Marysville, Ohio-based Scotts Miracle-Gro has released a financial update for fiscal 2012 to “reflect the pressures driven by lower-than-expected sales and unfavorable product mix,” according to a company press release.
Consumer purchases of its products at its largest retail partners in the United States are up 3% on a year-to-date basis, compared with 8% entering May. The company expects to fall short of its previous guidance of 6% to 8% sales growth and adjusted earnings of $2.65 to $2.85 per share.
"While we are clearly disappointed that we will fall short of our plans, there have been several key wins during the season that give us reason to be confident moving forward," said Jim Hagedorn, chairman and CEO. "We have seen unit growth in consumer purchases of our lawn fertilizer products for the first time in several years. Our controls businesses -- where growth in consumer purchases has been in the high teens -- are having their best season ever. In addition, our mulch business has grown by about 25% through the first seven months of the year. Those facts, coupled with market share gains in nearly every category, reinforce our confidence in our strategy and our brands."
The company pointed to slowing consumer demand following a strong and early start to the lawn care season in the second quarter. However, the gardening season, which traditionally peaks in mid- to late-May, has not met expectations. Consumer purchases of Miracle-Gro branded soils and plant food are in line with 2011 and appear to have been negatively impacted by an industry-wide slowdown in the sale of flower and vegetable plants. In addition, poor weather and challenging economic conditions will also cause the company’s European business to fall short of expectations.
"While we remain confident in the long-term growth opportunities in our business, it is clear that near-term category growth has become harder to achieve," Hagedorn said. "Over the balance of the fiscal year we will pressure test our assumptions and make any necessary adjustments as we plan for the 2013 lawn and garden season."