Hayward Holdings, Inc.

On July 28, 2022, Hayward disclosed that it was expecting its channel partners to reduce its inventory on hand by approximately 4 to 6 weeks in the second half of 2022. As a result, the Company updated its full year 2022 outlook expecting net sales to decline between 2% and 6% year-over-year, compared to prior guidance expecting net sales growth between 9% and 12% year-over-year.   

On this news, the price of Hayward’s stock price fell $2.50, or 17.9%, to close at $11.21 per share on July 28, 2022, thereby injuring investors.

The complaint filed in this class action alleges that throughout the Class Period, Defendants made materially false and/or misleading statements, as well as failed to disclose material adverse facts about the Company’s business, operations, and prospects. Specifically, Defendants failed to disclose to investors: (1) that Hayward and its management had engaged in a channel-stuffing

scheme designed to artificially boost Hayward’s short-term sales and earnings; (2) that Hayward had flooded its channel partners with inventory that they did not want or need at a level that far outpaced then-existing consumer demand; (3) that Hayward’s channel partners were suffering from an inventory glut as a result of the channel-stuffing scheme that would require a massive destocking in the second half of 2022; (4) that Hayward’s channel-stuffing scheme had cannibalized future sales, materially impairing the Company’s ability to sell to its customers; (5) that the demand for pool equipment had slowed down, which, combined with flooding channel partners with more inventory, led to an inventory glut and the need for these channel partners to reduce inventory levels; and (6) as a result, Defendants’ positive statements about the Company’s business, operations, and prospects were materially misleading and/or lacked a reasonable basis at all relevant times.