Thoughts on a Q4 sales slump
At Scotts Miracle-Gro, sales to U.S. consumers declined 2% in 2017, and 7% in the fourth quarter. CEO Jim Hagedorn discussed that decline, and some other key points during the company’s fourth quarter earnings call with analysts.
Hagedorn described the challenges the company faced with products flowing through the mass-retail channel.
“We saw growth pretty much in line with our original expectations in the home centers, hardware channels and with garden centers. But we were down mid-teens in mass retail and there was no way to overcome that.”
He added: “When you back out mass retail and mulch, then the rest of the portfolio saw POS growth of about 4%.”
And also: “Understandably, we've been getting a lot of questions about what we've experienced this year in mass retail. Frankly, I'd be careful not to overanalyze it.”
The Scotts CEO also addressed the topic or multi-channel retailing:
“Unlike many other consumer categories, lawn and garden continues to rely on brick-and-mortar retail. In 2017, about 97% of our sales came through these traditional channels. Will that change over time? Probably. Will it change substantially? I don't really think so.”
For the full year, the company showed gains in both sales and earnings.
Turf battle over reflective burns
Dalton, Ga.-based Go Green Synthetic Lawn Solutions is rolling out a new artificial grass product that provides a solution to what it describes as an industry-wide issue with reflective burns caused by Low-E windows.
With the introduction of Platinum HeatMaxx, the company is laying claim to the distinction: first and only manufacturer to offer a 15-year warranty against reflective burns.
The artificial turf manufacturer described heat as the enemy of turf. And the proliferation of Low-E windows can exasperate the problem, the company said.
"This has been quite a frustrating problem for our entire industry," said Michelle Balicki, VP of sales and marketing. "The finger has been pointed at the artificial turf manufacturer to mitigate an issue that has affected homeowners, architects, and commercial properties of all kind. But the truth is, this is clearly a much more wide-spread problem that expands much farther than our industry. We are just very excited to be able to provide a solution."
With the increase of these Low-E windows to create a better energy efficient solution for both residential and commercial applications, the synthetic turf industry has been challenged with reflective conditions that create very high temperatures. These reflective conditions have been reported around the world, to burn and melt surfaces such as aluminum siding on houses, paint on cars, and, among many others, artificial lawns.
Most synthetic lawns made of polypropylene and polyethylene have melt temperatures around 320°F. Go Green's Platinum HeatMaxx series made with nylon, have a melting point of 460°F. Because of this, they are able to withstand the high temperatures that exist in these reflective environments.
David Davis, President of Go Green stated, "We have been working for years to perfect our proprietary blend of nylon yarns to combat the heat issues our industry has been challenged with."
Masonite sales rise 6% for Q3
Masonite International Corp. reported third quarter 2017 net sales increased 6% to $518 million from $490 million in the same period last year.
The Tampa, Fla.-based manufacturer of interior and exterior doors attributed the increase to a 3% increase in volume, due primarily to higher volumes in North American residential and Europe segments, a 2% increase in average unit price, and a 1% benefit from foreign exchange.
Masonite also reported a net income of $30.6 million for the quarter, down from a net income of $33.2 million in the third quarter 2016. Additionally, Masonite reported a net income attributable to Masonite decreased $3 million to $29 million in quarter. The third quarter of 2016 included a $5 million gain related to the sale of Masonite Africa Limited, the company said.
Europe net sales were $75 million, a 7% increase from the third quarter of 2016, which was attributed to a 6% increase in volume. Architectural net sales were $74 million, a 4% decrease from the third quarter of 2016, driven by an 8% decline in sales volume which was partially offset by a 4% increase in average unit price and higher components sales, Masonite reported.
“We are encouraged by the improved volume trend and operational recovery in our business. While the third quarter began with weak margins as we worked through higher cost inventory, they steadily improved each month,” said Fred Lynch, Masonite president and CEO. “With our manufacturing productivity back on track to levels we anticipated, we expect margin growth to resume, particularly in 2018 and beyond.”