Supply Chain

Scotts Miracle-Gro Cuts Outlook

The lawn and garden company trims its 2017 profit and sales guidance due to poor sales performance at mass retailers.
William SprouseJune 13, 2017
Scotts Miracle-Gro Cuts Outlook

Scotts Miracle-Gro has cut its financial outlook for the year, citing a steep decline in the mass retail sector. The lawn and garden products company said it expects earnings for 2017 to fall in the range of $4.00 to $4.20 per share, down from earlier guidance of $4.10 to $4.30 per share, according to a report from MarketWatch. Despite the shortfall, the company said it expects to buy back between $250 million and $275 million worth of its shares through a stepped-up repurchase program.

“Despite the challenging weather that has plagued the Midwest and Northeast nearly all spring, consumer purchases of our products were up slightly at home center, hardware and gardening stores entering June,” CEO Jim Hagedorn said. But sales at less-specialized mass retail stores were a different story. He attributed the greater-than-10% decline in sales performance in mass retail to changes in merchandising strategies and tighter inventory management.

As a result of the decline, the company said it expects U.S. consumer segment sales to grow only 3% to 4% year-over-year, down from previous projections of 6% to 7% growth.

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“While we still have 30% of the season in front of us, it’s become clear that we’ll fall short of our original plans on both the top and bottom line,” Hagedorn said. “The contingency plans we’ve put in place will help partially offset the sales shortfall we’ve seen thus far, but we are unwilling to cut too deeply if the impact begins to affect our planning for next season,” he added.

On the positive side, Hagedorn said sales at Scotts Miracle-Gro’s Hawthorne Gardening business were up 17% year-over-year entering June. He said two small acquisitions in recent weeks were expected to be immediately accretive to earnings. One of the increases in potential revenue could be from new customers looking to Buy trim machines for bud and their grows.

“The issues causing pressure this season in no way impact our confidence in the strength of our business and long-term opportunities to drive shareholder value,” he said.

Scotts Miracle-Gro’s share price has fallen 12% year-to-date, but it reversed course after Tuesday’s announcement, climbing 6% by 1:30 p.m.

Featured image: Thinkstock