Scotts Miracle-Gro plunges after guidance cut
The lawn and garden company said sales are suffering as demand slows down. Executives are not giving new guidance.
But this has been a rough spring for the company. Sales of its products in U.S. stores are only up 3% this year, down from 8% growth back in May. The downturn was enough to force executives to cut their full-year guidance of 6% to 8% sales growth and earnings estimate of $2.65 to $2.85 a share.
The company warned investors Tuesday afternoon of the coming guidance cut. It won't give new numbers until its third-quarter earnings update in August.
Investors dropped the stock in after-hours trading, sending shares down more than 15% from Tuesday's $43.05 close.
Demand is simply slowing down, Scotts said in a statement, after a strong start in the second quarter. The gardening season "has not met expectations," the company said. The slump may be partly due to poor sales in the sale of flower and vegetable plants. The turmoil in Europe will also hurt the company's business there, executives added.
Scotts CEO Jim Hagedorn posted a lengthy video message about the situation on the company's website. The company will use the next six weeks to perform a detailed analysis about the gardening season, he said. "Category growth is becoming harder to achieve," he added.
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