Holdings is a global company known for its broad portfolio of pool equipment and automated systems. The class action lawsuit alleges that throughout the Class Period, the defendants made false and/or misleading statements and failed to disclose crucial information. The accusations include:

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1. Channel-Stuffing Scheme: Hayward Holdings and its management are accused of implementing a channel-stuffing scheme to inflate short-term sales and earnings artificially.
2. Excessive Inventory Flooding: The company allegedly flooded its channel partners with excessive inventory beyond existing consumer demand, leading to an inventory glut.
3. De-Stocking Crisis: The channel-stuffing scheme resulted in an inventory glut, forcing channel partners to undertake massive de-stocking in the latter half of 2022.
4. Cannibalized Future Sales: The channel-stuffing scheme is said to have cannibalized future sales, severely impacting Hayward Holdings' ability to sell to its customers.
5. Slowed Demand: A slowdown in the demand for pool equipment, coupled with the excess inventory, created the need for channel partners to reduce inventory levels.
6. Unrealistic Financial Projections: As a consequence of the above factors, Hayward Holdings' projected 2022 financial results were allegedly unachievable and lacked a reasonable basis in fact.

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Impact on Investors

On July 28, 2022, Hayward Holdings disclosed its financial results for the second fiscal quarter of 2022, which shocked analysts and investors alike. The company announced that its channel partners were expected to reduce their inventory on hand by approximately four to six weeks in the latter half of 2022. Consequently, Hayward Holdings lowered its 2022 guidance to account for the massive inventory reduction. During an earnings call, CEO Kevin Holleran admitted that the inventory bottleneck was rooted in decisions made before the Class Period. As a result, the price of Hayward Holdings common stock plummeted nearly 24%, causing significant damage to investors.

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Lead Plaintiff Process

The Private Securities Litigation Reform Act of 1995 allows any investor who purchased Hayward Holdings common stock during the Class Period to seek appointment as lead plaintiff in the class action lawsuit. The lead plaintiff represents all other class members and selects a law firm to litigate the case. It is important to note that an investor's ability to share in any potential future recovery from the lawsuit is not dependent upon serving as lead plaintiff.

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Robbins Geller Rudman & Dowd LLP's class action lawsuit against Hayward Holdings, Inc. brings to light serious allegations of securities violations during the Class Period. Investors who suffered substantial losses during the specified period have the opportunity to take action and potentially recover damages by participating in the lawsuit. For more information or to serve as a lead plaintiff, interested parties can contact Robbins Geller or provide their information through the provided link.