The Scotts Miracle-Gro Co., Marysville, Ohio, said on June 12 that consumer purchases of its lawn and garden products were a record $565 million in May, resulting in the near full recovery of the decline reported through the first seven months of the fiscal year.
“The recovery in our U.S. Consumer business in May speaks to the strength of our brands, the resilience of the lawn and garden category, and the continued support of consumers and our retail partners,” said Jim Hagedorn, chairman and CEO. “It’s also a tribute to the outstanding work of our associates, who understood that the delay to the start of our season was simply that – a delay. We are cautiously optimistic that consumer purchases will finish the year in positive territory, but we’re extremely pleased with the underlying strength of this business even if we fall short of that goal.
“While consumer purchases have been tracking positively for weeks, the combination of the slow start to the season and improved inventory planning by our retail partners is causing us to lower sales guidance for our U.S. Consumer segment,” he added. “Our original guidance assumed there would be a 2- to 3-point gap between POS and our shipments, which is, in fact, what we’re seeing.”
Scotts said on a year-to-date basis through June 10, consumer purchases in the U.S. Consumer segment were almost flat from 2017 levels, with positive growth in lawn fertilizer, grass seed, growing media, and mulch. Consumer purchases were positive in the home center and hardware channels, slightly offset by continued declines in the mass retail channel.
Scotts now expects reported full-year sales to be within a range of flat to 2 percent higher than year-ago levels, compared with a previous range of 2-4 percent growth. This guidance assumes a decline in U.S. Consumer sales of 1-3 percent, versus a previous projection of 0- 2 percent growth. Sales in the Hawthorne segment are expected to increase 25-30 percent for fiscal 2018, driven by the recently completed Sunlight Supply (GM April 20, p. 1) acquisition. Excluding Sunlight, but including previous acquisitions, Hawthorne sales are expected to be slightly down from 2017.
Non-GAAP adjusted earnings are expected to range from $3.70-$3.90 per share, including dilution of approximately $0.30-$0.40 associated with the Sunlight transaction.
Separately, the company said it took actions earlier this month resulting in annualized savings of $15 million associated with its commitment to achieving $35 million in synergies related to the Sunlight acquisition. Further actions are expected before the end of the current fiscal year, and total savings are expected to be mostly realized by the end of calendar year 2019. The company formally launched “Project Catalyst” to achieve these synergies. Benefits from the transaction are expected to improve year-over-year non-GAAP adjusted earnings by $0.60-$0.80 per share in fiscal 2019.