ScottsMiracle-Gro Co., Marysville, Ohio, said on Jan. 4 it is maintaining its full-year company-wide outlook for adjusted earnings per share ($8.50-$8.90 per share) despite a greater-than-expected decline in Hawthorne sales for the fiscal first quarter, which ended Jan. 1. First-quarter sales in Hawthorne are expected to decline approximately 40 percent, caused by a slowdown in the cannabis market, as well as supply chain disruptions that have delayed the sale of certain product lines.
“We are optimistic the supply chain disruptions we’ve experienced will be corrected by the end of January and we’ll be able to meet the continued demand we’re seeing for our industry-leading signature products,” said Cory Miller, Scotts CFO. “We’re also encouraged by the year-over-year increase we’ve been experiencing in pre-orders for growing media products for delivery to commercial growers in the second and third quarters.
“However, the decline we’ve seen in the first quarter, against a 71 percent growth comparison a year ago, is greater than we had anticipated,” he continued. “Based on our current view of the market, we are lowering our full-year sales guidance for Hawthorne to a range of 0 to minus 10 percent on a year-over-year basis, including the expected benefit from Luxx (see related story). This range assumes a return to growth during the second half of the year.”
The company said its U.S. Consumer segment continues to perform well, with POS growth in both dollars and units in every major product category and continued support in all retail channels. “Consumer purchases, in units, were up 3 percent in the quarter against a 40 percent growth comparison a year earlier, and POS dollars increased 9 percent in the quarter,” Miller said. “Retail inventory levels are appropriate for this time of the year, and we remain optimistic about the potential for the segment as we prepare for the upcoming lawn and garden season.”
U.S. Consumer segment sales in the first quarter are expected to decline less than 20 percent, which is better than originally anticipated. Miller said it was too early to raise guidance for this segment, though he said current trends and continued optimism about the upcoming season, coupled with a focus on expense control in both Hawthorne and U.S. Consumer, allow the company to maintain per share guidance.