Scotts touts first quarter sales increase; lawn fertilizer sales up 32 percent

Scotts Miracle-Gro Co. touted its sales results for the first quarter ending Jan. 2, 2010, saying the main driver was a 32 percent increase in lawn fertilizer sales. Scotts Chairman and CEO James Hagedorn told investors that the company spent aggressively to support the fall business – and the investment paid off.

“The year-over-year improvement was the strongest gain for lawn fertilizer we’ve seen any quarter for quite a while, and although Q1 is our smallest quarter, the success we saw at the end of the season reinforces our belief that we need to continue supporting the fall business going forward,” said Hagedorn. “The science is pretty clear cut. Fall is by far the best time for home owners to feed their lawns.” He was particularly impressed with the performance in the Southwest and West Coast regions, which exceeded a 40 percent increase in sales.

Company-wide, sales were up only 6 percent, at $302.2 million from the year-ago $286.1 million. There was a 14 percent increase from the Global Consumer unit. Within this unit, U.S. sales were up 17 percent, with consumer purchases of company-branded products at its largest U.S. retailers increasing 14 percent. There were gains in 49 states – with North Dakota the only exception – and some 38 states saw double-digit increases.

The company also said Q1 sales were influenced by southern retailers preparing for the season earlier than usual, and that this was an early indicator of the success of Scott’s three new Deep South regional offices.

Scotts historically reports a net loss in the first quarter, and the recent quarter was no exception, with a loss of $57.7 million ($.88 per diluted share) versus the year-ago loss of $57 million ($.88 per diluted share).

“Our first quarter results were better than we had originally anticipated and demonstrate the continued resilience of our consumer business and our brands,” said Hagedorn. “It was a great way to end the 2009 lawn and garden season, and an even better way to begin a new fiscal year.”

Scotts reaffirmed its full-year outlook on an adjusted basis at a range of $3.00-$3.10 per share, which assumes sales growth of 3-5 percent.

“We are well-positioned entering the peak months of the year and we remain confident in our current outlook,” said Dave Evans, Scotts CFO. “Early shipments to our retailers have been strong, and our retail partners remain poised to provide continued support to our brands and the overall lawn and garden category. In addition, we have locked in over 60 percent of our most sensitive commodities and are maintaining strong expense control.”

The recent first quarter ended Jan. 2, 2010. The year-ago first quarter ended Dec. 27, 2008.