The Scotts Miracle-Gro Co., Marysville, Ohio, posted a net loss for the third quarter ending July 2 of $443.9 million ($8.01 per diluted share) on net sales of $1.19 billion, compared to a year-ago net income of $225.9 million ($3.94 per share) and $1.61 billion, respectively. Adjusted EBITDA was $209.6 million, down from $357.1 million.
“Behind a complicated story this quarter, we were pleased to see consumer engagement build as the weather improved and the season progressed,” said Jim Hagedorn, Scotts Chairman and CEO. “While consumer purchases are down 8% in units year-to-date, that performance is in line with the guidance we laid out at the beginning of the year. We are extremely encouraged that consumer purchases in May and June were at near-record levels, once again showing the resiliency of the category. Unfortunately, shipments to our retailer partners did not keep pace with consumer demand, as retailers in all channels took steps to lower their own inventory levels.
“The lower-than-expected sales in our US Consumer segment, combined with continued pressure on Hawthorne sales due to oversupply issues in the cannabis industry, leave us unsatisfied with our financial results and with higher leverage than we want to maintain,” he added. “That is why we have launched the business transformation effort we are calling Project Springboard, which includes a series of aggressive steps to return the business to an appropriate level of performance.” The company had already announced job cuts at Hawthorne.
“The outcome of Project Springboard will lead to a set of detailed financial and incentive-related targets to ensure we are making substantive progress and holding ourselves accountable. We are committed to getting the business back on the right track, returning to an appropriate level of profitability in both segments,” said Hagedorn.
Scotts lowered full-year sales guidance for its US Consumer segment to down 8-9% from the down 4-6% that was given in June, and full-year EPS to $4.00-$4.20 from $4.50-$5.00.
Scotts reported a nine-month loss of $217.5 million ($3.91 per share) on sales of $3.43 billion, compared to the year-ago net income of $561.3 million ($9.81 per share) and $4.19 billion, respectively. Adjusted EBITDA was $630.5 million, down from $911.7 million.